World Energy Outlook 2007

infrastructure, housing and services. Between 1949 and 1990, 300 million
people were provided with urban housing. Urbanisation also affects energy use:
annual energy consumption per person in cities is much higher than in rural
areas, mainly because incomes are higher. China is still at a lower level of
urbanisation than OECD countries.
China’s urban population will grow strongly as a result of natural increase, the
transformation of rural areas into urban areas 13 and continuing rural-urban
migration. Migration is the most important factor (Sicular et al., 2007), even
more so than in other developing countries. The urban population is projected
by the United Nations to grow by almost 2% per year over the period to 2030.
According to UN projections, the rural population will drop to 574 million, or
40%, by 2030. Within ten years, more than half of the Chinese population will
live in cities (UNFPA, 2007).
Population migration is theoretically controlled by the central government in
China through the hukou system. Established in the 1950s, this created a twotier
system covering urban and rural areas, largely to control migration to cities.
Hukou migrants – those who change residence with official approval – actually
make up a minority of Chinese migrants. Non-hukou migrants tend to move
from poorer areas, often in the interior, to richer coastal areas. They do not
have easy access to schools, health care, and other basic services.
There is growing support for reform, as the current system is widely regarded
as unfair. The government is concerned that liberalisation should not result in
an uncontrolled influx to the cities, putting excessive strain on infrastructure
and services (low-lying cities already face the potential adverse effects of global
warming (see Box 11.1). In practice, constraints on movement are gradually
being eased, as part of the process of economic reform. This, combined with a
persistent income gap between rural and urban areas, will stimulate further
rural-urban migration. Migration will increasingly be intra-regional and intraprovincial,
as coastal mega-cities become saturated and the urbanisation drive
shifts to second- and third-tier cities.
Ageing
China is experiencing a profound demographic change. The one-child policy
instituted in the early 1970s, restricting most urban families to one child, has
been a major contributor to Chinese economic growth. But the downside is
that China might well get old before it gets rich. The current fertility rate of
1.7, the same as that of the Netherlands, is well below the replacement rate
(around 2.1). At the same time, life expectancy has reached 71 for men and
13. This process, known as peri-urbanisation is one of the drivers of structural change in the
economy, as rural workers shift from agriculture to manufacturing and services.
258 World Energy Outlook 2007 - CHINA’S ENERGY PROSPECTS