For those who make it their business to follow the Chinese economy…

For those who make it their business to follow the Chinese economy, there can be a constant list-keeping of economic hurdles Beijing must clear, of prescriptions it must enact—which at times veers into the overly clinical. It can be easy to forget the odds that Chinese leaders are up against, or the scale on which they are operating. Recent history has not looked kindly on countries aiming to escape the middle income trap. South Korea and Taiwan are the exceptions that prove the rule—and neither Seoul nor Taipei were attempting to reach escape velocity with 1.4 billion people.

A recent Financial Times video places China’s current economic struggles in some much needed perspective. “China’s rural to urban migration isn’t just the biggest exodus in human history,” it reminds. “It’s [also] the biggest migration of any type of mammal.” The result has been 250 cities of more than 200 million people, or 88 Londons.

The flow of migrants is drying up. Productivity gains – of the kind that only fresh labor meeting fresh capital can generate—are slowing. Wages for China’s migrants are going upward—more than doubling over the past 7 years. China is aging.

All true, but do these things necessarily mean that China’s migrant miracle must end?

Certainly, Beijing isn’t helping matters by the country’s continued lack of social safety nets. For low-skilled workers who lose their jobs, worker retraining options are scarce. The absence of meaningful anti-discrimination laws allows Chinese companies to look past the growing number of middle-aged and older workers. Migrant workers are returning home to their villages, older and sicker than when they came, and without any retirement savings to speak of.

No one doubts the Chinese government has the resources to engineer 6.5% growth this year. The real question is whether it can proceed with meaningful fixes for these problems along the way. Concerning signs of structural drift —slowing Chinese demand for finished and intermediate goods that defies easy explanation, and ever-dwindling interest payments compared to total debt outstanding for publicly traded companies in China—suggest that President Xi’s reforms cannot wait for rosier growth.

If Chinese leaders are to forge continued growth and reform progress, it will only happen through more productive investment. Sure enough, this does seem to be the mantra coming from Beijing. Whether China’s leaders can deliver remains unclear. Boosting investment productivity will require continued financial reforms and wiser government lending—both of which are politically fraught in their own ways.

But another important measure of Beijing’s reform seriousness lies (once again) in urbanization. Having supplied much of the magic behind China’s decades of 7%-plus growth, urbanization still has more untapped growth potential to offer. Unlike the traditional rural-to-urban refrain, China’s urbanization potential now lies more in its largest cities, which are much less dense. This sequel to China’s great migration—one focused on increasing urban density in China’s largest cities—could supply Beijing with precisely the kind of economic boost it needs. And while hardly easy, an urban density push in China’s largest cities would be far more politically feasible than several of China’s other crucial reform areas (especially financial reform and government lending reform). So far, however, this sequel does not appear among President Xi’s priorities.

Jennifer M. Harris is a senior fellow at the Council on Foreign Relations (CFR). Prior to joining CFR, Jennifer was a member of the policy planning staff at the U.S. Department of State responsible for global markets, geo-economic issues, and energy security. Jennifer is the co-author of the book War By Other Means: Geoeconomics and Statecraft.

This article is in partnership with the Financial Times.

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