While economists, politicians, and commentators continue to question whether the consumer part of the Chinese economy will ever generate the demand for goods that their economy needs for continued growth, Chinese retail sales of domestic goods have taken off. And, as we have shown in previous papers, during the past five years this economic growth has come entirely from China’s cities.
When Chinese farmers left the countryside they headed for the big city. As a result, China’s largest cities have grown more than 10% each year for the last two decades. This means that China’s rapid urbanization has been concentrated in its largest cities. Figure 1 shows where China’s migrant, non-hukou population has settled.
Today, more than twice as many Chinese live in urban areas as in the countryside. In India, the ratio is reversed. China is no longer a nation of farmers, but India remains so.
China’s actual percentage of city dwellers is now 69%1. India’s is 30%2. China’s percent urbanization equals that of many mature developed countries, such as Italy or Japan, and is much greater than the urbanization of its largest Asian neighbors, Indonesia and India.
Today, the number of people living in Chinese cities who are not counted by the official census as part of China’s urban population has grown to 260 million.1 This uncounted urban population is equal to all the people living in U.S. metropolitan areas.
At the start of 2011, China’s actual urban population was 926 million2 rather than the officially reported number of 666 million.3 Thus, the number of Chinese in major metro areas is three times larger than the total population of the United States. China’s current urban population dwarfs that of other countries and even the European Union.