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close this bookEmerging World Cities in Pacific Asia (UNU, 1996, 528 pages)
close this folderPart 3. Borderless cities
close this folderThe Hong Kong-Zhujiang Delta and the world city system
View the document(introductory text...)
View the documentIntroduction
View the documentThe Zhajiang Delta and its cities
View the documentThe world city hypothesis and Zhajiang Delta cities
View the documentTerritorial containment of a functional world city phenomenon
View the documentConclusion
View the documentAcknowledgements
View the documentReferences

Territorial containment of a functional world city phenomenon

The purpose of the previous section was to establish the underlying features of the Zhujiang Delta city system vis-à-vis world city characteristics. Understandably, being at the bottom of the world city hierarchy and located on its periphery, not every world city characteristic is represented in the Zhujiang Delta urban system. This is because the periphery, unlike the core of world capital accumulation, is only partially integrated with the world economic system. There are other underlying reasons; for example:

· Economic reform policies since 1978 have not been a total deviation from China's strategy of agro-development, with basic needs as its guiding principle.

· China's open policy is a revival of a traditional policy of frontier zone management and territorial containment.

· As regionalism in the Zhujiang Delta region grows with economic prosperity and outside connections, the inhabitants of the Zhujiang Delta region are inclined towards further integration with the world city system and are looking for the possibility of upward movement in the hierarchy; but the government at the core will exercise every possible means of stopping this centrifugal tendency.

As outlined in the first section, China, because of its unique political and cultural position, did not closely follow the main stream of development thinking. Instead, it has always attempted to address its own problems in its own ways and find a "Chinese" solution. In the 1960s it went for agro-development rather than a city-based strategy. From 1978 onwards, many Western scholars have described China as having reversed its former strategy in favour of a development strategy oriented to the coastal cities. A careful analysis of the Chinese economic reforms will indicate that this may not be the case.

Economic reforms actually started in the rural areas with the "baogan daohu" system - a system of contractual responsibility between farming households and the collectives. In other words, it was the success in the catchment area of the cities in the Zhujiang Delta that created the material foundations for the development of the urban system. The liberalization of the price control system for basic staples relieved more people from tilling the soil. They could now either participate in the offshoots of transnationals run by Hong Kong subcontractors, or own private businesses or even private enterprises (often under the name of collectives). From here they began extending the "brogan" system to the urban area.

The less clear-cut property rights system in the urban state-owned enterprises made it difficult to implement urban economic reforms. Urban economic reforms encountered many problems in the Zhujiang Delta. This was especially the case for those enterprises having no potential for conversion into joint foreign partnerships. The distorted price system, the overburdened welfare system, low wages, "overstaffing," obsolete machinery, poor management, too many superior organizations that could intervene in operational management decision-making, and a relatively low rate of profit retention are features common to all Chinese state-owned enterprises. The enterprises of the PRC Zhujiang Delta are no exceptions, especially the large enterprises owned and run by the central ministries and provincial departments. Only the medium to small enterprises are actually run by the municipal and township bureaux. In general, Chinese domestic enterprises are still predominantly the largest employer, producing a significant share of industrial output.

The four cardinal principles that China must uphold (socialism, the dictatorship of the proletariat, communist leadership, and the thoughts of Marx, Lenin, and Mao) explicitly or implicitly affect decision makers in the PRC Zhujiang Delta at all levels and are part and parcel of the so-called "Chinese way of socialism." The upholding of the four cardinal principles means that China will not participate wholeheartedly in the new international division of labour, and the functional power of transnationals will be taken as a constant threat to the territorial sovereignty of China. It may not be the wish of the Chinese government to find itself integrated with the world system only in a peripheral position, with its cities in the Zhujiang Delta only in the lowest stratum of the world city hierarchy. It would, however, be a dilemma for China if the position of its cities in the world city hierarchy were able to rise only with a fuller integration of its economy with the world system. Integration in this sense means that China would have to offer more concessions in functional terms to transnationals, for example as regards their trademarks, patents, and other kinds of measures to protect intellectual property, which can be used in China only with permission.

The open policy has commanded great attention since 1978. The present form of the open policy - accepting foreign investment in setting up equity joint ventures in production as well as in the tertiary business sector - was absent in the period 1949-1978. However, if one goes back further in history one discovers that in many dynastic periods the Chinese government practiced open policies in the frontier zones but rarely in the ecumene (Chu and Zheng, 1992). Wholly owned subsidiaries and joint ventures with foreign and domestic partners were found in many coastal provinces and cities prior to 1949. The open policies since 1978 have not just been the response of the Chinese government to the emergence of transnationals, but are a continuation of a disrupted long-held tradition in frontier provinces. Inherent in the openness, Chinese central governments have traditionally sheltered their ecumene by territorial means. The first is distance decay, which weakens the impact of alien influences over distance. The second is territorial containment: alien elements are allowed only in well-defined and guarded plots of territory under Chinese jurisdiction. Apart from these defined plots of territory, there are some less well-defined areas where alien elements would be tolerated but not explicitly welcomed. This model of territorial containment could be observed in Guangzhou, Quanzhou, and Fuzhou during the Ming dynasty and even earlier.

The Special Economic Zones, the open coastal cities, and the deltaic Open Economic Regions are all territorial containment devices (Chu, 1986) to control the alien phenomena associated with the international circulation and accumulation of capital (of both transnationals and overseas Chinese families). Hong Kong and Macau have been part of the world city system since well before 1978. In the early 1980s, Shenzhen and Zhuhai were designated to contain the circulation of international circulated capital. These Special Economic Zones were the first to allow wholly foreign-owned subsidiaries offshoots of the transnationals. Joint ventures were permitted and tolerated in other Zhujiang cities and countryside between 1980 and 1984. The forceful penetration of overseas Chinese family capital in the Zhujiang Delta in the early 1980s and the successful integration of the area in the world economy by means of compensation trade and contractual joint ventures brought to the attention of the Beijing central government that the initial barriers of the Special Economic Zones had been breached and that other restraints were necessary. In 1984, 14 "open coastal cities" were designated to accept foreign and overseas Chinese family capital. A year later, the Zhujiang Delta Open Economic Region was created. The failure to contain the rapid growth of activities of alien capital in the inner Zhujiang Delta led to the retreat of the boundary of the Zhujiang Open Economic Region to the outer Zhujiang Delta in 1987. In the course of time, it is possible that China will have to enlarge this Open Economic Region again, or modify its containment strategy by creating new containers for the diversion and control of alien capital and to accommodate new investment.

Regionalism has always existed in the South China frontier zone (Solinger, 1977). With a strong central government, the centrifugal tendencies of the South are suppressed as much by military presence as by an effective centralized resource allocation system on which all outlying regional economies are dependent. When the core degenerates, as during the period 1966-1978, the fringe areas, as subsystems of the whole, are able to exploit their relative autonomy and transform themselves into "upward transitional peripheries" and break away from the control of the central government. The autonomy of Guangdong and Fujian in economic affairs was legitimized in 1978 and they have been granted the power to experiment with ideologically unconventional means of economic development. Innovative concepts of the acceptance of foreign capital, technology, and Western management in Guangdong and Fujian have been implemented, leading to the partial, if not total, integration of the economies of these two provinces with the world economic system and of their cities with the world city system. The Zhujiang Delta, being next to Hong Kong, which is already a member of the world city system, is therefore close to the network of world capital circulation and information flows.

The regionalist tendencies of Guangdong were reinforced and it subsequently succeeded in moving away from the system in mainland China towards the outside capitalist world. The account of the development of the PRC Zhujiang Delta above illustrated this without touching on the subtlety of the working mechanism. In brief, PRC Zhujiang Delta officials were bold enough to interpret the various measures of the open policy set by the central government, the autonomy in economic affairs, the four cardinal principles, etc. with the greatest flexibility. One official summarizes this situation well as follows: "Central government expects the regions to follow what is allowed; but the Guangdong officials do everything as long as the central government does not explicitly disapprove" (fieldwork, 1991).

Without the centrifugal tendencies, the regional officials' bold attempts to interpret central government directives flexibly would not have been supported by the public. In most cases they were rewarded with a high rate of economic growth in the region or monetary returns to their enterprises. However, some unlucky ones encountered sanctions from the central government. In Hainan Island, car imports and their resale to inland areas is a notorious example. Others are less publicized; for example, the appointment of Mr. Li Hao from Beijing to take over as mayor and first municipal party secretary of the Shenzhen Special Economic Zone, two key positions formerly held by the deputy governor of Guangdong.

Guangdong's emergence as an economic power among the provinces also enables it to have a bigger say in national policy. On the governorship of Guangdong, for example, the former governor's declared preference to retain his position rather than take a higher position in Beijing also indicated that Guangdong regionalism had never been stronger since 1949. This tendency will likely become accentuated when Hong Kong and Macau become part of China in 1997 and 1999 respectively. Being functionally integrated, Hong Kong, Macau, Guangzhou, and other prosperous Zhujiang Delta cities and towns exert a very strong economic, if not political, power over future national policy formulation in China. From the perspective of the central government, would a strong, united, and powerful Zhujiang Delta urban system in the southern frontier region of China be to its benefit?