Summary of Key Points
This article focuses on the "shift" in China's urbanization process: on one hand, the traditional model of urbanization, characterized by the migration of agricultural populations across provinces, has slowed down (with a decrease in the number of new migrant workers and inter-provincial mobility); on the other hand, urbanization is accelerating towards "megalopolization"—where population is converging towards major cities in the east (such as the Yangtze River Delta and Pearl River Delta) and provincial capitals in the central and western regions. This shift is driven by factors such as a shift in the industrial structure from manufacturing to services and the enhanced resource advantages of large cities. The article also uses data on population flow and personal income tax contributions to reveal the underlying competitiveness of these major cities and discusses the development opportunities and challenges for the core cities in the central and western regions.
I. Why Has Urbanization Slowed Down?
The migration of rural workers to cities, which drove urbanization over the past 40 years, has weakened:
- Decrease in new migrant workers: In 2010, there were 12.43 million new migrant workers; by 2025, this number is expected to drop to only 1.42 million, with a growth rate of just 0.5%. There are two main reasons for this: firstly, the rural labor force is declining due to aging (the average age of migrant workers will be 43.3 years by 2025, with those over 50 accounting for 32%); secondly, there are fewer job opportunities in factories (manufacturing employment has been decreasing since 2013, as industries no longer require as many manual laborers).
- Reduced inter-provincial mobility: In 2025, the number of migrant workers moving across provinces is expected to decrease by 750,000, while intraprovincial mobility will increase by 2.1 million. This change is due to older migrant workers preferring to return to their hometowns or find jobs in nearby cities rather than traveling long distances.
- Slower growth rate of urbanization: After the urbanization rate exceeded 64% in 2021, it has only increased by 0.8% annually in the past five years and is expected to slow even more after reaching 70% in 2028.
II. Why Is Megalopolization Inevitable?
International experience and industrial changes are driving this trend:
Developed economies around the world follow this pattern: for example, Greater Tokyo accounts for over 30% of Japan's urban population, and the Seoul metropolitan area makes up 50% of South Korea's total population. China is no exception for several reasons:
- Shift from manufacturing to services: The contribution of the manufacturing sector (secondary industry) to GDP has been declining since 2006, while the service sector (such as finance, education, and healthcare) is growing. Services rely more on population density, and large cities can provide more job opportunities and resources.
- Capital-intensive industries in large cities: Manufacturing is shifting towards capital- and technology-intensive sectors (e.g., electronics, shipbuilding), which require complete industrial chains and support from academia, research, and industry. Large cities have a competitive advantage in these areas (for instance, the eastern coastal regions account for two-thirds of global shipbuilding orders).
- Resource advantages of large cities: Better public services in education, healthcare, culture, and entertainment attract young people and high-income individuals. For example, in Beijing and Shanghai, the service sector accounts for over 80% of GDP, and real estate market activity is robust compared to smaller cities.
III. Where Is the Population Moving?
The population is flowing towards key cities in the east and provincial capitals in the central and western regions:
Data shows that from 2017 to 2025, only 11 provinces will experience net population growth:
- Eastern provinces are most attractive: Zhejiang leads with a net population increase of 7.6%, surpassing Guangdong (2.1%). Cities in the Yangtze River Delta (Hangzhou, Ningbo) and Pearl River Delta (Guangzhou, Shenzhen) account for more than half of their province's population growth.
- Provincial capitals in the central and west are attracting surrounding areas: Sichuan (excluding Chengdu) will experience a net population loss of 5.2 million, while provincial capitals like Changsha and Zhengzhou in Hunan and Henan will see net population gains. For example, Chengdu's population is expected to increase by 5.49 million from 2017 to 2025, and Wuhan and Xi'an are also seeing significant growth.
- Twin-city models are becoming a trend: Provinces like Zhejiang (Hangzhou + Ningbo), Jiangsu (Suzhou + Nanjing), and Guangdong (Guangzhou + Shenzhen) have twin cities that account for around 30% of their total population, and this proportion is expected to rise in the future.
IV. How to Measure the Competitiveness of Large Cities?
Personal income tax contributions and population flow are more reliable indicators than GDP:
GDP alone does not reflect quality; these two indicators provide a better picture:
- Personal income tax contribution: By 2025, the eight major eastern cities (Beijing, Shanghai, Guangzhou, Shenzhen, Hangzhou, Nanjing, Suzhou, Ningbo, and Yongzhou) will account for 53.4% of national personal income tax revenue, compared to only 19.1% of GDP. This indicates that high-income individuals are concentrated in these cities (Shanghai, Beijing, and Shenzhen contribute 37.8% of national personal income tax).
- Net population flow: Zhejiang has the highest attractiveness, even though its GDP is 5 trillion yuan lower than Jiangsu's; its population growth rate is more than three times that of Jiangsu. Zhejiang's residents have a higher risk appetite (leading in stock and futures trading) and are active in entrepreneurship and investment.
- Regional disparities: The five eastern provinces and two cities (Jiangsu, Zhejiang, Shanghai, Guangdong, Shandong, Beijing, and Fujian) account for 65% of national personal income tax revenue. The Yangtze River Delta and Pearl River Delta are the most competitive regions, followed by the Beijing-Tianjin-Hebei area, with core cities in the central and west (Chengdu, Wuhan, etc.) also emerging as strong contenders.
V. Opportunities for Large Cities in the Central and West:
These cities have the potential to attract industries and population, but what is needed to enhance their competitiveness?
Core cities in the central and west (such as Chengdu, Chongqing, Wuhan, and Zhengzhou) are becoming new growth centers:
- Attracting eastern industries: They can leverage cost advantages to develop industries like electronics and new energy vehicles, attracting nearby populations for work (e.g., the phenomenon of "peacocks flying southwest").
- Key to competitiveness: Successful models include using government funds to invest in industries (e.g., Hefei's "equity finance") but this is difficult to replicate without sufficient talent and financial resources. For most cities, improving the business environment and investing in education and healthcare are more practical steps.
In summary, the trend of population convergence towards large cities is inevitable. Eastern core cities and provincial capitals in the central and west will become hubs for population and resources, while smaller cities face increasing challenges.