The Urbanization of the Chinese Working Class

China’s ambitious new urbanization plan comes with a set of contradictions the Communist Party won’t be able to control.

Aly Song / Reuters

China has problems. Not despite thirty-five years of record-breaking growth, but because of it. The country’s dependence on exports and investment-led development has resulted in stark inequality, underconsumption, over-investment, disappearing arable land, exorbitant housing prices, and a looming environmental catastrophe. This leaves China increasingly vulnerable to a number of potential crises: external economic shocks, housing market collapse, mass defaults on public debt, and fits of social unrest.

What, then, might ensure the stability of Chinese capitalism for another generation?

For the state, a big part of the answer is urbanization. In the recently released National New Urbanization Plan (2014–2020), the central government calls for more than 100 million people to move to cities by 2020, pushing China’s urban population to 60 percent. The plan sets out admirable goals such as an expansion of public housing, education, and health services, a reduction in carbon emissions and other environmentally destructive activities, and preservation of agricultural land through limits on sprawl.

The theory is that urbanization will encourage the shift to a less resource-intensive service-based economy, that better access to social services will allow for an expansion of domestic consumption, and that urban education and training will lead to an upgrading of human capital, thereby reducing inequality. The initiative is part of a package of reforms that are aimed at “rebalancing” China’s economy.

But the state’s hopes that urbanization will lead to a more equitable and sustainable form of capitalism will likely not come to pass. First, even if everything goes according to plan, there will still be a massive and restive second-class citizenry excluded from social services. This represents an ongoing political threat.

Second, the state presumes (and must presume) that a technocratic solution to existing problems is possible. Without addressing politics, it is impossible to imagine how such a seamless transition to a different model of accumulation will be possible. Envision, for instance, twentieth-century Keynesianism without a labor movement.

The Communist Party would like to be able to produce and deploy labor power at the precise moment when the market requires it. But labor power can never be separated from the worker, and moving people around according to the dictates of market and state inevitably entails dispossession, divisions, and social friction. Farmers will continue to follow the well-trodden path to the city, but the fantasy of technocratic biopower perfected will remain just that — a fantasy.

“The Natural Historical Process”

The Chinese Communist Party’s quaint twentieth century belief in Progress is on full display in its proclamations on urbanization. As the preamble to the National New Urbanization Plan states, “urbanization is … the natural historical process of the rural population concentrating in cities. It is the objective tendency of the development of humankind, and it is an important symbol of national modernization.”

For anyone that has traveled in the metropolises of Beijing, Shanghai, or Guangzhou, it might seem as though China has already completed its “natural historical process.” These cities are so overwhelming in their scale, so densely packed with all the wonders and horrors of contemporary capitalism, that further urbanization exceeds the imagination.

In reality, however, China is by some measures under-urbanized. The country has 270 million rural-to-urban migrants, who have left their officially registered place of residence to work in the city. Although this represents the largest human migration in history, at present China has just over half of its population in cities. It’s a smaller percentage of city-dwellers than other countries at a similar level of economic development.

This should not be surprising — state policy since the late 1950s has been specifically designed to demobilize rural labor.

The most important tool in managing the movement of people is the hukou, or household registration system. The hukou ties provision of social services to place, so that access to state-subsidized education, housing, healthcare, and pensions is not guaranteed if someone leaves their officially registered hometown.

China’s capitalist transformation has heavily favored urban areas, meaning that hundreds of millions of people must leave their place of hukou registration in order to find employment. Acquiring hukou in urban areas is possible, but municipalities set their own conditions for admission. This has resulted in a spatially stratified citizenship regime in which migrants are often left entirely to the whims of the market in the areas where they work.

Under the new plan, the so-called “extra-large cities” with populations of over five million are to maintain tight population controls by continuing to restrict access to local hukou. It is these extra-large cities that, not coincidentally, are the most economically dynamic and offer the best social services. The plan envisions the majority of new urban residents settling in poorer small- and medium-sized cities with populations of less than one million.

Thus, we have the first method of urbanization: by relaxing hukou requirements in small- and medium-sized cities, the hope is that people will forsake their megacity dreams and settle in the Chinese equivalents of Omaha, Albany, or Boise. They may not be the most glamorous places, but they are close to home. Most importantly, rural-to-urban migrants in these cities will have an easier time sending their children to public schools, enjoying subsidized housing and healthcare, and accessing loans and other assorted benefits.

Even if the quality of these services is far inferior to what a resident of Beijing or Shanghai might enjoy, it is likely an improvement over being outside the system altogether. By dangling the carrot of full citizenship rights, the government is using a relatively hands-off approach to move people into specific spaces at specific times.

The second method of urbanization is more tightly managed, less voluntary, and wreathed in violence. In this case, the government deliberately moves people from the land to dystopian planned settlements, characterized by comically wide roads, row after row of drab and cheaply constructed apartment blocks, and public spaces (perhaps “state spaces” would be a better term) devised with seeming active contempt for human scale.

These developments — some of which have become ghost cities, filled with buildings but devoid of people — are built from the bottom up with the intention of getting people out of rural areas. The typical approach is to have farmers give up their land rights in exchange for a free or subsidized apartment in a new town.

Although implementation is uneven, these developments are also supposed to be equipped with social services such as schools, health facilities, and public transportation. The state imagines this as a win-win process in which farmers are rescued from the idiocy of rural life and transformed into savvy urban consumers, all while freeing up land which can then be consolidated for better economies of scale.

The final officially sanctioned process of urbanization is aimed at attracting elite “human talent” (their terms) to elite cities. Although the extra-large cities are supposed to maintain strict population controls, they have been encouraged to establish a point-based citizenship system under which hukou can be granted on a limited basis.

In order to be considered for these schemes, applicants must not have a criminal record, and cannot have violated the birth control policy (often incorrectly translated into English as the “one-child policy”). Additionally, they must provide leases, proof of social insurance payments, and labor contracts from within the receiving area for previous years.

An applicant’s chances of success improves depending on their level of education and certain defined sets of skills that comport with the needs of local capital. Employment in a state-owned firm or as a civil servant helps. And it never hurts to know the right people and to liberally grease the right palms.

The intended consequence of this multi-tiered approach is to prevent the overaccumulation of people in the spaces of generous social service provision. Given the stark asymmetry between the mobility of capital and labor in post-socialist China, the state has been able to realize this ideal to an extent unimaginable in most countries. But even with the overweening authority of the state dedicated to this project, not everything will go according to plan.

A New Class Structure

What sorts of problems will emerge from China’s urbanization? There are two general categories: those that are important from the perspective of equity, and those that matter to state and capital.

With respect to the former, the first issue is that more than 200 million people will remain outside of their place of hukou registration. By 2020, the state hopes to have 60 percent of the population living in cities, but only 45 percent of them with permanent residence. If these numbers are in fact realized, it will result in a slight decline in the “floating population.” But 200 million people with no guaranteed access to social services is hardly inconsequential.

The land-for-hukou deals have already generated major social problems, as is always the case in processes of accumulation by dispossession. Although most migrants are interested in living in urban areas, many fewer are willing to give up their land rights — one of the last meaningful vestiges of the state-socialist economy.

Thus, it is not surprising that there is major resistance when the state attempts to requisition land in exchange for an apartment in a depressing and economically stagnant town that has sprung up overnight. In fact, resistance over land grabs in China has probably been the largest source of social unrest in recent years, and in some cases has led to mass confrontations. For this approach to be viable, the state will need to continue to employ violence on a tremendous scale.

Accumulation by dispossession is not just a rural phenomenon, as the urban subaltern has also come under the threat of the bulldozer. The government has announced that it will spend 1 trillion yuan ($160 billion) to redevelop shantytowns. If experience is any guide, this redevelopment will in fact consist of forced demolition and relocation to make way for real estate speculation. The urban poor will be pushed further into the periphery of the city, adding even more hardship to their work and social lives.

The state’s plan to funnel people into small- and medium-sized cities through a relative relaxation of hukou requirements will certainly have some effect, and may even encourage growth. But two fundamental problems remain.

The first is that the large majority of migrants are currently living in the extra-large cities that are now tasked with tightly restricting population growth. They have come to these cities because China’s model of accumulation has heavily favored urban areas, and these are places where they can make enough money to survive.

The state would like to shift growth away from these megacities so that people will be able to survive in smaller cities — but this adjustment is neither inevitable nor instantaneous. As a result, tens of millions will be caught in between, only able to access full citizenship in places where there are not likely to be enough jobs. Thus, huge migratory flows will continue outside of the plan.

The second problem is that the state now seeks to solidify an already emergent system in which those cities that are hardest to gain access to are the places where public spending is greatest. A resident of Beijing can count on having the best schools and hospitals and the most generous pensions, and their children enjoy a huge leg up in admission to local universities — which, not coincidentally, are the best universities in the country. The non-local residents with the best chance at getting access to Beijing’s public services are rich, highly educated, and well connected — in other words, precisely the people that need it least.

Those migrants working in factories or construction sites, as nannies, waiters, or truck drivers, will never collect enough points to be considered human talent. From the state’s perspective, it may seem perfectly reasonable to demand that people produce proof of several years of employment contracts, rental leases, and payment of social insurance.

But these requirements exclude all informal workers, those who live in informal housing or have faced forced demolition, and those employed in places where the boss doesn’t pay social insurance — in other words, almost all of the working class. And those people that were born in violation of the birth control policy — “surplus children” — are categorically excluded from consideration of citizenship rights.

Given this setup, a rural resident may very well make the calculation that they should settle for a smaller regional town. Even after getting local hukou, this newly-minted urbanite will send their kids to inferior public schools and receive worse healthcare and a smaller pension.

To get into elite universities in Beijing and Shanghai, their children will need to get a much higher score on the entrance exam than the children of local residents. There is no guarantee that they will be able to find employment, and if they do, it will likely be for lower pay. The implications for intergenerational class reproduction are obvious.

Will It Work?

Even if one is willing to accept such a rigidly unequal socio-spatial hierarchy, there are real doubts as to whether this pattern of urbanization can solve the problems that the state recognizes as such. As far as reducing inequality is concerned, there is a somewhat greater likelihood of addressing regional inequality. The central government has been redistributing funds to poorer rural and western regions for more than a decade now, and there have been some important results.

But there is little to suggest that the urbanization plan will do anything to address class inequality at the national level. As suggested above, it is actually likely to be intensified.

Will the plan increase domestic consumption? Perhaps, but implementation will be decisive. The reason Chinese people have historically high savings rates is that they face a radically uncertain future. Although the plan calls for expanded access to public services, it is notably silent on the question of how much money the central government will contribute to this end. Given that the social welfare system is largely devolved to the municipal level, the question remains as to whether these local governments will be willing to fund major expansions to include migrants.

Will healthcare coverage be sufficient such that people don’t live in constant fear of illness? Will pensions be generous enough that middle-aged workers don’t have to worry about supporting their elderly parents? In an area of rampant real estate speculation, how much of people’s income will have to be devoted to housing?

These are crucial questions that will determine how much spending money new urbanites have. Given the paltry sums that have been devoted to social welfare thus far, there is ample reason to believe that people will continue to hedge against future risk.

What’s more, there are important and powerful urban interests that have benefited immensely from low wages and a booming real estate market. China’s export and construction sectors are unimaginable in their current form without wage repression, theft, and avoidance of social insurance payments. These powerful groups will do everything in their capacity to ensure that they do not have to pay full price for labor.

There is similarly scant evidence that the proposed urbanization will lead to a more ecologically sustainable future. Although China’s cities have made commendable investments in public transportation, car purchases continue to skyrocket and have already overtaken those in the United States. There is little reason to believe that local governments’ penchant for attracting capital — including the ecologically toxic variety — will be diminished by urbanization. The green innovation economy that urban boosters the world over dream about will remain in the realm of fantasy for most places.

What’s more, the desire to increase consumption and shift to a more ecologically sound mode of accumulation are fundamentally at odds with each other — imagine a world in which 1.4 billion Chinese people shop like Americans. The possibility of shifting certain features of the ecological crisis to another country remains, but this hardly qualifies as a long-term solution.

Finally, it seems likely that urbanization will only increase the possibility of widespread unrest. Urban and rural dispossession will continue to cause violent resistance. The concentration of migrants in economically stagnant ghettos is not a recipe for winning their allegiance. And those migrants that gain urban hukou closer to home may feel disillusioned with public services that are far inferior to those of their compatriots in the megacities. A “harmonious society” remains elusive for the Chinese Communist Party.

Neoliberalism Meets Stalinism

At the heart of the contradiction is the mobility of capital over and against labor. This asymmetry is, of course, central to capitalist expansion globally, but it is unusual for the differential to be so vast within a given country (and when it is, it tends to be racialized as in the apartheid systems of South Africa or Israel). So we might think of post-socialist urbanization as a wretched synthesis of neoliberal capital flows and Stalinist labor control. The consequence has been explosive growth for more than a generation while countless millions of lives and communities have been pulled apart.

This reveals a major shortcoming in liberal thought, which holds that formally free labor is the basis of sound economic growth. Indeed, liberals in contemporary China yearn for the day in which the formal hierarchy of the hukou system can be replaced by freedom in the market and informalized domination of capital.

China’s experience demonstrates that pre-modern (or state-socialist) forms of control and hierarchy are not only compatible with, but can in fact be conducive to, capitalist expansion. Far from undermining this inherited and status-based form of inequality, capital in China has seized on and benefited enormously from the prior socio-spatial hierarchy.

That being said, it is probable that the formally tiered citizenship regime will diminish in relevance over the medium to long term. Economically, capital has already found that it is increasingly difficult to pin down a labor force. Hukou restrictions make it impossible for migrants to reside permanently in the places where there has been the most capital accumulation. Eliminating or reducing this market imperfection will be necessary to address China’s persistent labor shortages.

Politically, formal discrimination is likely to generate discontent. As a form of domination, it is simply too crude, too obvious. We are now witnessing an attempt by the state to use authoritarian tools to stabilize a new class structure, which before long can be legitimated by invisible market forces rather than the all-too-visible cudgel that is the hukou.

There is little to suggest that the Chinese central state has the capacity to realize the more equitable and sustainable form of capitalism that it claims to want. The state’s vision of urbanization over the next six years suggests a rigidification of the class structure and a continuation of policies that funnel public money to elites. The parts of the plan that might benefit those without property will certainly engender resistance from those with power. And we have no reason to believe that those who have benefited enormously from existing arrangements will willingly cede control in the interest of the system’s long-term sustainability.

Ultimately, overcoming entrenched interests will require the use of political force. If Chinese workers want a right to the city, they will have to take it for themselves.