So China plans to move 250 million rural residents into cities over the next two decades?
This Long March to the Cities just won't do what the reasonably enlightened despots hope, as I said:
China benefited from lots of people moving from rural areas to cities to take jobs in factories looking for workers and desperate to take anyone.
China can't replicate that leap in GDP by sending people from rural areas to cities and hoping they find jobs not now in existence.
A blogger with more economic knowledge about China (with thanks to Defense Industry Daily for the blog) than I have recently commented on this plan, noting that urbanization accommodates growth and does not cause growth:
Like so many of the earlier bull arguments, however, this new belief that urbanization is the answer to China’s growth slowdown is based on at least one fallacy and probably more. The first and obvious reason is that urbanization is not an act of God, and therefore indifferent to earthly conditions. Urbanization itself responds to growth. Countries do not grow because they urbanize, in other words, they urbanize because they are growing and there are more good, productive jobs in the cities than in the countryside. In that sense urbanization is not a growth machine. It is simply a pro-cyclical process that accommodates growth when growth is rising and reduces it when it falls.
And pro-cyclicality is a bad thing, not a good thing. It means that increases in growth are enhanced but reductions in growth are exacerbated, so it adds costly volatility to the economy. As the economy slows, in other words, urbanization itself slows, thus subtracting economic activity.
The latter touches on what I mentioned--that urbanization creates the raw material for revolution. When an economy slows, rather than remaining on their land in the country consistently producing a small amount of GDP, these unemployed workers become non-productive, subtracting from GDP.
And if these new urban residents don't have jobs to produce GDP, they become potential foot soldiers for a charismatic rebel to harness.
So China, if they move a quarter billion people into their cities, are setting the stage for a recession or depression that creates lots of desperate people who might blame the Chinese Communist Party which made them move into the cities for their plight.
Be careful what you wish for, it is said, for it might come true.
