China bets future on inland cities

Early morning traffic crosses the Huanhuayuan bridge across the Jialing in southwest China's Chongqing municipality. In China, building new cities is part of an effort to drive the economy to a new stage of growth. Photo: AFP

China has put big money down on a momentous gamble: rush to build new cities in its poor interior, then wait for people to come and help drive the economy to a new stage of growth.
Here in this corner of the Chinese hinterland, the government has widened farm lanes into highways, turned wheat fields into an industrial park, spent a fortune on government offices, and set up a school for thousands of students in what was a dusty town a few years before.
Old, cracked gravestones have been bulldozed to make way for a housing estate featuring 60 apartment buildings, a winding creek and tennis courts, the latest such development in Gushi.
But the roads are mostly deserted apart from the odd goat herd trundling along them. The industrial park features a handful of workshops and no big factories. Vast new housing estates fan out from the original town centre, most of them uninhabited. Skeletons of half-built villas, stained from neglect, are splayed across fields.
About 1,000km (600 miles) south of Beijing in Henan province, Gushi is a microcosm of this latest face of China's urbanisation, featuring ambitious officials, angry farmers, countryside capitalists, a new batch of consumers -- and empty buildings.
Over the past three decades, rural migrants flocked to big, prosperous cities along the coast. Now, in its revamped model of urbanisation, the government is trying to bring cities to its farmers, a project that could absorb more residents than the entire population of the United States in the coming decades.
Farmers such as Xiang Wenjiang are not at all sure they like what they see rising up from their muddy fields.
"This is my land, but now it's all been sold," said the wiry, sun-beaten Xiang, eyeing a row of apartments under construction advancing toward his hut. "I won't leave until they give us the right money for moving, not just a few coins."
The apartment complex encroaching on Xiang's land is part of a vast urban development juggernaut that has become a new engine of economic growth as global demand sputters. It offers enormous opportunities for the companies that dig up the raw materials needed to build the new cities; that make the cars for the new roads and the washing machines for the new homes.
But such high hopes come with ample scope for disappointment. If the unprecedented population shift from villages to cities is mismanaged, it could squander resources, radicalise peasants and damage China's prospects.
With 1.7 million people, Gushi is the most populous county in Henan and one of the biggest in the nation. Locals boast it sends out more workers to cities than any other county in China.
This annual flow from farms to factories is at the heart of how China's economy, a welterweight in global terms in 1980, will become the world's biggest in a little more than a decade.
"You are going to see smaller cities being created out of townships, townships created from villages," said Jing Ulrich, chairman of China equities at JP Morgan.
"I do believe in the long-term thesis that playing this urbanization trend, playing consumption growth on the back of urbanisation and income growth, this is probably one of the brighter spots in the global economy."
Like much of central China, Gushi has been in a rush to catch up with the wealthier coastal regions.
"Failing to develop is the worst kind of corruption," Guo Yongchang said before he fell from power as Communist Party chief of Gushi in 2008. "If you'd prefer not to develop, and you don't get close to businesspeople, then it's more evil than corruption a hundred times over."
That sort of cockiness led to his downfall. He and another former head of Gushi county have been accused of graft. Buildings for a new university that went bankrupt stand abandoned. The town's main factory also went bankrupt.
Villagers denouncing corruption and resisting the loss of farms have turned a strip of land where their fields meet the expanding township into a protest battleground.
"The local officials force the farmers to sell the land for very little. Here there are no controls," said Zhao Jiuzhou, a 24-year-old in jeans, watching local farmers dig the foundations of a new apartment block.
"If you foreigners want to develop here in Gushi, it would be like Cinderella being eaten by the big wolf," he added, mismatching his fairy tales. "Here the officials can make a killing from nothing".
Gushi is not alone. Multiply its problems across thousands of towns and small cities across China, and the risks of the country's headlong rush toward urbanization become evident.
Yet if the pitfalls are clear so is the potential. Between now and 2040, China's urban population will expand by up to 400 million, according to Han Jun, a rural policy expert who advises the government. In other words, cities will absorb about 15 million new residents every year.
To be continued