On the one hand these phenomena are the results of some local governments’ partial understanding of the urbanization process, and often result from a single-minded pursuit of GDP and a disengagement from any associated concerns. On the other hand it is important to recognize that they stem from a lack of clarity, consistency, and maturity in the mechanisms for financing the process of urbanization. Although urbanization could liberate enormous domestic demand and directly boost industrial upgrading, the consequent rise in the demands on social security must be met and assured, otherwise the process will not work.

According to the conclusions of the Conference, we need to identify new ways to promote urbanization, establishing a new mechanism to guarantee funding which is sustainable and pluralistic, and we can only provide a complete solution to the problem of financing by accurately understanding these conclusions. To establish a sustainable and pluralistic mechanism will mean addressing the following points: first, ensuring the focus and sources of governmental investments; second, establishing a system of diverse channels of financing; third, clarifying the sharing mechanism for social security funds.

Both central and local governments must make scientific development plans, and they must direct their attention to infrastructure. Governments are the main investors in infrastructure; to improve local financing mechanisms they should gradually establish a local taxation structure that is appropriate to their own needs, says Dai Xianglong, secretary of SSF. We can only promote healthy urbanization and avoid the problems associated with urbanization of land and selling national land at low prices by clarifying that which should belong to governmental investment, and through the security of the investment mechanism.

In terms of diverse financing, the focal point is relaxing market access, encouraging private capital to engage in the creation of urban infrastructure. Nowadays, apart from some areas that should be supported by governments, private capital should play a more significant role. If we can create a good market environment managed according to the rules of the market, urbanization can prosper.

The main costs facing rural residents who move to the cities are social security, education, health-care, and providing for their old age. Today, every city has established some level of social security system, but the fact that they are working separately and raising money independently has caused financial overload. Moreover, these new residents may have paid insurance in other places, and even if these payments can be transferred with them to their new location, there may still be many differences in timing and sums. In addition, there is also the problem of the segmentation in the outlet of education from government finance, adding further pressure on these new residents. To solve these problems, we need to set up a unified network of social security, creating rational mechanisms of sharing among governments, enterprises and individuals. At the same time we have to form a new mechanism connecting the people who are transferring from rural areas to cities with transfer payments from the exchequer, encouraging advanced areas to absorb more rural residents and converting them into local citizens, thus helping the urbanization process to run more smoothly.