The role of the state in China's urban system development : government capacity, institution, and policy

Abstract

Existing theories on urban system development derived from the experiences of Western advanced countries mainly emphasize the importance of geographical factors and market forces. They do not pay much attention to the role of the state because the influence of the state in their countries is relatively low. China is one of the few countries in the world that has an explicit national urban system policy that “strictly control the scale of large cities, rationally develop medium and small cities” in regulating China’s urban system development to avoid the urban problems plaguing the primate cities in the urbanization process of the developing countries. In the early period of reform era, by the Household Registration System (hukou) and the promotion of Township and Village Enterprises (TVEs), the state can achieve this goal. However, the ways in which the state regulates urban system development are changing because the state has gradually transformed from a single unitary power into a power matrix during the post-reform period. The political hierarchy that affects the internal power relations of the state is used to understand the role of the state in China’ urban system development. This thesis reveals that the state has achieved its goal of “strictly control the scale of large cities” to a large extent, leading to the under-development of the large cities if they are mainly developing according to the market force. However, this has become less influential with the advancement towards the market economy. In order to gain economic efficiency, the state has to encourage the development of large cities with comparative advantages, but does not drop its goal of “rationally develop medium and small cities” by helping the medium and small cities. As a result, state regulation and policies have reduced the gaps between cities at the top and bottom of the urban hierarchy. This thesis argues that the Urban Administrative System (UAS) is an important tool for the state to regulate urban system development. The UAS imposes a hierarchical distribution of state power in the urban system and thereby leads to variations in urban government capacities across cities. Empirical results indicate that urban government capacity is a critical factor in determining urban size and growth, and verify the complementary effects between urban government capacity and the market forces. In addition, our analyses show that the administrative level has significant effect on urban growth performance. China’s urban system is strongly shaped by the omnipresent state through the UAS, which hierarchically differentiates the urban growth processes. By controlling the administrative level upgrading process, the state can prevent large cities and city number from growing too fast. In sum, in addition to the national urban system policy and the hukou system, the hierarchical power relations amongst cities and resulting variations in urban government capacities are the keys for unfolding the “black box” of the state in understanding the role of the state in China’s urban system development in the post-reform period.