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China Briefings

Reports on China issued by Samsung Economic Research Institute

Urbanization, China’s New Growth Engine

Urbanization, China’s New Growth Engine

CHOI Myeong-Hae

Feb. 28, 2013

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Urbanization is among the highest priorities for economic development in China. It is expected to help China change its growth engine from export-based to domestic demand-based as exports have become increasingly sluggish due to the global economic recession. Also, urbanization will contribute to the establishment of a harmonious society. Although China has pursued balance, income disparity is still serious. By granting nongmingong with citizenship status, the social class disparity could be reduced.

The potential of urbanization is large, because China’s urbanization rate is significantly low despite recent improvements. China’s strategy for urbanization is based on “decentralized concentration,” forming city clusters and nurturing new growth poles. With this strategy, China expects to avoid the negative side effects or failures of conventional methods such as “large city syndrome.” As a result, small and medium-sized satellite cities centered on main cities will surge.

Investment and demand will increase while the middle class expands and industrial structure changes, raising the importance of the service industry. This will present enormous business opportunities and the demand for construction materials and consumption goods will boost Korea’s exports.

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