Crisis caution over urban push; The urbanization drive could fuel social unrest over land disputes and pose financial risks if money is thrown around recklessly

Crisis caution over urban push

Friday, March 08, 2013

The urbanization drive could fuel social unrest over land disputes and pose financial risks if money is thrown around recklessly, a senior Communist Party official and a leading economist warned.

Shifting people from the countryside to cities is a policy priority for new leaders as they seek to sustain economic growth that last year slowed to a 13-year low of 7.8 percent.

Beijing hopes 60 percent of the nation’s almost 1.4 billion population will be urban residents by 2020.

The urban population jumped to above 700 million from less than 200 million in the previous 30 years but the explosion triggered sometimes violent clashes over seizures of farmland for development, as well as water shortages, pollution and other problems.

“These are severe challenges as we try to sustain the urbanization process,” said Chen Xiwen, head of the Office of Central Rural Work Leading Group, the top body guiding farm policy.

“Many people have worries and such worries are understandable,” he told a news conference on the sidelines of the annual parliament session.

Farmers must be protected from losing their land in the process, as local governments rely heavily on land sales to finance investment, Chen said.

“If the urbanization process becomes a process of depriving and harming farmers’ interests, it cannot be sustained and society cannot maintain stability.”

And influential Peking University economist Li Yining warned that banks could be dragged into another spending binge, sparking a financial crisis.

“When we talk about urbanization, it seems the whole country is going into mass action to spend heavily. This could trigger a financial crisis,” he said.

Urbanization guidelines are set to be issued within the first half of the year, National Development and Reform Commission head Zhang Ping said on Wednesday. National leaders have pledged to steadily reform the rigid household registration, or “hukou,” system that could help turn millions of rural workers from savers into consumers.

The hukou system has split the population along urban-rural lines, preventing millions registered as rural residents from settling in cities and enjoying basic urban welfare and services.

REUTERS

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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