We study the urbanization process in China during the past decade by deconstructing different sources of new urban residents. We find that around one-third of urban population growth in the past decade has consisted of redefined migrants from communities that have been reclassified from rural to urban, though they do not actually move. We further find evidence that failing to consider the number of redefined migrants and their housing behaviors leads to a high housing vacancy rate in China’s urban areas.

China’s fast economic growth over the past 40 years has been accompanied by an increasingly rapid rate of urbanization. Between 2000 and 2015, China's urban population increased from 459 million to 771 million, and the urbanization rate increased from 36.2% to 56.1%. Accompanying this unprecedented growth (Christensen and McCord 2016) is the boom in the urban housing market. However, recently a study by the China Household Finance Survey (CHFS) estimated that there were approximately 50 million vacant housing units in 2014 and 65 million in 2018 in urban China, accounting for more than 20% of the urban housing stock (Table 1) (see Note 1). However, if one looks at the total completed residential housing units and the total increase in urban households since 2000 (Figure 1) and assumes that each newly added urban household occupies one unit, it is impossible to find such a large number of vacant units in urban China (see Note 2). This article shows how the oversupply of urban houses is attributable to redefined migrants who constitute a significant source of urban population growth but have been overlooked by both researchers and relevant policy makers.

Table 1

Figure 1

The current standard for rural-urban dichotomy, issued in 2008, defines urban areas at the community level. Figure 2 shows a snapshot of this information from the National Bureau of Statistics website. After tracking and matching nearly 700,000 communities from 2009 to 2017, we find that nearly 4% of 2010 rural villages were reclassified as urban by 2015. Relying on community survey data from CHFS, we translate the number of reclassified communities into the number of redefined migrants between 2010 and 2015, which is around 33.83 million, accounting for one-third of all urban population growth during that five-year period. This standard is solely based on land contiguity and does not take into account population densities, economic activities, or residential infrastructures of the community. Hence, it is possible that a community could be reclassified from rural to urban simply because its attribute of land contiguity has been changed. In fact, by exploring the CHFS dataset, we confirm that these reclassified communities, though statistically treated as urban, are much more similar to rural villages in both demographic and economic characteristics, while redefined migrants living in these communities maintain their traditional rural lives, especially in their housing behaviors and demand. Figure 3 shows a reclassified community in Deyang City, Sichuan Province, in western China (see Note 3).

Figure 2

Figure 3

(Li Gan is the Director of the Survey and Research Center for China Household Finance and the Dean of the Research Institute of Economics and Managementat at Southwestern University of Finance and Economics in Chengdu, China; Qing He is a researcher in Survey and Research Center for China Household Finance at Southwestern University of Finance and Economics; Ruichao Si is an assistant professor in the School of Economics at Nankai University; Daichun Yi is an assistant professor and vice-director of the Survey and Research Center of Housing at Southwestern University of Finance and Economics in Chengdu, China.)

References

Chen, Qin, and Zheng Song. 2014. “Accounting for China’s Urbanization.” China Economic Review 30 (September): 485–94, https://doi.org/10.1016/j.chieco.2014.07.005

Christensen, Peter, and Gordon C. McCord. 2016. “Geographic Determinants of China’s Urbanization,” Regional Science and Urban Economics 59 (July): 90–102. https://doi.org/10.1016/j.regsciurbeco.2016.05.001

Wang, Fang.2004. “Composition of Population Growth between the Fourth and Fifth Census in UrbanChina.” (In Chinese) Population Research 28(3): 60–67.