Chinese urbanisation will be a globally consequential trend in the 21st century. The path policymakers follow is of profound importance.

A noisy debate about city planning has been ongoing for years, essentially between laissez-faire advocates of 'mega-cities' and those arguing for more distributed population centres. This debate cuts to a core chicken-and-egg developmental question: whether urbanisation drives modernisation, or vice versa.

Can a top-down mandate for city size result in a 'moderately well-off' society by 2030?

Proponents of large cities think huge, dense metropolitan areas are the future: progressive, market-determined, compact and efficient. But there is strong resistance to untrammeled growth, not least from the largest cities themselves, where there is fretting about social stability, pollution, congestion, sustainability and strained public services. Beijing alone has been absorbing half a million people every year; now its mayor is turning them away.

China's official urbanisation rate is over 52%, and the country is urbanising 20 million migrants annually (though this has likely peaked and should level at 15 million yearly to 2020). Urbanisation could reach 60% by 2020, with 45% enabled by urban hukou residence permits. The 'Three 100s' Plan, from 2014-2020, has a target of 100 million people to be urbanised, redeveloped shantytowns for 100 million and 100 million to move to western and central cities. Although this plan is exceedingly ambitious, it has still disappointed some and it depends on financing, cost and logistics.

The most difficult aspect, however, will be social integration. Moving to cities has been traumatic for many farmers who are disadvantaged by their status. One means to ease tensions will be eventually to unify the hukou system. A new trial which offers equal rights for residence of six months or longer is welcome.

But the likeliest outcome of the urbanisation debate will be a compromise between big and small city advocates: 'conurbations' or cluster-cities.

Last month the State Council designated just six metros with 'supercity' status, implying they will be allowed 10 million residents. A further 11 centres will be 'very large cities' of 5-10 million. Given that 16 cities are already edging toward 10 million or beyond, this suggests a strong reorientation of policy due to fears of over-concentration. It will become harder to be a 'megapolitarian.' Instead, distributed cluster-cities will be created through better regional transportation networks. Hong Kong, for example, could eventually become a part of a Pearl River agglomeration of 80 million people with Shenzhen, Guangzhou, Foshan, Dongguan, Zhuhai and Macau.

Predictably Beijing has an even grander design, an awesome 130 million capitol extending into Hebei province and designed to lead national reform from the front.

There are problems with the cluster approach. Decentralised cities may not coordinate well, as can be seen with Guangdong's tangle of bridges, ports and airports. It will encourage sprawl. Beijing's population density has already collapsed from 425 to 65 people/hectare since 1970; the capital has literally paved over surrounding counties. Concerns over Asian 'super-slums' are well founded and the dispersed 'Western' model appeals (the US has only nine cities of one million or more; China already has more than 200). And in China there is another factor driving sprawl: land conversion is fiscally lucrative. City governments have strong incentives to rezone neighbouring farmland into new suburbs. The economist Li Gan estimates that 'redefined' farmers actually exceed relocated migrants in the 'urbanisation' process.

There is another, more fundamental, problem. People move to cities for the same reason Willie Sutton robbed banks: because that's where the money is. An auto assembly worker making 2500 RMB monthly in Baoding would earn 3-4 times more in Beijing, just 150km away. But in Beijing, apartments are ten times dearer. Economists have noted an identical pattern in the US: 'the two halves of the American Dream — a good job and an affordable place — are living apart.'

Jobs are where companies are located, and Asian countries have a strong tendency to centralise. Greater Seoul has half of Korea's population and Tokyo-Yokohama one-third Japan's. This may be due to their hierarchical political systems with close commercial ties. Beijing and Shanghai between them host the headquarters of one-third of the 300 largest Chinese firms (Beijing alone has a quarter). By contrast, Washington, DC hosts a single S&P 500 company and only a handful close to its Beltway (although I am not arguing that corporate lobbying doesn't matter in US). Most US states have a scattering of well-paying multinational firms, something Chinese authorities wish to emulate.

Young Chinese want to live in the big metros because of superior opportunities, pay, benefits, lifestyle, services and prestige. It is also notable that Xi Jinping's administration looks strongly biased towards centralised power. Smaller Chinese cities without distinctive businesses and industries are losing talent and will forever be condemned to lower status.

Photo courtesy of Flickr user Andreas Wecker.