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World Bank Recommends China To Reform Land Use, Local Finances

The World Bank advised China to tackle environmental degradation and other strains of rapid urbanization by systematically changing how it allocates land, people and capital across the nation.

In a report released Tuesday, the lender said China should build denser, rather than larger, cities to cut down on traffic congestion, air and water pollution and the maintenance costs for infrastructure services.

The report suggested reform agenda toward efficient, inclusive and sustainable urbanization. According to World Bank, with more efficient, denser cities China can save some $1.4 trillion in infrastructure spending, or 15 percent of last year's GDP.

Further, the bank observed that cities may require temporary subsidies to help them transition from the hukou household registration system to one based on residency.

It also called for China to enforce existing environmental laws, regulate local government borrowing, and encourage cities to generate more revenue.

In order to address challenges in urbanization, the bank urged comprehensive reforms in six areas, especially land management, environmental management and local finances.

"As China's urban population projected to rise to about one billion, or more than 70 percent of the country's population, by 2030, the new report lays out a new model of urbanization that is focused on quality, not quantity," said Bert Hofman, chief economist for the Bank's East Asia and Pacific Region.

At the China Development Forum, Asian Development Bank President Takehiko Nakao said China should proceed with public finance reforms for its sustainable and inclusive development. In order to meet increasing expenditures, the tax system should be reformed, he said.

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