efforts to 2006, the number of its rural residents rose by 447.65 million, with an annual growth of 8.5 million. This is very rare in the world.

China's current urbanization lags behind its industrialization by more than 10 percentage points. The satisfactory urbanization rate should be 50 percent, which means 50 of every 100 Chinese people should be urban residents.

What are the major problems confronting China's urbanization? What should be done about them?

China's urbanization faces two major problems. First, instead of moving to local small towns, a large majority of farmers have migrated to major cities or super cities on the southeast coast, because the local industry is underdeveloped and the farmers can hardly find jobs there. To solve this problem, the government of small towns should strive to improve local investment environment for the sound operation of township enterprises, thereby creating more job opportunities for migrant farmers.

Second, some of the existing policies run counter to urbanization efforts. One is the hukou hurdle. A lot of problems are hukou-related. There are many restrictions that prevent the transfer of one's hukou to another place. Another problem is the contradiction between the contracted land and assets. When a person's hukou is transferred from the rural area, his contracted land must be handed over to the government.

Third is the problem of rural homesteads. Farmers moving to towns have to give up their rural homesteads provided gratis by the government and buy new house sites on their own, which they find not a fair deal.

Worse still, town authorities tend to believe that migrant farmers will add pressure to local development, and thus take various measures to prevent rural residents from moving to towns.

What do you suggest for future small town construction?

Urbanization is a complicated, systematic and time-consuming social project. I suggest we seriously consider the following problems. At present, the most urgent task is to specify the primary goal of small town construction, which is to attract rural population to towns whenever possible and at whatever level of construction that is necessary.

Infrastructure construction is also one of the major requirements for developing small towns. Sound infrastructure can attract enterprises and rural population to move to small towns, but the construction is very costly.

Infrastructure construction in small towns, including retail and wholesale markets, schools, kindergartens, roads and electricity and water supplies, should all be built by enterprises with funds raised by themselves.

After the construction projects are completed, they can be leased out or sold. The government, collectives and individuals can all participate in the investment. Those who invest can own the project and benefit from it.

We should introduce market mechanisms into small town construction and form multifaceted investment mechanisms. Local government capital could be invested in pure public infrastructure, which could not generate economic profits, such as road maintenance, public lighting and environment improvement.