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Could China's Urbanization Unwind?

The idea that hundreds of millions of Chinese will move from the country to the city is one of the basic assumptions that guide investors and policymakers in the US and elsewhere.

According to Jamil Anderlini of the Financial Times, that assumption could be wrong.  China is likely, he says, to maintain the two-tier hukou system which denies rural migrants full residential rights in Chinese cities.  The system provides China with cheap labor; it also means that in times of trouble migrant workers go back to the family farm — the only safety net they have.

Maybe.  But over time, those migrants will demand equal rights, and failing to satisfy worker demands could blow China sky high.

The one thing that policy makers and investors need to keep in mind: nobody, and especially not China’s leaders, knows where China will head.  The only sure bet: the ride will not be dull.

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