Economics of Planning Policies in China

Infrastructure, Location and Cities

Wen-jie Wu

• Publisher: Routledge
• Year: 2016
• Print ISBN: 9781138790452
• eBook ISBN: 9781317653578
• Topic: Business
• Subtopic: Business General
• Index: Business

Fast urbanizing countries like China have experienced rapid – albeit geographically uneven – local and regional economic growth during the past few decades. Notwithstanding this development pattern, China has been investing heavily in targeted coastal and inland regions through planning policies for infrastructure, location and cities. This is a largely place-based investment process that is of great importance for the public, business and policymakers. China's urban and regional transformations provide incentives for spatial agglomeration and will shift the growth of activities within and across cities for decades to come. This spatial differentiation is likely to be driven by government decisions at all levels about where, when and in what to invest, in an institutional context where policy instruments act to constrain or facilitate China's urban and regional development.

Economics of Planning Policies in China looks at the role that the institutional characteristics of the Chinese planning system and market mechanisms play in transforming and shaping the infrastructure, location and cities with the potential for spatial disparity and inclusive growth. The planning and geographical perspective and evidence make this book a reference for international scholars, policymakers and graduates

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Part I

Overview

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1 Introduction

China has experienced substantial but uneven urban transformation in the past six decades, which has brought great challenges and opportunities for planners and policymakers. This transformation has come alongside massive infrastructure investments, the gradual formation of agglomerations and market integration that are guided by various planning policies. Indeed, the implementation of planning policies has emerged as an important way of re-orientating urban and regional transformations in China. Historically, the introduction of the ‘Five-Year-Plan’ by the Chinese Government in the early 1950s signified a landmark shift in its development strategy towards a regular five-year planning system. One important focus of the ‘Five-Year-Plan’ series is to make infrastructure, particularly transport infrastructure, available to both core regions and marginal regions, and integrate a variety of Socialist-based and Capitalism-based regimes into a local and regional economic development tide. However, inherent tension rises as infrastructure, including railway and airport network improvements, help to raise spatial disparities between metropolitan and periphery regions. The planning programmes of infrastructure improvements have profound implications for urban systems and spatial agglomerations. The role of China’s planning policies on economic transition and growth, and their spatial implication are therefore crucial to our understanding of what drives success and failure in local and regional agglomeration and development modes.

There has been a growing interest from various disciplines such as economics, political economy, and social policy in the role of place-based planning policies on influencing spatial economic performance (e.g. Glaeser and Redlick, 2008; Neumark and Kolko, 2010; Kline, 2010; Busso et al., 2013; Faggio, 2014; Cheshire et al., 2015). Recent Chinese studies have investigated the macro-level transitions on economic systems. However, lessons are likely to be generalized in the spatial context because of the unique characteristics of the spatial-temporal evolution of uneven development patterns in Communist China. Existing theoretical frameworks – derived from transitional socialist legacies to interpret the roles of the State and market forces in urban and regional transformations – are reflected by the evolution and repositioning of China’s planning policies that often lead to differential economic convergence and divergence modes, within and among regions. International mainstream journals have published a growing number of studies using Chinese evidence and data, but much remains to be known about the evolution of planning policies and their spatial economic implications in transitional socialist countries, including China. The scarcity of the literature leaves a gap for spatial policymaking.

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The resurgence of China’s spatial economic disparities depends, to some extent, on planning policies for cities, locations and infrastructure investments. In this situation, careful evaluation of planning policy interventions is needed. Planning policies, however, do not work simply and effectively because of rules and regulations in policy initiatives. According to Cheshire et al. (2014), reducing spatial disparities through planning policies is challenging, as evidenced in the UK. Planning policies might work because of the non-random way in which they invest in mega-projects within and between cities. These investments can be regarded as a prominent policy tool for reshaping comparative locational advantages and enhancing the agglomeration process of production factors such as amenities, labour force and capital fundamentals in specific cities and regions. This policy channel has played a critical economic role in urban development.

As shown in the following chapters, the role of planning policies in shaping China’s spatial development patterns over the past six decades makes understanding the fundamentals and characteristics of the Chinese planning policies essential. Tracking these patterns is a difficult but meaningful task. Take cities, for example: decades of rapid urbanization and infrastructure improvements, as guided by the planning system, have changed the ‘faces’ of many Chinese cities dramatically. In particular, the constraints on migration and private sector investment in the centrally planned economy era (1950s–1980s) shifted the spatial economic growth towards industrial towns in the north-eastern and ‘Third-tier’ (san xian) regions. With reforms and opening up, large proportions of planning policies have concentrated on promoting spatial economic performance in coastal regions. At the intercity level, expressways, airports and high-speed railways have been built and expanded to strengthen intercity connections, whereas non-randomly distributed infrastructure projects have also affected the economic disparities between cities. At the intra-city level, subways, ring roads and radial roads have developed rapidly to reduce commuting times. However, congestion and pollution problems in mega-cities have increased. This infrastructure expansion is driven by Government planning decisions on where and how to invest, in a context where powerful political and institutional factors act to constrain or facilitate the economic implications of planning policies. This basic viewpoint – that the interaction of cities, location and infrastructure improvement is important for economic growth – has influenced most planners, economists and economic geographers alike, as well as their evaluations of which planning policies work better for local economic development.

The aim of this book is to analyse the role that planning policies play in China’s urban and regional transformation when growth, agglomeration and regeneration are the potential objectives; that is, how important planning decisions play a role in influencing urban and regional development. In fact, there are three specific motivations for the focus on cities, location and infrastructure.

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The first motivation is to help build a solid evidence base for understanding the economic implications of planning policies on Chinese cities and regions. Although planning policies are frequently championed as a useful instrument, both for growth and for addressing spatial economic disparities, the existing evidence and theoretical arguments are not clear-cut (Gibbons, 2015). The Chinese experience and evidence over the past six decades can inspire those involved in the planning of cities and infrastructure, by shedding light on what outcomes to expect and how regulations enhance or distort the spatial agglomeration process when massive Government investment is allocated in the Third-tier regions, when special economic zones are reinforced by the Central Government in contemporary China, or when transport links that connect cities with each other in the urban system become denser. Such information is critical to good policymaking, yet has so far been relatively deficient in China.

China’s urban and regional development in recent decades and its relation with planning policies will be a useful lens to reflect economic transitions from the centrally planned economy era to the market-orientated economy era. Overall, economic growth is enhanced by necessary policy incentives to gain better access to markets in other cities and various ports. In the market-orientated economy era, differential changes in market access affect relative growth rates between cities and regions, whereas such changes don’t create so much difference in economic performance in the centrally planned economy era. The range of China’s planning policies that will be elaborated in the following chapters include the guiding principles, rationales and philosophy of the Chinese planning system, as well as the economic implications of formulating uneven spatial development over the past six decades.

The second motivation, at least since the works of Johan George Kohl and Alfred Marshall in the nineteenth century, is that transport accessibility has played a pivotal role in urban theories among geographers, planners and economists alike. Transport accessibility determines the spatial layout and structures of core-periphery urban systems and influences how cities of different rank connect with others. Urban and regional agglomerations, as suggested by economic theories, rise with improved transport accessibility. Decades of rapid transport infrastructure expansions, as regulated by the Central Government’s planning policies, have provided a good opportunity for paramount scientific value, by creating a foundation for the economic implications of infrastructure investments. A natural question emerges: will the transport infrastructure expansion as guided by the Chinese planning system influence the spatial configuration of urban systems and regional disparities? Using airport and railway networks as case studies, Chapters 6 and 7 examine these elements using a combination of complex network models (Dong et al., 2009; Wang et al., 2011; Lin, 2012) and traditional market potential models, based on the economic geography literature (Harris, 1954; Gibbons et al., 2012). However, a major barrier to the identification of causal effects on outcomes of new infrastructure is that these facilities may not be allocated randomly across fast-growing cities and regenerated regions. Recent works of Faber (2014) and Banerjee et al. (2012) on China’s intercity road network have overcome this problem by measuring the local effects of transport accessibility, and have focused on places between cities that were affected incidentally by intercity road infrastructure expansion.

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Third, this book provides insights into, and alternative thoughts on, the vibrant urban space in a spatial context where big data emerge (Batty, 2013; Goodchild, 2013). To some extent, the intensity of human activity at fine geographical scales can be regarded as a proxy indicator in identifying city vibrancy patterns by tracking the temporal distribution of human activity based on mobile phone data (Jacobs-Crisioni et al., 2014). Chapter 8 provides an empirical insight into this topic within the land and housing marketization context, employing Beijing as the case study. In the research, we do not adopt traditional static surveys, but use temporally integrated human activities collected by the positioning system of mobile phones. The underlying ways of thinking adopted in Chapter 8 favour the market-reform and land-development mechanisms that played important roles in shaping the vibrant urban space.

Given this focus, this book touches on many of the priorities identified in the economic geography and planning literature in China, but is centred on three factors: at the regional level, the need for understanding the rationales of planning policies that drive the uneven economic development modes, and the roles planning policies play in affecting the formation and evolution of urban and regional agglomerations; and at the intra-city level, the importance of focusing on geographic uncertainties of urban vibrancy patterns through the interactions between people and places. The book is organized into four parts, starting with the Chinese planning system, with Part IV providing some concluding remarks.

In the rest of Part I, the basic building blocks of Chinese planning policies are developed in Chapter 2. The mix of industries and economic linkages across cities has been altered under the evolution of the Chinese planning system. Cities higher in the administrative and urban hierarchy may gain more than others. Core cities may flourish and peripheral cities decline when facing place-based planning policies such as transport infrastructure improvements. As a result, there will be differential effects from planning policies within and across regions, and spatial inequalities occur. For example, cities by-passed by high-speed railways are likely to be disadvantaged in developing service sectors, and may resort to activities reliant on expressways (Duranton et al., 2014). When this book looks at the role of transport infrastructure improvements in affecting intercity connections and market access, and when it looks at the effects of planning policies on the reallocation of resources and other factors within and between regions, it overlaps with relevant literature and other topics listed in Routledge’s Regions and Cities and Advances in Regional Economics, Science and Policy series.

Chapter 2 also examines the fundamentals of Chinese planning policies with an aim to develop cities in different places in the productive urban system. An ideal planning policy for guiding urban and regional development, as discussed in Chapter 2, needs to consider the economies of agglomeration, comparative location advantages and the optimized usage of infrastructure systems. These economic implications of planning policies (although these policies are less predictable regarding their economic impacts) could affect the degree of city sprawl, overcrowding, exclusion, productive density and vibrancy through the intervention of infrastructure investment and planning regulations.

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China’s growth is uneven. Unlike engineering-driven infrastructure construction policies, cities and industries tend to respond to regional planning policies differently. In the centrally planned economy, these differences can be affected by planning rules and regulations which reallocate labour, capital and resources from coastal regions towards inland areas. In the market-orientated economy, these differences can be enhanced by planning policies because some cities get better access to infrastructure and other resources. Furthermore, the transition of economic growth in the resurgence of China’s geographic economy is a fundamental reason to rethink the importance of planning policy fundamentals – especially regarding cities, location and infrastructure – over the past 65 years.

Part II explores these characteristics in detail. As Chapters 3 to 5 acknowledge, China’s planning policies regarding urban and regional development have played an important role in influencing the success of urban and regional transformation. It is expected that the Chinese economic reforms we have observed over the past few decades are going to continue in a more in-depth way. In turn, this makes designing planning initiatives a key policy toolkit for fostering urban and regional transformation.

Chapter 3 examines how the evolution of China’s planning policies in the centrally planned economy affected local and regional development (1950s–1980s). This period is characterized by using planning policies to fully control the allocations of industrial projects, infrastructure, skilled labour and all other types of economic activity across regions. This period is also characterized by the emergence of spatial disparities. For example, Jian et al. (1996) found significant evidence for regional economic divergence across provinces during the Cultural Revolution period (1966–1977). In general, cities in the north-eastern region (e.g. Liaoning province) and in the Third-tier regions (e.g. Chongqing, Sichuan, Guizhou) have done well and outperformed those in the coastal regions (e.g. Guangdong province), but the neglect of market channels at work may result in the low efficient resource allocation and the lack of consistent driving force in formulating agglomeration economies over space. After the economic reform and opening up since the 1980s, a market mechanism has been re-established in China. Its establishment has paralleled China’s overall economic transition from the centrally planned economic system to the market-orientated economic system. The establishment of market mechanisms has also generated widening spatial disparities of economic integration and agglomeration, leading to the emergence of mega-metropolitan areas and core-periphery urban systems in contemporary China.

Chapter 4 characterizes the spatial disparity patterns in more detail. Cities and infrastructure are typical public investment areas via various planning policies. Since the 1980s, the most rapidly growing cities – for example, Shenzhen – have been greatly affected by planning policies under the umbrella of Deng Xiaoping’s politically brave reform. The gain of comparative locational advantage in industrial production in places with the support of planning policies is an important factor in enhancing access to domestic and international ma...

Table of contents

• Cover Page
• Economics of Planning Policies in China
• Regions and Cities
• Title
• Copyright
• Contents
• List of Figures
• List of Tables
• Foreword I by Professor Paul Cheshire
• Foreword II by Professor Siqi Zheng
• Acknowledgements
• PART I Overview
• PART II Spatial Evolution of Planning Policies in China
• PART III Planning Implications: Infrastructure, Location and Cities
• PART IV Conclusions
• Index