The Great Urbanization of China

The following sections are included:

• Preface

• Acknowledgments

• Contents

• Contributing Authors

The spectacular rise of China as a world economic power is one of the most important events at the turn of the 21st century. In the three decades after China launched its market-oriented reform in 1978, the world's most populated country has seen its wealth continuously grow by almost one tenth per annum. With that rate of growth, the size of the economy doubles every seven years. Thanks to hyper economic growth, hundreds of millions of people have been lifted from poverty even though income distribution has become more polarized. With a 12-fold rise in just 30 years, China's per capita income has risen from merely one tenth of the world average to about one third in the past 30 years (NBSC, 2009a). Meanwhile China has also become a global hub of manufacturing, the second-largest exporter in the world market (2009), and the second-largest economy in the world (2010). By 2008, China had lifted itself from the rank of low-income countries to be one of the middle-income countries (Fig. 1.1)…

China has been experiencing rapid urbanization since the economic reform starting in 1978. The number of cities increased from 191 in 1978 to 667 in 1999, while the urban share of national population increased from 18 percent to 31 percent. This paper examines China's urbanization and the evolution of its city system. It uses city-level data from 1991 and 1998 to investigate China's city-size distribution and its changes. It also discusses how economic and institutional factors affect the urban system and the patterns of city growth.

In the six decades of the People's Republic of China, the country has followed a rather unusual path of urbanization and regional development under a changeful policy-institution environment. Especially in the last two decades of the 20th century, China's urban development strategy and institutions went through drastic changes as the economy was transformed from a centrally planned economy to a market-based economy. Since then the state urbanization strategy has evolved from the so-called small-town consensus to one that relies on megacities to play a central role in regional development. The state urbanization strategy has been increasingly influenced by local and regional interests in a more decentralized post-reform political-economy structure. Institutional changes in the urban real estate market, central-local fiscal relationship, and residential administration of migrants have made profound impacts on the process of urbanization.

Urban planning should be an effective tool for maintaining status quo interests and establishing order in the land market. Planning as a positive instrument for socioeconomic change is demonstrated in the exercise of plan-making. However, there are no mechanisms in the planning system to generate positive actions and thus to guarantee positive implementation of plans. China's developmental planning paradigm emerges from its unique historical circumstances. The post-1978 deliberate urbanization results from the pre-1978 suppressed urbanization which created great shortages of urban land and premises. The huge demand for physical expansion to accommodate rural-urban migrants has led to a planning system which should fulfill the aspirations of a growing economy. Both instruments of strategic concept plans and the flexible development control regime enlisted by the local developmental state cannot be ignored as two of the important contributing factors to the spectacular economic growth. The essence of the developmental planning is threefold. Preference is given to newly emerging interests over status quo interests, land revenues are mobilized to develop quality infrastructure and public facilities, and planning is made responsive to market change. Nevertheless, real long-term sustainable growth, which is not promised by the existing planning practice, requires further institutional change to the transitional paradigm of China's urban planning.

Rapid industrial development and urbanization transfer more and more land away from agricultural production and affect the patterns of land use intensity. This paper analyzes the determinants of land use by modeling arable land and sown area separately. An inverse U-shaped relationship between land use intensity and industrialization is explored both theoretically and empirically. The findings highlight the conflict between the two policy goals of industrialization and grain self-sufficiency in the end. Several policy recommendations are offered to reconcile the conflict.

This paper examines three trendy urban spatial development patterns in China: special economic zones, university towns, and central business districts, as compared to mixed land use. The findings suggest the potential negative consequences and associated efficiency losses that may affect the long-term sustainable growth of cities. Some of the issues and problems generated by these patterns resemble urban sprawl but others represent disconnection between urban functions and forms in terms of efficiency in land use and development. It is unlikely that these patterns can be avoided, even with emerging market forces, without substantial reforms in planning and administration that govern and influence the behavior of local government officials. Meanwhile, the current city development and urban spatial form across Chinese cities suggest that the model of mixed land use may not be as desirable as in the US. Therefore, urban development should be focused on the creation and development of employment (sub)centers and urban spatial development in conjunction with these (sub)centers through the integration of land use and transportation.

This paper outlines how the public (land) leasing system (i.e. land use rights system) was introduced as the foundation of today's urban land market. The land transaction data of Beijing in 1997–1999 is used to examine the effects of the urban land market on land use patterns. The results provide evidence that market forces and prices have significant influences on the determination of urban land use and land development.

There has been a fundamental institutional change during the transformation from the centrally controlled system to a market-oriented economy in China since the early 1980s. The socialist land use right as an institution of the outgoing central planning system became an obstacle to the emerging land market for urban redevelopment, although land leasing as a new institution had created a real estate market primarily for the development of greenfield sites. From a case study of a district in Shanghai, it is discovered that rapid urban land redevelopment since 1992 has been greatly facilitated by the informal institution of the land development right. The land development right unlocks the process of land redevelopment in the central city, while the existing land user's land use right is taken care of during the gradual transition. Land use efficiency is improved to a great extent through land redevelopment for uses of higher productivity. However, the informal and insecure institution of the land development right induces hasty land redevelopment. Assisted by a capricious land use planning regime, the land development right yields suboptimal development. Clarification of property rights is the goal for further institutional change.

Chinese economic reforms since 1978 have been a continuous process of fundamental institutional change. The new institution of ambiguous property rights over state-owned urban land evolves from the socialist institution of people's land ownership. This institutional change is driven by the changing economic system and by two new organizations — the local developmental state and danwei-enterprises. The new institution facilitates the formation of an emerging land market. This land market, structured by ambiguous property rights, has accounted for the dynamic urban physical growth in many of China's coastal cities in the 1980s and 1990s. Nevertheless, massive rent dissipation induced by the new institution does not provide market certainty, nor does it offer incentives for optimal development. The cost incurred by the institution is gradually overtaking its benefit. The ambiguous property rights are deemed to be a transitional institution during the development of land markets in urban China.

China's hyper economic growth in recent years has occurred with the rapid expansion of urban land use. Whether such urban land expansion is efficient remains questionable. Using China's data for 31 provincial economies during 1996–2007, this study applies the neoclassical growth accounting model to assess the distinctive contribution of urbanized land to economic growth. The finding shows rather low contribution rates of urban land expansion to economic growth. This empirical evidence suggests low efficiency in urban land uses, which is rooted in a series of institutional weaknesses of the land market.

Since 1978 China has experienced a rapid and unprecedented process of urbanization, created by the largest flow of rural-urban migration in history in the world. This paper attempts (a) to assess the role of city-ward migration in China's urbanization in 1978–1999 and (b) to empirically investigate the factors behind the migration boom with time-series and cross-section data. We find that (a) rural-urban migration made dominant contributions to the Chinese urban population growth; (b) while moving together with the Chinese economy, the causal link runs from economic growth to migration, not vice versa; (c) inter-province migrants were encouraged by the rural-urban income gap and discouraged by the geographic distance to destinations; and (d) the number of intra-province migrants is positively related to the rural-urban income gap and urban population in that province.

More than one tenth of China's total population has become the so-called floating population, consisting of mostly rural migrants who are away from their place of household registration for more than six months. Migration improves the efficiency of interregional resource allocation and enhances the welfare of residents in both the poor and rich regions. However, massive migration from low-income regions to high-income regions redistributes the so-called demographic dividends across regions by restructuring regional demographics. The poor regions with net outward migration thus face a major challenge regarding how to maximize the benefits of labor mobility and control its negative impact on their economies.

A review of the past 30 years of China's urbanization experience reveals the challenges the country faces in the next stage of development. The most serious challenges include the environmental challenge, the urban governance challenge, and the migration challenge. How China answers these challenges will define the pace and features of the great urbanization in the coming years.

The following sections are included:

• APPENDIX Major Events of China's Urban Development (1949–2010)

• Index