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Economy

Urbanization to drive China's growth

By Chen Jia and Yang Ning (China Daily)
Updated: 2011-03-26 10:20
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BEIJING - China's urbanization will provide sustainable investment and become a key factor in bolstering the country's growth during the coming five years, said a top policy adviser on Friday.

"The country's urbanization rate is expected to increase by 1 percentage point every year for the next 20 years," said Zheng Xinli, vice-president of the China Center for International Economic Exchanges (CCIEE).

The figure is predicted to rise from the current 47 percent to 57 percent in 2020, and to approximately 70 percent by the end of 2030, according to Zheng.

He said urbanization will be a significant contributor to the nation's gross domestic product (GDP) during the 12th Five-Year Plan (2011-2015), and in the longer term. "By 2026, the country's GDP is likely to exceed that of the United States and be the largest in the world," he said.

According to research by CCIEE, a government think tank, GDP could reach $28.1 trillion 15 years from now, compared with a predicted $25.8 trillion for the US.

During the last five years, the Chinese economy has grown at an annual rate of 11.2 percent on average, while the rest of the world has seen growth of 3.5 percent, and the US 0.9 percent, according to a report from China's National Bureau of Statistics (NBS), published on Thursday.

In 2010, China's GDP accounted for 9.5 percent of the global total, overtaking Japan and becoming the second-largest global economy, according to the NBS.

Premier Wen Jiabao said in March that the country has set an annual growth target of 7 percent for each year up to and including 2015.

Wen emphasized the need for economic restructuring and increases in incomes for both rural and urban residents in the five-year plan.

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"Our research suggests that one rural resident moving to an urban area will lead to investment of 100,000 yuan ($15,240) on infrastructure construction and public services," said Zheng, also a top political adviser. He said the stimulus provided by accelerated urbanization means that economic growth is unlikely to slow.

Zheng said that by the end of 2030, China's Yangtze River Delta is likely to outstrip the New York Metropolitan Area to become the world's largest urban agglomeration.

"Considering that it could bring tens of millions of rural residents to the cities, and thus boost domestic consumption in real estate and a number of related industries, the urbanization process is bound to be a sustainable engine of China's economic growth," said Li Tie, director-general of the China Center for Urban Development at the National Development and Reform Commission.

The government may need to spend a total of 24 trillion yuan on urban infrastructure by 2020 because the number of city residents will continue to increase, according to a report released by the China Development Research Foundation.

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