Urbanisation in China has long been held back by various restrictions on land and internal migration
but has taken off since the 1990s, as these impediments started to be gradually relaxed. People have moved
in large numbers to richer cities, where productivity is higher and has increased further thanks to
agglomeration effects. In the process, the rural-urban income differential has narrowed. Urbanisation also
entails costs, however, notably in the form of congestion, all the more so as public transport provision has
not kept up. Demand for living space is set to continue to increase as living standards improve, putting
pressure on land prices. This can be offset by relaxing the very stringent restrictions on the use of
agricultural land for building. For migrants to better integrate in the cities where they work, their access
and that of their families to education, health and other social services must continue to improve, in
particular via further changes to the registration system, coupled with more market-based rules on land
ownership and use.
