ReportIn cities accelerating, the central government has tried

ReportIn an attempt to transform from an export oriented economy to a services-based, capital investment focused economy, China is implementing a urbanisation plan to the lower tier cities. With the market saturation of T1 cities accelerating, the central government has tried to ease urban density and moving swathes of people to lower tier cities. As a result, demand for real estate in Tier 3 and 4 cities has surged. The attraction of buyers can also be attributed to local governments imposing cheap credit and removing any restrictions on property purchase. A trend of reverse migration and population growth has led to a net population outflow back to lower tier cities. Residents of these cities have seen the income gap close compared to larger cities and their purchasing power has risen, attracting investors and developers. This creates a cycle of rapid expansion in T3 and T4 Chinese cities, with the government continuing to implement policies to regulate this growth and ensure sustainability.HukouChina operates a hukou system, a legal registration system identifying residential area and personal identification information. Typically separated into either urban and rural, this system has provoked economic and social inequality and has hindered the goal of establishing a urbanised consumer-driven society. Migrant workers working remotely in cities are treated unfairly in the labour markets, denied home loans and cannot gain access to social benefits or a good education for their children. This has prompted many to return to their rural hometowns despite the more challenging living conditions. To support and sustain the rapid growth in lower tier cities, the central government has abolished migrant restrictions on small cities while maintaining tight controls on the largest cities in China. The government has implemented a points based grading system based on the applicant’s education level, tax payments and work experience, reducing the supply of migrant workers from rural towns. However, Tier 3 and 4 cities have significantly more relaxed regulations, which remains in line with the government’s aim of congregating workers in these cities to spur labour supply and economic growth.The ultimate goal is to expand urban hukou permits to 100 million migrant workers by 2020 in an effort to rebalance the economy (Spencer Sheehan).