China is passing through the steepest part of its urban transition. In 1980, 190 million people lived in urban areas comprising 20 percent of the national population. Between 1980 and 2000, the urban population increased by 270 million to reach 36 percent of national population and another 200 million are estimated to be added by 2015 when 60 percent of the population would reside in urban areas. Population growth is fastest in smaller cities and peri-urban areas of large metropolises where manufacturing and other industries are being set up. By 2020 there will be 70 to 100 cities with over one million people, representing close to 30 percent of the national population.
China’s urban areas now generate over 60 percent of GDP and 85 percent of GDP growth and the achieving the objective of sustainable development with poverty reduction increasingly depends upon the performance of its cities and towns. The 11th five-year plan recognizes that urbanization is necessary for stimulating and sustaining growth and a key contributor to alleviating rural poverty. Given the limited potential for agricultural growth, only rapid urbanization can reduce the income gap by reallocation of surplus rural labor and enabling increased capital and technology inputs in agriculture. It is estimated that the shift of rural labor to more productive urban manufacturing and services has contributed about 10 percent of China’s economic growth in the last two decades.
Up to now the urban areas of China’s eastern coastal provinces from north to south (Helongjiang to Guangdong) have been the engine of the economy through their linkages with the global economy. These coastal areas represent 480 million people, produce two thirds of China's GDP, and attract 85 percent of foreign direct investment. Increased urbanization of non-coastal provinces is an objective of the 11th five year plan.
The rapid urbanization presents immense challenges for the provision of infrastructure and social services, environmental planning and metropolitan management. The World Bank is actively engaged in all these aspects of urban development.
More information:
 Issues and Dynamics: Urban Systems in China (18.2kb pdf)
China Urbanization: Objectives, Policies and Programs (14.3kb pdf)
China Urban Development Portfolio: Project Financing Matrix as of July 2007 (51kb pdf)
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