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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

Policy implications and future trends in urban development

The past decade of rapid development of the economy and the urban system is the result of interaction between economic reforms and the open policy. Because of the locational advantage of the Eastern Coastal region, the open policy has made it grow faster than the Central and Western regions. Urban growth and urbanization, especially rural urbanization, are also most rapid in the Eastern Coastal region. With continued economic development as a result of the open policy, more towns in the Eastern Coastal region will be upgraded to become cities in the future, reversing the pre-1978 trend of decentralizing cities to the Central and Western regions. Unless there is a major shift in the existing policy, there will be an upsurge of new cities in the Eastern Coastal region because the majority of the rapidly growing towns are located there, such as the towns in Guangdong and Jiangsu. Furthermore, some towns located in these provinces (such as Dongguan) have already been granted city status in order to have more autonomy and flexibility in attracting foreign investment. Apart from the addition of new cities, the open policy also favours the development of existing cities in the Eastern Coastal region that have better accessibility and an economic base for foreign investment. The recent designation of Pudong in Shanghai as a special development area is an example of this trend. If Pudong development is successful, it may become a model for development of other existing cities.

The open policy has opened the highly centrally controlled economy to a mixture of central and market economies. More and more people do not rely on the state for income and housing. The pre-1978 mechanisms of population control and state resource allocation are becoming less effective in controlling urban development. One of the main manifestations of the weakening of central government in shaping urban development is the marked increase in temporary population in the cities. This is a major problem. In general, the level of urbanization in China is related to the level of industrial development. Although there is some temporary population in the cities, pseudo-urbanization has not yet occurred in China. However, with further development of the free economy and if industrial development cannot catch up with urban population growth, pseudo-urbanization may occur in China. The massive rural-urban migration that has plagued many large cities in less developed countries may appear in China, repeating some of the urban problems experienced by large cities in Asia.

China is in the midst of economic reforms. It is uncertain how much more the free market mechanism will be allowed to operate in the future. The existing form of free market demonstrates that there is an urgent need to improve urban management. In the past, urban development could to a large extent be controlled by the state through the allocation of funding. Since the adoption of economic reform, the introduction of housing and land reform, and the opening up of China to foreign investment, the state and centrally planned economy have less role to play in influencing the development of cities. These new developments are affecting the internal structure of the cities and leading to the restructuring of their land use to reflect market forces rather than the previous state control of land-use allocation based on economic planning. As a result, foreign investment has led to the clustering of commercial housing to form new social areas, the restructuring of land use and urban development, and the designation of new economic and technical development zones for attracting foreign investments (Yeh and Wu, forthcoming).

City governments have less control over the location and timing of development. Without good urban management, the land-use pattern can be chaotic, leading to inefficient use of the land and traffic congestion. There is an urgent need to manage the fast-growing towns and cities in the Eastern Coastal region, otherwise their living environment and traffic conditions will deteriorate. Urban management is particularly needed in small towns which are growing rapidly but with little planning and control. Environmental degradation of towns will be a serious issue if it is left unattended. There is an urgent need to train professionals such as planners and public administrators to plan and manage these towns and cities.

There may be a need to review the appropriateness of the national urban policy - "control the growth of large cities, rational development of medium-sized cities, and active development of small cities" - for guiding city size development. However, there is a weak relationship between city size and economic efficiency. The economic efficiency of cities depends not on city size alone but more on the level of investment, industrial structure, and locational factors. There is also a great variation in economic efficiency among city sizes and regions (Zhou and Yang, 1990). The control of city size does not seem to be an appropriate policy because it may not fully utilize the economic efficiency and locational advantage of some cities. Because of the increasing influence of market forces under the open policy, urban development is moving away from the policy of controlling city size. Most foreign investment has occurred in extra-large and large cities in the Eastern Coastal region. Even the central government is not consistent in this policy. It has just announced a grandiose plan to develop Pudong in Shanghai, one of the largest cities in China. There may be a need to develop different urban development strategies for different regions and such strategies may need to be adjusted periodically to reflect the level of economic development. For example, large cities may be developed in the relatively underdeveloped areas in the Western and Central regions as focal points for developing these areas with the support of some medium-sized cities. Small cities and towns experiencing rapid economic development in the Eastern Coastal region should be allowed to be further developed into medium-sized and large cities to maximize their economic efficiencies and locational advantages.

Although the free market is playing an increasing role in urban development under the open policy, public policy still plays an important role. One of the main reasons for the rapid development of towns and cities in the Eastern Coastal region is that the central government allows them to have more autonomy in attracting foreign investment, which was one of the main factors influencing economic development in the past decade. The central government also designated four SEZs and 14 open coastal cities in the Eastern Coastal region as catalysts for economic development in the Eastern Coastal region. The central government has allocated funding for the development of the SEZs and coastal open cities. Without such policies and investments, towns and cities in the Eastern Coastal region would not have developed so rapidly.

Regional inequality between the Eastern Coastal region and the rest of the country is increasing. This is understandable at present because it is hoped that, once economic development has taken off in the Eastern Coastal region, it will diffuse to the interior provinces. However, there is a need to monitor whether diffusion is occurring in order to determine the need to give selected cities in the interior provinces, such as major river ports along the Yangtze River, similar treatment to that at present enjoyed by cities in the Eastern Coastal region in order to help develop the interior provinces. Accessibility in transportation and communications plays an important role in globalization. Coastal cities are developing more rapidly than non-coastal cities mainly because of their accessibility to the outside world. If China is to develop the interior provinces, its internal transportation and communication systems will have to be improved.

The impact of globalization on the urban system in China is different from that in other developing countries. In other developing countries, globalization is mainly concentrated in a few cities, particularly the primate cities. In China in contrast, although globalization is still concentrated in the coastal provinces, it is more dispersed than in other developing countries. None of the cities or provinces has more than 40 per cent of national total exports or foreign investment. Foreign investment is mainly from Asia, which is a big contrast to other developing countries.

There has been increasing competition among cities and towns for foreign investment. The competition is at all levels: among different districts of a city, among different cities and towns, and among different provinces. To be more competitive in attracting domestic and foreign investment, many preferential treatments are given and sometimes rules are flexibly applied. This has created problems in planning and managing cities and towns. However, more importantly, there is a rise of localism and a lack of cooperation in regional development. Localism is especially visible in regions that are developing very rapidly such as the Pearl River Delta. Four international airports are to be built in Zhuhai, Macau, Hong Kong, and Shenzhen, which are less than 50 km from each other. Unlike in the past, when the state allocated resources for major infrastructure projects, local government can raise funding for infrastructure projects. Because of the lack of coordination, it may be a waste of resources. There is a need to have better coordination of regional development and planning.

The boom in export industries and in foreign investment in the past decade owed much to China's cheap land and labour. With the increase in labour costs and land prices, there is an increase in competition with other countries in Asia, such as Viet Nam. There is a need for China to improve the quality of its labour and its products if it is to stay competitive in the world economy. Cities with better infrastructure and higher-quality labour may need to be developed as commercial centres for better integration with the world economy.