Correspondent Mike Noske’s bland assertion
(yesterday, comments) that urbanisation is not the driver of China’s economy over the next decade is bemusing for both his
misreading of the original story (16 December, item 3) and his misjudgement of
Chinese policy. He seems to confuse two issues – urbanisation and internal
migration to the east coast cities – which are not quite the same thing.

There is a simple economic imperative
behind urbanisation – peasant farmers are not very productive. For China to
achieve its ambition of becoming the world’s number one economic power, it
simply can’t have half its population producing a quarter of its GDP. (They are
not exact figures – I can’t put my hand on them at this instant – but you get
the idea.)

Furthermore, a less literal interpretation
of the example of peasant moving to the big smoke would of course include the
necessary infrastructure investment that goes with it. Just as the population
of Australia leaves the Chinese village for the city each year, so China is
building Australia’s electricity generation capacity each year.

As for manufacturers investing in
labour-saving capital, they are responding to the market mechanism – a shortage
of skilled labour. There’s no shortage of
peasants but the manufacturing and infrastructure boom means there is a growing
shortage of skilled peasants.

Beijing doesn’t want to keep the quaint peasants down on the farm. It
doesn’t want all of them on the east coast either.

As a broader topic of interest again, there
is an intriguing comparison to be speculated upon about the difference between
democratic India and totalitarian China
both needing to make the same transition from low-productivity agrarian

India’s ballot box runs the risk of forcing the more productive parts of
the economy to subsidise the unproductive rural poor – sort of like France
really, only much less picturesque and without good cheese and wine.

China is untroubled by such niceties. Beijing just has to
manage the balance of keeping the peasants happy enough yet sufficiently oppressed so
that they won’t revolt while this massive transformation is taking place.