Author: Zheng Xin, Research Fellow of Department of Urbanization

Editor’s Note: The citizen-oriented development of migrant workers will increase their consumption in cities and stimulate economic growth.

In 2015, the permanent urban population in China reached 770 million, with an urbanization rate standing at 56.1%. Urbanization is still an important driving force for Chinese economic growth.

The rapid economic growth can be attributed to industrialization and urbanization. Agricultural labor forces become migrant workers in cities and their incomes also increase, which helps boost economic growth. In 2015, the urbanization rate increased by 1.33 percentage points over 2014 and China's GDP grew by 6.9%. If we presume that urbanization will be stable after the urbanization rate reaches 70-80%, we can expect that urbanization will generate 15-20 percentage points of economic growth.

When talking about the citizen-oriented development of migrant workers, we mean that they become genuine urban residents who have equal rights with the registered urban population.

This trend will increase the consumption of migrant workers in cities, which increases consumption expenditure, improves the consumption structure and better stimulates economic growth. In 2014, the monthly expenditure of Chinese farmers stood at RMB 944, less than one third of the monthly incomes of migrant workers. The citizen-oriented development of migrant workers will increase the consumption of migrant workers in cities and increase their demand for urban housing and high-quality products and services, thus providing further market demand for economic restructuring and upgrading.  

In 2015, the urbanization rate of the registered Chinese population was lower than 40%. To ensure that the rate rises to 70-80%, more than 400 million farmers must become citizens. The citizen-oriented development of migrant workers will become a huge driving force for the economic restructuring and upgrading of China, the influence of which will be as big as when urbanization kicked off more than 30 years ago.