The Power of Urbanization in China

Recently, urbanization has become the leitmotif of the Chinese policymakers. Thus, during the meeting between Li Keqiang, Chinese Prime Minister, and Jim Yong Kim, Governor of the World Bank in November 2012, Li Keqiang said that urbanization "represents the greatest potential for growth in the coming years".

For the current Chinese rural residents who eventually become urban residents, this urbanization allows them to get jobs and also increase their salaries as dynamic cities offered a lot of opportunities, especially in construction (Lecture 9). By transferring labor from the countryside to the cities, urbanization will reduce income inequality between rural and urban areas, while supporting economic growth.

For the current Chinese rural residents who remain in the rural area, migrant workers from the countryside to the cities help them thanks to money transfers. Indeed, these migrant workers usually have a very high saving rate and thus transfer money to countryside. Therefore, it contributes to the growth of consumption in rural areas and also increase rural residents’ standard of living.

Finally, for the Chinese economy as a whole, urbanization is considered by Chinese leaders as a way to solve many problems of the Chinese economy. Indeed, urbanization will increase aggregate consumption as urban households tend to have higher wages and thus spend more in private consumption. As a consequence, it will lower Chinese dependence from external demand and then rebalance Chinese economy thanks to a more dynamic internal demand. Urbanization will also reduce the inequalities between rural and urban areas, stimulate non-agricultural sectors (especially service sector) as it is considered as the future deposits for growth and employm...

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...d Philippines, Malaysia might maintain its technological lead over China thanks to investment in R&D. But it has to do it quickly as China is moving up very fast. Third, Malaysia may diversify into the service sectors as China still remains oriented on industry sectors.

Regarding this third measure, there are some evidences that Malaysia is already on the way. Indeed, in Malaysia, 20% of banking assets are Sharia-compliant whereas in all Muslim countries, the average is below 12%. Thus, Malaysia is going to be a global Islamic-Finance center. Malaysia is also dominant in global Sukut issuance with $80.5bn out of $109.1bn from January to September 2012. There are also evidences regarding healthcare tourism in Malaysia. As doctors there have often been trained in Western countries, they attract western people to get for example expensive surgery such as heart surgery.