China will invest more than 1 trillion yuan ($163 billion) redeveloping shantytowns this year as the government promotes urbanization as an engine of growth, according to state broadcaster China Central Television.

The nation will redevelop shantytowns involving more than 4.75 million households this year, CCTV reported Sunday, citing the Ministry of Housing and Urban-Rural Development. China will promote fiscal and financial reforms that support urbanization, it said, citing a plan for 2014 to 2020 issued by the Communist Party of China and State Council.

Chinese leaders have pledged to speed up urbanization as they seek to shift the world’s second-largest economy toward a growth model that relies on domestic consumption rather than investment and exports. Premier Li Keqiang said March 13 the government will increase its efforts to solve people’s basic housing needs.

Urbanization is a “strong engine” for sustainable and healthy economic development, according to the text of the plan released Sunday by the official Xinhua news agency. Li said March 13 that tens of millions of people still live in shantytowns, which Xinhua has defined as areas of dilapidated housing where poor factory workers often live.

The CCTV report didn’t state the source of the redevelopment funds.

China will speed up the construction of railways, expressways and airports to support the rapid urbanization, Xinhua said in a separate report on the plan.

The government will remove restrictions on obtaining household registration permits in small cities and towns, while it will strictly control the populations of megacities with more than 5 million urban residents, according to the plan.

The urbanization plan will help promote regional development, upgrade industries and increase domestic demand, according to the text released by Xinhua. Urbanization is important for accelerating the development of the service sector, which will create many jobs, it said. 

(Bloomberg)