One move, many ripples
View(s):Over the past 25 years, China’s GDP has surged from just above US$1 trillion to more than $18 trillion. No other major economy in the world has matched China’s scale and speed of growth during the first quarter of the 21st century.
But China has a problem! One of the serious challenges that China has to deal with was its own stubborn demographic and structural rigidities involving critical growth and development implications.
It would be better for us in Sri Lanka to take note of how China has chosen to confront the issue because this particular issue is quite similar to one of our own problems. Over the past decade or so, China has addressed the problem at its source. Although Sri Lanka has also been faced with similar issues – of course for different reasons – we hardly look at it even as a problem.
Sri Lanka should follow China’s example of urbanisation.
The problem
In China, a large share of the population has long remained in rural areas, engaged in agriculture. Many might ask: is this really a problem? Let us look at it closer.
At the turn of the century, nearly two-thirds of China’s people lived in villages and farming communities. By 2010, this had fallen to 50 per cent and by 2024 to about 35 per cent, with a corresponding rise in the urban population.
Historically, strict rules under the household registration system, known as “hukou”, restricted rural migration to cities. The system was designed both to prevent overcrowding in urban areas and to secure food supplies for the world’s largest population.
In practice, the hukou system tied rural residents to their birthplace, limiting their mobility and blocking access to urban jobs, housing, healthcare, and education without official approval. As a result, tens of millions of rural migrants in cities were excluded from urban benefits, reinforcing inequality and deepening rural poverty and hardship.
Economic liberalisation
After the 1990s, economic reforms began to loosen migration restrictions, allowing more rural workers to move to cities—though often without equal rights. In recent years, gradual reforms have aimed to integrate rural migrants more fully into the urban sector.
Yet, the legacy of the old system continues to shape outcomes. Unlike the Western experience, structural changes in employment have been slow. Even today, about 22 per cent of China’s workforce remains in agriculture which contributes less than 7 per cent to GDP.
By contrast, Western economies show a different trajectory. As economic progress advances, rural populations decline and agricultural employment shrinks sharply. In many Western countries, 80–90 per cent of people live in urban areas, with only 10–20 per cent in rural communities.
Agriculture’s share of employment is now just 2–3 per cent of the workforce while the overwhelming majority works in industry and services. This small share reflects the transformation of farming into large-scale, technology-driven, environmentally-sensitive and highly mechanised operations.
Rural hardship
The problem is clear: China has been slow to undergo the demographic and structural transformations seen in Western economies. Why does this matter? Because the consequences are bitter and painful economic, social and environmental outcomes.
Slow transformation leads to inefficient or wasteful public spending in rural areas and constrains overall growth. Evidence shows that rural life in China is often marked by poverty, limited services, and stark inequality compared to cities.
On average, rural residents earn less than one-third of urban incomes, widening the wealth gap. Many households struggle with food insecurity and lack the means to escape poverty. Access to clean water, sanitation, and reliable utilities remains limited.
Healthcare is scarce, with underfunded rural clinics and unaffordable treatment leading to poorer health outcomes. Schools are under-resourced, restricting children’s opportunities and perpetuating cycles of poverty.
Infrastructure gaps—poor roads, weak transport, and limited communication networks—make it harder for rural residents to reach markets, jobs, and services. As young people migrate to cities, villages are left with aging populations and weakened local economies.
Environmental vulnerability adds another layer of hardship. Rural communities are more exposed to floods, droughts, and climate change impacts than planned urban settings. A newer challenge is social exclusion: as youth leave, isolated rural residents face loneliness and marginalisation.
Urban attraction
Even if governments are expected to meet all the needs of rural communities, in reality this remains only an expectation. Spending on infrastructure, utilities, and services is far more efficient in urban areas than in rural ones.
It is not surprising that serving “one hundred thousand households” in a city cost less than serving “one hundred households” scattered across villages. As a result, inequalities between urban and rural sectors are difficult to avoid.
Urban growth is naturally higher because industry and services, concentrated in cities, can expand without limits. By contrast, rural economies rely heavily on agriculture, which faces natural constraints and cannot sustain high long-term growth.
Urban expansion in industry and services also requires labour, which comes from surplus workers in rural areas. Thus, rural-to-urban migration is a natural movement of labour in growing economies.
New type urbanisation
The problem China faced during its economic transformation is clear: rural communities remained poor and stagnant, while the urban sector demanded more labour to fuel industrialisation.
Over the past decade, China has introduced rural revitalisation strategies aimed at sustainable development, poverty alleviation, and welfare improvements. Yet, the divide between rural hardship and urban prosperity continues to be one of the country’s most pressing challenges.
Among the innovative responses, the “National New Type Urbanisation Plan” launched in 2014 stands out. What is striking is that instead of treating rural poverty and economic growth as separate issues, China sought to address both through a single integrated strategy. The plan emphasised coordinated urban-rural development, improved infrastructure, and better access to public services for migrants, while also promoting balanced regional growth.
This approach reflects a recognition that rural revitalisation and urban expansion are not competing goals but interconnected processes. By linking them, China aimed to reduce inequality, sustain economic momentum, and create a more inclusive path of modernisation.
Rural uprooting
The 2014 plan set out to urbanise about 250 million rural residents within a decade, shifting vast numbers of people from villages into cities. To achieve this, the government prioritised expanding infrastructure, reforming the hukou system, and promoting growth in small and medium-sized urban centres.
Massive investments were made in housing, transport, and public services to absorb the influx of migrants, while granting them access to healthcare, education, and social security in their new urban communities.
Industrial expansion and job creation in manufacturing and services provided the economic pull, while rural revitalisation policies sought to balance migration with improvements in village life. This coordinated effort enabled one of the largest planned population shifts in history.
The plan’s broader goal was to raise the share of the population living in cities, thereby strengthening domestic consumption and boosting aggregate demand, rather than relying solely on export-led growth. Beyond the sheer numbers, it emphasised a “people-centred” approach to urbanisation—focusing on sustainable development, better infrastructure, improved public services, eco-friendly urban design, and stronger integration between urban and rural areas.
Two different worlds
China’s unique approaches to becoming a modern developed society, alongside its high growth trajectory, have begun to bear fruit. Although gradual, the share of population in rural areas and employment in agriculture has steadily declined. This shift has supported faster growth in industry and services while helping to lift rural communities out of poverty.
The push for “new-type urbanisation” has also contributed to greater environmental efficiency in both rural and urban settings. Studies suggest that growth is becoming greener, more sustainable, and increasingly driven by technology and environmental priorities rather than by land or construction alone. China is moving toward a more sustainable, high-quality model of urbanisation while accommodating the migration of rural people.
Sri Lanka, though a very different context in many respects, may still draw valuable lessons from China’s experience. How can strategies of integrated urban-rural development, people-centred urbanisation, and environmentally conscious growth be adapted to our own challenges? This is a discussion worth exploring in the weeks ahead.
(The writer is Emeritus Professor at the University of Colombo and Executive Director of the Centre for Poverty Analysis (CEPA) and can be reached at sirimal@econ.cmb.ac.lk and follow on Twitter @SirimalAshoka).
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