March 17 (Bloomberg) -- China said it will invest more than 1 trillion yuan ($162 billion) redeveloping shantytowns this year as the government detailed how it will boost its urban population to support growth.
More than 4.75 million households will be involved, state broadcaster China Central Television reported yesterday, citing the housing ministry. China will build more transportation links, ease some residence-registration rules and let local governments directly issue bonds, according to the urbanization plan for 2014 to 2020, issued by the ruling Communist Party and State Council.
The plans add details on how China will seek to achieve a 7.5 percent target this year for expansion while sustaining growth through the rest of the decade. Leaders have pledged to speed up urbanization as they try to rely more on domestic consumption for growth and give markets a bigger role in the world’s second-largest economy.
Urbanization is a “strong engine” for sustainable and healthy economic development, according to the text of the plan released yesterday by the official Xinhua News Agency. Premier Li Keqiang said March 13 that tens of millions of people still live in shantytowns, which Xinhua says are areas of dilapidated housing where poor factory workers often live.
China completed 1.12 trillion yuan of investments in subsidized housing last year, according to housing ministry data. The government “basically completed work” on 5.44 million subsidized housing units in urban areas and started construction on another 6.66 million, the National Development and Reform Commission said in an annual work report this month.
The nation is targeting having 60 percent of the population in urban areas by 2020, according to the plan. That compares with 53.7 percent in 2013 and about 50 percent in 2010. The U.S. proportion was 82 percent in 2011 and Japan’s was 91 percent, according to a joint report in 2012 by the World Bank and Development Research Center of the State Council.
The CCTV report didn’t state the source of the redevelopment funds.
China will speed up the construction of railways, expressways and airports to support the rapid urbanization, Xinhua said in a separate report on the plan.
The government will remove restrictions on obtaining household registration permits in small cities and towns, while it will strictly control the populations of cities with more than 5 million urban residents, according to the plan. China will help 100 million people, including migrant workers, get status as urban residents by 2020.
China plans to set up a transparent financing mechanism for urban construction, allowing local governments to issue municipal bonds, according to the plan. The central government will also establish a management and rating system to increase the use of direct financing and consider establishing policy-financial institutions for both infrastructure and home construction, it said.
The urbanization plan will help promote regional development, upgrade industries and increase domestic demand, according to the text released by Xinhua. Urbanization is important for accelerating the development of the service sector, which will create many jobs, it said.
Chinese leaders vowed in December to map out city clusters across the country’s central, western and northeastern regions and develop them into engines for growth as part of the nation’s urbanization strategy.
“Diverse and sustainable” funding mechanisms will be developed to finance policies, they said at an urbanization conference, according to a report on the meeting by Xinhua. Attention must also be paid to the environmental impact of such development, leaders said.
To contact Bloomberg News staff for this story: Bonnie Cao in Shanghai at email@example.com