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opportunities for the rural poor to improve their incomes (and those of their families remaining in the village) through migration. Critics of these policies point to the human costs it generated, the potential negative impact on social mobility and equality of opportunity it had, and the underutilized potential of agglomeration economies in China’s large cities (World Bank and DRC 2014). In the absence of a credible counterfactual, the question of whether the benefits of China’s restrictions of population movements have exceeded their costs needs to remain open. As the pressures to migrate have receded, the restrictions have been progressively lifted. Even if the hukou has played a positive role in coordinating the pace of urban migration and job creation and reducing the pressure on urban services in the past, in the face of the economic inequalities that it risks perpetuating, the time may have come to lift it altogether.

China has relied heavily on public investment in infrastructure to support long-term development and to boost the economy during downturns. The evidence presented in this report points to significant positive spillover effects for all sectors of the economy and for poverty reduction. However, with significant service gaps remaining in rural areas, particularly with respect to health care and education services, the bias in local government incentives toward investments in hard infrastructure to boost growth and the reliance on land-based financing vehicles arguably perpetuates a misallocation of fiscal resources that could be costly in the long term (World Bank and DRC 2019). The environmental footprint of China’s infrastructure explosion adds to concerns that the country will need a different, more services-oriented growth model going forward. The challenges of managing the transition to a greener and more inclusive development path and the implications for poverty reduction and social policies are examined in the next chapter of this synthesis report.

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