The Central Work Conference on urbanization has proposed that the government should establish a pluralistic and sustainable financial mechanism, aiming to solve the problem of funding in the process of urbanization.

Where will the money come from? This is an issue that must be dealt with. Urbanization is not only an important way to expand domestic demand, but a vital channel of investment.

In practice, relevant investment is directed to two main targets: 'hardware' and 'software'. Hardware represents items such as basic facilities and utilities like water, electricity, road, gas, homes, schools and hospitals; software consists of social security support like employment, health-care, education, and minimum living and endowment insurance. Together, these two areas represent the basic support systems for civil life; each is indispensable and requires support through investment.

The practical difficulty facing many locations is a shortage, or even a complete absence, of funds for investment. On the hardware side, as some local governments do not have enough capital to improve their infrastructure, they have to borrow. Consequently, they are always under pressure to meet their debt repayments.

Some local governments try to solve this problem by asking property developers to build roads and to construct infrastructure; in return, they offer a range of inducements to the developers in terms of land development, and help them sell their houses, thus forcing rural residents to become 'urban citizens'.

In terms of software, some local governments face even greater challenges. In many big cities, many new arrivals are tormented by the problems of education and health-care, and in some newly developed or expanding cities, many new residents have fears that go beyond their social security entitlement and touch on their ability to find any kind of stable job.