Urban-rural integration: A blueprint for China's modernization and social security reform

"Integrated urban and rural development is essential to Chinese modernization," says the "Resolution of the Central Committee of the Communist Party of China on Further Deepening Reform Comprehensively to Advance Chinese Modernization," which was issued on July 21.

The Resolution also proposes to build a sound social security system to serve people in flexible employment, rural migrant workers, and those in new forms of employment.

In an exclusive interview with Shanghai Daily, Professor Zhang Yi, Deputy Dean of School of Public Economics and Administration at Shanghai University of Finance and Economics, talks about how the integration of urban-rural development is equally important for urban and rural populations. He also discusses Shanghai's successful practices and future challenges in this area.

Shanghai Daily: Could you explain briefly what "integrated urban-rural development" is? What role does a sound social security system play in the process of promoting integrated urban-rural development?

Zhang: Urban-rural integration is a way to create a unified social and economic system between cities and the countryside. Another aim is to close the gaps in growth, living standards, and public services between urban and rural areas.

In fact, these two aims are closely related. We need to break down the divide between urban and rural areas, so that resources, money, people, information, and technology can move freely in both directions. This helps close the gaps between urban and rural areas.

Shanghai Daily: What does this policy mean for cities, rural areas, and individuals respectively? Which group of people or which place can benefit the most from it?

Zhang: I think everyone in rural areas will benefit. And in the long run, city residents will also benefit it because a unified market improves economic efficiency and makes the pie much bigger.

But the groups that will benefit most directly, I think, are migrant workers, people who work in flexible jobs, and those who need to switch between urban and rural social security systems. It'll be easier for them to join the urban system and enjoy the benefits. Moreover, switching between systems will be more convenient and with less loss of benefits.

Shanghai Daily: Could you give us an update on Shanghai's progress in integrated urban-rural development?

Zhang: Shanghai is one of the leaders and pioneers in social security practice and reform. We have done some things first, like the Minimum Livelihood Guarantee System and Housing Provident Fund. They've also been quickly adopted by the central government and then being rolled out nationwide.

For instance, they merged the Minimum Livelihood Guarantee System in 2015, health insurance in 2016, and pensions in 2020. These reforms were early and have helped urban-rural integration a lot.

Plus, things like the 'One-Stop Service' make it easier to handle social security tasks like medical reimbursements. Sometimes you don't even need to leave home; officials reach out to individuals directly. This is the so-called "policy reaches out to people". Policies like this have significantly improved the convenience for residents.

Shanghai Daily: What do you think is the most critical element in promoting integrated urban-rural development and a sound social security system?

Zhang: The key is balancing efficiency with fairness, and also balancing the urgency and feasibility of reforms. Urban social security has a long history, with higher benefits. Rural social security started later, has lower benefits, and lacks some insurance types.

We want fairness and faster integration, but too fast an increase in rural social security and public services could also be a problem. Farmers have lower incomes and might have difficulty paying the contribution. Government subsidies also have limits. Plus, there's a risk of people becoming dependent on welfare. Despite these issues, integration and fairness are the main directions.

Shanghai Daily: In addition to this, are there any other challenges that Shanghai is facing in this matter?

Zhang: I think the main challenge for Shanghai is boosting the rural collective economy and strengthening rural industrial development. Urban residents in Shanghai have the highest per capita disposable income in the Yangtze River Delta, but rural residents rank only ninth. That's partly because rural collective economies aren't very developed, and natural resources aren't too outstanding. For example, many places in Zhejiang have great natural environments and a lot of interest provided for the tourists. But Shanghai's rural economic growth hasn't been as fast, which is a setback for urban-rural integration and social security development.

Shanghai Daily: What are your thoughts on the future development of Shanghai's social security system for both urban and rural residents? Do you have any advice on how it could be improved or expanded in the coming years?

Zhang: We need to anticipate future risks and challenges such as aging, and declining birth rates.

And I also think the reduced inflow of migrant labor is another very big issue. However, this trend is weakening, with a decrease in labor flow and an increase in the dependency rate for Shanghai. This requires great attention.

I think the most important thing is to reduce the barriers for the young workers outside Shanghai to enter this city and to benefit their daily life in Shanghai. Also, we have to increase our attraction for the young laborers and make the young people like this city and want to stay in the city.

Shanghai is not just a huge city in China but is also an international city. We have to increase our competitiveness and attract people of talent all over the world.