China to increase urbanization rate to 70 percent within five years

China has set a target to increase the urbanization rate of permanent residents to around 70 percent within the next five years, aiming to further leverage the country's significant potential for domestic demand, according to a recently released five-year plan by the State Council.

At a press conference in Beijing on Friday, officials outlined the action plan, stating that it focuses on a people-centered approach to urbanization, fostering a virtuous cycle between consumption and investment.

By the end of 2023, China's urbanization rate of permanent residents reached 66.16 percent, a significant increase from 53.1 percent at the end of 2012. To achieve the urbanization target, millions of rural residents will be encouraged to permanently settle in cities. Officials believe this shift will be crucial in expanding domestic demand and supporting long-term economic stability.

"In terms of consumption, our calculation indicates that a one-percentage-point increase in China's urbanization rate can generate more than 200 billion yuan (about 27.75 billion U.S. dollars) of new consumption demand each year. In terms of investment, our preliminary calculations indicate that a one-percentage-point increase in the urbanization rate could drive new investment demand on the scale of one trillion yuan. Therefore, our new-type urbanization can play an important role in expanding domestic demand, thus promoting stable economic growth, steady quality improvement of the economy, and sustained improvement in people's livelihood," said Zheng Bei, deputy head of China's National Development and Reform Commission.

According to the action plan, the top priority for new urbanization is to grant permanent urban residency to eligible individuals who have moved from rural areas to cities.

Shang Jianhua, head of the Migrant Worker Affairs Department at China's Ministry of Human Resources and Social Security, stated that efforts will be focused on four key areas to promote stable employment for residents who have relocated from rural regions to urban areas.

"First, we will strive to broaden employment channels and roll out supportive policies for employing migrant workers in industries such as intelligent manufacturing and housekeeping services so as to continuously expand the scale and improve the quality of migrant worker employment. Second, we will work hard to optimize employment services for migrant workers and continue serving them with various supportive campaigns. Third, efforts will be made to enhance skills training and conduct various training sessions for working skills, job skill improvement, and entrepreneurship. In addition, measures will be taken to protect the rights and interests of employees, improve the social security system for migrant workers and other workers, improve the transfer policy of social security, expand the coverage of social insurance for migrant workers, and implement relevant policies to safeguard the rights and interests of workers in new forms of business," said Shang.

Fu Jinling, director of the Department of Economic Construction at the Ministry of Finance, outlined the financial support his ministry has provided for new urbanization across three key areas.

"First, funds have been allocated to ensure that new urban residents who migrated from rural areas receive the same public services, such as education, medical care, and housing policies, as other urban residents. Since the central government established a reward fund in 2016 to support the process of granting urban residency to people migrating from rural to urban areas, 280 billion yuan has been allocated to enhance the ability of regional authorities to implement favorable policies. Second, funds have been allocated to comprehensively enhance urban functions and increase the capacity of Chinese cities to accommodate more residents. Third, funds have been allocated to advance new-type urbanization by supporting new forms of industrialization. Additionally, a new round of incentive and subsidy policies for enterprises that use advanced technologies to produce innovative and unique products has been launched this year," said Fu.

China to increase urbanization rate to 70 percent within five years

U.S. tariffs on Cambodia, which were set at 49 percent, have sparked concerns among the Southeast Asian country's key export industries such as garment manufacturing amid the ensuing economic uncertainties.

On April 2, U.S. President Donald Trump announced the 49 percent "reciprocal tariff" on goods imported from Cambodia, the highest among all countries. Days later, the U.S. reduced the so-called "reciprocal tariff" to 10 percent for 90 days, offering a window period to Cambodia for negotiations with it.

Cambodian businesspeople say the tariffs have the potential to wreak havoc on the country's manufacturing sector, which, according to data from the World Bank, makes up around a fifth of the country's GDP.

"For U.S. manufacturers, definitely, there will be a big impact. If manufacturers are focusing on U.S. products, they are now in the middle. They don't know what they should do at the moment because the tariff now from Cambodia to the U.S. is actually quite high," said Dr. Ben Li, a Hong Kong investor in Cambodia and Chairman of the Cambodia Chinese Commerce Association.

Nevertheless, Li sees the tariff hike as an opportunity to export more Cambodian goods to the European Union, where a majority of Cambodian exports enjoy duty-free status.

"I always say there will be a light (at the end of the tunnel.) Even now, the U.S. tariff is so high, it's going to be so high after 90 days, we don't know. But, there's still a big market to Japan or to the European Union. There's still a big opportunity there," he said.

The Cambodian investor also believes the development of major infrastructure projects will help support Cambodia's economy.

"Especially the new canal and then the new airport, and the railways which connect to China. I believe once the logistics and infrastructure are built up, it can help the whole country's economy. By reducing the transportation costs, it can also mitigate the tariff costs," he said.

Cambodia and the U.S. held their first tariff negotiations on April 16, with more expected to follow. Local experts said the stakes are high for the country's workers.

"If this negotiation fails, there will be a significant impact. It will include the garment and travel goods sector. These sectors consist of about 1,068 factories and 930,000 workers. The income generated from these sectors is about 3 billion dollars per year. So it would significantly impact Cambodia's economy, jobs and incomes," said Chey Tech, a socio-economic research and development consultant from Dynamic Alliance Consulting.

Despite the potential risks, Tech expressed his optimism about a positive outcome, citing Cambodian Prime Minister Hun Manat's letter to Trump on April 4.

"The Prime Minister's letter confirmed that Cambodia would reduce the tariff rate for U.S. goods to 5 percent. Second, Cambodia is the least developed country. Third, Cambodia produces goods that the developed countries won't produce. We asked whether the U.S. would be able to produce these low-cost products. It cannot," said Tech.

In 2024, Cambodia exported goods of 9.9 billion dollars to the U.S., making it the country's largest market, accounting for 37 percent of Cambodia's total exports.

49-percent US tariffs sparks worry among Cambodia's key export industries