Translated from the 21st Century Business Herald

China’s permanent urban-resident population hit 691 million in 2011, 51.27 percent of the country’s total. But only 35 percent of China’s population holds urban hukou, household registration. That means about 219 million people live in urban areas without officially recognized citizen identity and treatment.

As more farmers become city residents in China in the future, governments face bigger burdens as they provide newcomers with citizen welfare, which is much more than in rural areas.

Even if new residents bring in new spending, China’s fast urbanization rate has obviously surpassed the capability of China’s economy and industry infrastructure. The new urban population will not become new economic engines, but government burdens.

Local governments get exorbitant revenue from transferring land to support the needs of the current city population. The excessively high price of housing and land mean that governments are actually overdrawing their future revenues to satisfy today’s needs.

So to make ends meet in the future, the governments should provide new residents from rural areas with opportunities to improve their skills as laborers and upgrade China’s industrial infrastructure. Or the newcomers, who own land collectively as villagers before should benefit more from land transfers before losing their land and coming to the city.

Otherwise, the rapid urbanization will prove disastrous.