Opinion | China's urbanisation challenge

This year marks a watershed in Chinese urbanisation: for the first time in China's history, over half of its people now live in the city. With an average of over one percentage point added to the rate of urbanisation every year for the past 33 years, it's an achievement to be proud of. But, as Premier Wen Jiabao conceded last week at the World Economic Forum in Tianjin , China's urbanisation is falling short of what it should be. The country has gained some experience but learned some lessons too, he said.

We couldn't agree more.

Urbanisation is a force in China's modernisation. Only when production capacity is concentrated in the city can economies of scale be achieved. In today's China, urbanisation can also help rev up domestic demand, mop up excess production capacity, and spur growth. Urbanisation - along with industrialisation, the information technology revolution and globalisation - will drive social and economic growth in the years to come.

The danger now is that China's "incomplete urbanisation" will not only impede its growth, but may also become a source of social tension, leading to instability.

The problem, Wen said, is that Chinese villagers are not treated the same as urban residents. In other words, farmers are not successfully becoming city residents.

On paper, the rate of urbanisation leapt from 18per cent in 1978 to 51.3per cent at the end of last year, during which the urban population grew from 238million to 680million. Officially, this figure includes everyone who has lived in cities and towns for at least six months. In reality, however, at least 250million migrants working in the city are not entitled to the social benefits given to urban residents, and have little or no access to a secure job, welfare benefits, or education and medical benefits for their children. This imbalance is especially striking in the big cities where migrants congregate.