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China's urban drive risks digging economic hole

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(Globalpost/GlobalPost)

After a lifetime of farming and mining in the hills of southwest China, Zhang Zongfu was thrust into subsidised housing closer to town, and into a monumental urbanisation drive aimed at boosting growth.

Zhang likes his newly built digs, which are effectively free, but city life has been harder to settle into. The 48-year-old villager lacks job skills or prospects -- putting a major wrinkle in Beijing's blueprint for prosperity.

"Without work I'm in trouble," he said in his living room, overlooking neat rows of freshly painted apartment blocks on the edge of Anshun in Guizhou, one of China's poorest provinces.

"The house is fine. But if you have a house to live in and can't feed yourself, what's the point?" he asked.

Zhang's situation illustrates the developmental dilemma facing China as its rubberstamp parliament, the National People's Congress, meets this week.

Economic growth and rising prosperity are key to the Communist Party's claim to a right to rule, and the legislators will put their imprimatur on reforms it has promised.

By 2030, projections say a billion Chinese will live in cities -- up 300 million from now, nearly equal to the population of the United States.

Beijing hopes that if the urban influx earn and spend more it will both reduce poverty faster and help switch the economy to growing through consumption rather than investment.

But if local governments simply build the shells of cities with no economy that former farmers can participate in, they may simply be digging a deeper investment hole -- and creating neighbourhoods full of idle inhabitants.

"This is certainly something I've seen in other places, where you have have people cut off from the way they've made their living their entire life. Then there's nothing really that they can do," said Tom Miller, the Beijing-based author of China's Urban Billion.

"And if this happens on a grand scale across the country, then potentially you're building up enormous problems," he said. "That's the fear, if you look 10 to 15 years ahead."

Guizhou is constructing 180 sites to resettle two million people by 2020, surpassing even the 1.3 million relocated for the vast Three Gorges Dam.

But while the first batches of villagers have been taken to their new white-trim homes in Anshun, it has not yet taken the countryside out of the villagers.

Several said they missed the security of growing their own food. Just in case, Zhang and his wife -- who heaved a basket packed with vegetables up four flights of stairs to their apartment -- have filled one of their three bedrooms with giant sacks of rice.

- 'There's no way to go back' -

Under Xi Jinping the Communist party has promised to speed up changes to a "hukou" residency system which denies rural incomers equal access to services such as schooling and healthcare.

But specifics are still pending and cities, especially large and crowded ones, have resisted lifting hukou restrictions and spending more on migrants.

Experts call such reforms critical, as a social safety net would encourage migrants to spend more and better education would improve the prospects of the next generation.

Relocated villagers in Anshun complained that government officials promised compensation and jobs but, since the move in June 2013, have only provided a few days' training on smarter farming.

Several ridiculed the idea, saying they had left their land and sold their farming equipment.

"There's no way to go back and farm," said 60-year-old Nuo Mingsheng. "It's too far away, the land has not been cultivated, the farming tools are gone, the houses have been dug up.

"Right now I'm living off the farming tools and other things I sold from my old home, and I'm not sure what I'll do after that," he said.

For urbanisation to work local authorities will have to adapt to reality, said University of Washington professor Kam Wing Chan.

With some exceptions, he said, "Local bureaucrats are very bureaucratic, they just follow the plan without seriously considering the local situation."

But the trend of urbanisation is inexorable, especially among young people, said Jonathan Woetzel, a Shanghai-based director at consultancy McKinsey and Company and co-chair of the Urban China Initiative.

Even without a job guarantee or hukou reform, he pointed out, "it hasn't stopped anybody from migrating so far".

"As productivity increases you expect to see better standards of living," he said.

Yet back in Anshun, Guo Taifu, a 43-year-old former miner, wondered how he would support his three children. Officials had offered work at a construction site but villagers considered the pay too low, he said.

"I'm worried, period."

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http://www.globalpost.com/dispatch/news/afp/140303/chinas-urban-drive-risks-digging-economic-hole