Regional Development in China

Yehua Dennis Wei

• Publisher: Routledge
• Year: 2013
• ISBN:
  9781134591251
• Edition: 1
• Topic: Ciencias físicas
• Subtopic: Geografía

This study systematically examines uneven regional development in China, focusing on three central agents: the foreign investor, the state and the region. Wei's findings have important implications for theories of, and policy towards, Chinese regional development. This book is a vital resource for those with an interest in transition economies.

1 Introduction

Regional development is an important area of academic inquiry. Regional inequality in particular is one of the major concerns facing governments, as it reflects unequal opportunities among regions and may threaten national unity and social stability (Smith 1995; World Bank 1997).¹ Regional development and inequality are of particular importance to the developing countries that inherited regional imbalances as a result of colonialism, and to former socialist countries that demanded, as a point of ideology, a reduction in regional inequality. Even in developed countries, such as the United Kingdom, Italy, and Canada, regional inequality has received considerable attention (Martin 1988; Higgins and Savoie 1995). The trends of and forces underlying regional inequality have been the subject of heated debate. Questions whether regional inequality was reduced in former socialist countries and whether economic reforms have intensified regional inequality have generated considerable research. Indeed, spatial issues are the traditional areas of interest, especially for geographers and planners, but have attracted broad interests in economics, geography, political science, sociology, and history (e.g., Parsons 1988; Storper and Walker 1989; Porter 1990; Krugman 1991, 1995; Plestina 1992).

Regional inequality has been an important issue in China since the establishment of the People's Republic of China (PRC) in 1949, mainly as a result of its role in debates concerning the nature of socialism, central control and local autonomy, and resource allocation among regions (Bo 1993). Researchers generally agree that some effort was expended to develop economically lagging regions but there is disagreement over the extent and consequences of this (Wei 1999a). Since the launch of the economic reforms in 1978, China's dominant development policies have shifted from ones based on self-reliance to ones based on comparative advantage and open door policy. Problems arising from migration, resource allocation, and intense intergovernmental relations have prompted many to consider regional inequality as an important issue of government policy, although researchers disagree over whether regional inequality has in fact intensified and what forces have contributed to changing patterns of regional development.

This book investigates changing patterns and underlying factors of regional development and inequality in China since the founding of the PRC, with an emphasis on the reform period. I adopt a multiscalar approach to examine changing patterns of regional inequality, and argue for an analysis of the central state, local states and factors, and global forces to achieve a better understanding of China's regional development. I hope this study improves the research on the trends and causal mechanisms of regional inequality in China and contributes to the broad debates on theories and policies of regional development and the transition taking place in the former socialist countries.

1.1 China's development path and regions

When the PRC was established, Chairman Mao Zedong and the Chinese Communist Party (CCP) faced the problems of poverty and substantial coastal–interior imbalances in China. Influenced by socialist ideology and egalitarian ideas, Mao tried to develop the backward inland areas and to reduce regional inequality. Indeed, the appropriate allocation of resources among regions was one of the major components of China's First Five-Year Plan (FYP) (1953–57), and has since become an important part of China's national and regional planning. The relationship between the coastal and interior regions was one of the ‘ten great relationships’ analyzed by Mao (1956) in which he stressed the development of the interior region while encouraging growth in the coastal region. Researchers generally agree that some effort was made to develop the interior, but there is disagreement over the extent and consequences of such a policy. Most maintain that regional inequality declined as a result of the implementation of distributive policies, while others contend that regional inequality actually persisted or even increased under Mao (e.g., Lardy 1975, 1978, 1980; Donnithorne 1976; Paine 1981; Cole 1987; Wu 1987; Pannell 1988; Cannon 1990; Yang 1990; Lyons 1991; Tsui 1991; Wei and Ma 1996; Wei 1998).

Since the late 1970s, China has experienced dramatic reforms and profound changes. Influenced by the ‘ladder-step theory’ (tidu lilun)—a Chinese version of the growth pole and inverted-U theories—the government has encouraged some regions to ‘get rich quick’, thereby emphasizing the development of the coastal region. It argues that concentration and specialization are required to accelerate economic growth in China and that spillover from the more developed coastal region would stimulate the prosperity of the country as a whole (State Council 1986). China's reform policies in the 1980s, such as the open door policy and the coastal development strategy, provided more favorable policies to some coastal areas. Supporters of uneven development policies argue that these policies have stimulated rapid economic growth without generating huge regional gaps, while the opposition contends that social problems arising from reforms, including rising regional inequality, have brought social unrest to China. To what extent regional inequality has increased in post-Mao China and how many resources should be committed to developing the backward regions have become central issues of government policy and research agenda.

After a short period of stagnation following the Tiananmen incident in 1989, the 1990s witnessed the implementation of bolder reforms aimed toward transforming China into a ‘socialist market economy.’ During the 1990s, some regions, particularly some coastal areas such as southern Jiangsu, recorded dramatic growth while some interior areas were lagging far behind. Millions of rural workers migrated to coastal cities in pursuit of employment and better living conditions, which generated considerable concerns about the impact of economic reforms and spatial policies in China. Regional ‘resource wars’ erupted in many regions in which regions used illegal administrative and even military measures to protect their local markets and restrict interregional resource flows.² Bargaining between central and local governments over resource allocation and development policies became extremely intense, partly as a result of China's poorer areas considering themselves to be less favored by the central government. These problems—intensified by inflation and corruption—have prompted many to consider regional inequality as the root of China's regional problems and an important issue in government policy. The Ninth FYP (1996–2000) views polarization as a serious threat to China's future prosperity, stability, and unity; consequently, the government has made reducing regional inequality a top policy priority.

Researchers disagree once more over whether regional inequality has intensified and over the forces that have contributed to the change of regional inequality in post-Mao China (e.g., Lakshmanan and Hua 1987; Wu 1987; Aguignier 1988; Goodman 1989; Kueh 1989; Cannon 1990; Linge and Forbes 1990; Denny 1991; Lyons 1991; Tsui 1991; Veeck 1991a; Kato 1992; Huo 1994; Beresford and McFarlane 1995; Fan 1995a; Chai 1996; Chen and Fleisher 1996; Jian et al. 1996; Wei and Ma 1996; Zhao 1996; Yang 1997; Raiser 1998). The debate is also intense among scholars in China (e.g., Yang 1992, 1993; Hu et al. 1995; H. Wei 1995; Lu and Sit 1997; Wang et al. 1998). The discourse surrounding China's regional inequality, however, suffers from several shortcomings. First, intellectual and political debates have been principally conducted without concrete evidence, due in part to the lack of reliable time series regional data on social and economic development. Secondly, even fewer studies have been undertaken to explain the forces responsible for regional inequality. Thirdly, the scale of observation has created much confusion, as the patterns of change across the nation's macro geographic regions (coastal versus interior regions or eastern, central, and western regions) are different from those across the provinces (Wei and Ma 1996; Zhao 1996). Lastly, substantial regional inequalities exist within the provinces, and merit further investigation (Wei and Fan 1997; Yang 1997; Lyons 1998).

1.2 Objectives of the research

In this research, I investigate regional development from the founding of the PRC to the late 1990s, with an emphasis on regional inequality during the reform period. I attempt to systematically examine disparities in reform policies and development processes across China's regions. The first objective is to examine changing patterns of regional development, and this in turn will determine whether, and to what extent, regional inequality has intensified. This research uses a multiscalar approach, as I investigate regional inequality across China's macro regions, provinces, and counties (interregional, interprovincial, and intraprovincial inequalities). This approach is sensitive to geographic scales and shows the complex mosaic of regional development emerging in China. The second objective is to analyze the impact of three major forces—the central state, local states and agents, and global forces—on regional inequality.³ Regional development theories are developed largely based on the assumptions of closed free market economies and the experiences of developed countries, and are preoccupied with a singular focus explanation of regional inequality. Each theory only captures, at best, part of the picture of regional inequality. They are less relevant for explaining regional inequality in transition economies, such as China, where forces of regional development differ from that in capitalist economies. This research is within a multivariate framework and explores how the complex interplay of national, local, and global forces shapes regional development. Thirdly, the new findings will also provide policy and theoretical implications for regional development and poverty relief. The analysis of China may provide useful references for other transition economies and developing countries that are undergoing similar processes of economic restructuring and globalization.

I argue for multiscale and multi-mechanism approaches for a better understanding of regional inequality in China. First, I maintain that three particularly powerful factors and agents underlie regional development in China: namely, the central state, the local state and agent, and the foreign investor. Scholars have attempted to understand economic reforms and transition taking place in China (e.g., Nee 1989; Oi 1992; Naughton 1995a; Walder 1995a), and the spatial ramification of reforms (e.g., Fan 1995a; Lin 1997; Yang 1997; Wei 1999a). Factors and agents of regional development must be analyzed in light of the complexities of the Chinese economy. In China, the central state is still playing an important role, and global and local forces have emerged as important forces shaping China's regional development, as a consequence of globalization and China's economic reforms (Wei 1997a; Wei and Fan 1997). I wish to show that the multitude of agents has jointly produced uneven regional development in China.

Secondly, I investigate the regions and adopt a multiscalar approach. An analysis of regions, including development paths and assets, helps to unfold how the above three sets of underlying forces shape changing patterns of regional development. In addition, regional analysis relates to geographic scale (Gore 1984). Patterns of regional inequality across China's macro regions differ from that across the provinces. Within provinces, inequalities across regions also differ from that across the counties. In other words, a multiscale approach is helpful when studying regional inequality, and we should not exaggerate or ignore the significance of any level of regional inequality. This book examines regional inequality across China's macro regions (coastal, central, and western regions), across provinces, and within provinces (through a case study of Jiangsu), and analyzes development paths and conditions of selected regions.

Thirdly, the temporal change of regional inequality cannot be simply described as convergent, divergent, or inverted-U. Rather, it is shaped by multi-mechanisms, related to the fortune of regions, and is specific to geographic scale. The forces underlying regional development change over time, and the impact of the global, state, and local forces on regional inequality differs historically and geographically. To better understand these three arguments, I briefly review the literature on regional development and the research on former socialist countries in the following two sections.

1.3 Regional development theories and the changing world

The issue of regional inequality has been a subject of intense theoretical debates, especially since the 1950s. Scholarly views on the temporal patterns of regional inequality, the forces driving regional development, and the roles of institutions differ greatly. Neoclassical economics, growth pole dynamics, and inverted-U theories maintain that factor mobility and diffusion tend to equalize regional income differentials, while divergence and structural theories argue that backwash effects and capital accumulation tend to reinforce regional inequality. Theoretical pluralism and debates characterize theories of regional inequality.

The neoclassical growth theory emphasizes equilibrium conditions and the importance of the market in allocating resources, and considers regional inequality as a transitory phenomenon. It stresses the influence of the supply-side factors such as labor, capital stock, and technical change, and views regional growth as a process of resource reallocation, i.e. the mobility of capital and labor. It holds that regional inequality rises from temporary disequilibrium between supply and demand; efficient markets and factor mobility would eventually equalize regional differentials (Borts and Stein 1964; Smith 1975). Regional export base theory also predicts long-term regional convergence (North 1955). The neoclassical growth theory has been influential in studying regional inequality, but has been challenged on several grounds, especially by institutionalists and structuralists.

Growth pole and inverted-U theories are probably the most influential in regional development and planning in developing countries. Perroux (1950, 1955) considers growth poles as engines for innovation and regional growth. The inverted-U theory holds that regional inequality tends to rise during the early stages of development and to fall as the economy matures (e.g., Hirschman 1958; Williamson 1965; Friedmann 1966; Alonso 1980). This paradigm of regional development is also known as top-down development, or development from above (Hansen 1981). Since the late 1960s, a great deal of empirical work has been conducted. Some scholars have supported the convergence and inverted-U theories (e.g., Green 1969; Mera 1977; Tabuchi 1988; Mallick 1993; Crown and Wheat 1995; Barro and Sala-i-Martin 1995). Others have criticized these theories and have found regional inequality persisted or even increased in some countries (e.g., Gilbert and Goodman 1976; Stohr and Todtling 1977; Fields and Schultz 1980; Krebs 1982; Maxwell and Hite 1992; Siriopoulos and Asteriou 1998). Development from below and a variety of structural theories appeared as alternatives (Stohr and Taylor 1981).

The divergence theories, particularly dependency and structural schools, contend that regional inequality and its increase are inevitable under capitalism. Myrdal's (1957) cumulative causation thesis argues that factors of production tend to move to the more developed core regions, and this negative backwash effect reinforces regional inequality, although he recognizes the work of spread effects. The dependency school holds that the spread of capital to the periphery creates a dependent core–peripheral structure, sustains labor outflow and unequal transfer of value, exacerbates the stagnation of the periphery, and intensifies regional inequality (Frank 1967; Emmanuel 1972; Slater 1975). Regional inequality under capitalism has been seen as necessary for capital accumulation, and the capitalist mode of production actively creates, intensifies, and maintains regional inequality, as capital tends to move to core areas with higher profit rates (Soja 1980; Harvey 1982). Scholars have also stressed the periodic crises of the capitalist economy and the dynamics of uneven regional development (e.g., Smith 1984; Clark et al. 1986; Markusen 1987). It is argued that capital tends to move back and forth between developed and underdeveloped areas, and regions are continuously developed and abandoned. Based on the long wave theory, the regional cycle theory argues that regional economies progress in a wave-like manner, causing regional inequality to rise and fall cyclically (Amos 1990).

Since the mid-1980s, considerable attention has been drawn to neo-Marshallian and transactions cost theories of regional development. Scholars argue that Fordist mass production is formed geographically in manufacturing regions and stimulates urbanization and intensifies regional inequality, while post-Fordist production is characterized by flex...