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close this bookEmerging World Cities in Pacific Asia (UNU, 1996, 528 pages)
close this folderPart 2. Changing Asia-Pacific world cities
close this folderGlobalization and the urban system in China
View the document(introductory text...)
View the documentIntroduction
View the documentEconomic reform and globalization in China
View the documentThe globalization of china's economy
View the documentForeign investment
View the documentUrbanization and urban system development in China
View the documentThe effects of globalization on the urban system in China
View the documentProblems of urban development under the open policy
View the documentPolicy implications and future trends in urban development
View the documentNotes
View the documentAcknowledgements
View the documentReferences


The year 1978 is a major turning point in the development of China. At an important meeting of the Communist Party in December 1978, it was decided to focus the country's efforts not on politics and "class struggle" but on economics and the Four Modernizations - in agriculture, industry, national defence, and technology. This involved reducing the dominance of central state planning and permitting a more market-led economy. This also included an "open (door) policy" to open up China to world markets and foreign investments and to promote economic and technical cooperation with other countries. The adoption of economic reforms and an open policy has had a profound influence on the economic development and urban system in China. Economic reforms have improved the national economy and at the same time work together with the open policy in integrating China with the world economy. Economic reforms have freed the market from the rigid state-controlled economy towards a more vibrant domestic market. The increase in the domestic market alone could not have achieved the economic growth that China experienced in the 1980s. Isolated from the world during the Cultural Revolution, it needed foreign investment and foreign technology, particularly production technology, to speed up its economic development and upgrade its production. It is difficult to envisage economic reform without the open policy. It is through this course that China is working its way through economic development.

In contrast to the sudden drastic change from a socialist economy to a free market economy in the former Soviet Union and Eastern Europe, China has adopted a gradual path of reform and development. Its economic reforms are gradual and so is its opening up to the world. Economic reforms are tested in pilot areas and sectors before being applied to the whole country. The opening up of the centrally planned economy to a market economy is carried out gradually. The open policy is also gradual in terms of geographical location and economic sectors. First, foreign investment was limited to the four Special Economic Zones (SEZs) and later extended to other special zones such as the open cities and economic and technological development zones. Secondly, foreign investment was allowed in manufacturing and later extended to property development, and now to the tertiary sector (e.g. shops and banks).

Since 1978, economic development has been rapid. China had an average annual growth rate of 14.3 per cent in the period 1978-1990, which is one of the highest in Asia and the world. Such high economic growth has been achieved through economic reforms and the globalization of its economy. The globalization of its economy is an intentional effect of the open policy adopted in 1978. Because of locational advantage, it is not surprising to find that economic growth is faster in the coastal provinces than in inland provinces. It is hoped that economic growth will later spread to the inland provinces. Coastal cities are developing more rapidly than non-coastal cities. The open policy has had a major impact on the spatial structure and urban system of China, influencing the pace and composition of development in different provinces and cities of China.