Urban development in China

Urban development is seen as a key driver of economic and social development. For many policymakers, the road to economic and social development is alleged to go via a process of urbanization (see World Bank, 2009 ). At the same time, urbanization also follows economic and social (policy) changes. Whatever the merits of urbanization, it is not without its problems in terms of, for instance, the environment, health issues or the uneven spatial distribution of economic activity into center-periphery structures with, possibly, income inequality as a result. This issue of the Cambridge Journal of the Regions, Economy and Society deals with urbanization in China. The unprecedented economic and social changes in China since the start of the economic reforms in the late 1970s have gone along with an equally unprecedented rise in the Chinese urban landscape caused by an enormous migration from the countryside to the city. Studying the causes and consequences of urban development in China is also a way to gain a better understanding of the recent economic and social developments in China. The eight articles in this issue each highlight a different aspect of urban development in China. They can be grouped into four different but related topics: (i) technology, (ii) population dynamics and migration, (iii) transport and infrastructure and (iv) the financial sector. Taken together, these eight contributions show that urban development has been instrumental to economic development in China, but also that this process has gone along with a range of increasing disparities within and between cities that need to be addressed. Stimulated by a conference held at Xi’an Jiaotong – Liverpool University in June 2015, the majority of contributions to this issue come from (young) Chinese academic researchers, which guarantees a unique inside and expert view on the topics at hand. This Editorial will not only briefly introduce and summarize the various contributions, but also provide some historical background on the process of urbanization in China. These stylized facts then set out an agenda for the eight articles in this issue. The final section briefly summarizes the contributions of these articles. Recent evidence shows that our ancestors were already engaged in building projects constructed by groups of people as long as 175,000 years ago, when they created large mysterious cave structures about 300 metres from a cave entrance in France ( Jaubert et al., 2016 ). It is, of course, a long way from these early structures to something we could call a city. There is an ongoing debate about what constitutes a ‘city’ (involving specialization, trade, institutions and infrastructure) or not (see Compton, 2015 , also for the discussion below). It is clear, however, that city development is related to the agricultural revolution, which started in the Fertile Crescent around 8500BC. To illustrate the history of (global) urban development, we focus on the world’s largest city over time. Following Chandler (1987) , who uses a range of methods to estimate the size of a city, Figure 1 illustrates the evolution of the size of the largest city for the past 5,000 years using a log scale. Memphis (Egypt) was probably the largest city in 3000BC, with a modest population size (according to modern standards) of 30,000 inhabitants, which is dwarfed by modern urban giants like London, New York and Tokyo. 1Figure 1 shows that the size of the world’s largest city started to rise particularly quickly after 1200AD. Given the topic of this issue, we want to highlight the fact that Chinese cities figure quite prominently in Figure 1 . The world’s largest city since 3000BC. Source : based on data from Chandler (1987) , updated for Tokyo metropolis in 2015; non-Chinese cities indicated with circular markers, all other cities are Chinese. In view of the size of its population, not only currently but throughout history, it comes as no surprise that Chinese cities played an important role in the ‘largest city’ competition. Chandler (1987) identifies ( Figure 1 ) five Chinese cities as largest city at some point in time. All five are located in current East–Central China (see Figure 2 ). China, its neighbours, and the world’s largest Chinese cities in history. The first Chinese city that was at one time the largest in the world is Xi’an (or Chang’an, Shaanxi province), one of the Four Great Ancient Capitals of China and well known for its terracotta warriors. It was the largest city, with 400,000 people around 200BC and again (with the same size) around 600AD. Kaifeng (Henan province), a former capital of the Song dynasty, was the largest city of the world around 1000–1100AD, with a population size of about 400,000 people. Hangzhou (Zhejiang province), the southern terminus of the Grand Canal, had the honour of the world’s largest city from 1200 to 1350, with a population rising from 255,000 to 432,000. It was briefly replaced by Nanjing (Jiangsu province), another of the Four Great Ancient Capitals, around 1400 with a population of 487,000. Nanjing was replaced by the province-city Beijing, yet another of the Four Great Ancient Capitals, which was the largest city around 1450–1500, and again around 1750–1800. Its population rose from 600,000 to 1.1 m in this time period. 2 Beijing was overtaken by London (first city to reach five million), New York (first city to reach 10 million), and Tokyo (first city to reach 20 million and 30 million). All five Chinese cities mentioned above are still large today by world standards. Today more than half of the world’s population lives in cities, but this is a relatively recent phenomenon. In 1960 about 34% of the world population lived in cities, rising to 53% in 2014 and crossing the 50% threshold only in 2011 (see Figure 3a ). As one might expect, there is a high positive correlation between the share of the rural population and the share of income or employment generated in agricultural activities. Since the latter is negatively correlated with general development levels (as measured by income), there is a positive correlation between income levels and urbanization. This is illustrated in Figure 3a for the high-income OECD member countries, where the share of the urban population was 64% in 1960 (almost twice the world average), rising to 81% in 2014 (28 percentage points higher than the world average). Urban development since 1960. Source : based on data from World Development Indicators online; urbanization: urban population (% of total); panel b: urban population in million; panel c: rural population in million; OECD = high income Organization for Economic Cooperation and Development countries. Figure 3a also depicts urbanization developments in China and India, by far the two largest countries in terms of total population. In 1960 the degree of urbanization was substantially below the world average in both countries, and slightly lower in China than in India, namely 16 versus 18%. In India the developments are stable: the urban population share rises steadily every year and reaches 32% in 2014. In China the developments are much more dramatic (see also below). Initially, the urban population share rises from 1960 to 1964 (from 16.2 to 18.3%), but then it declines until 1972 (to 17.2%) and slowly crawls back until 1977 (to 17.5%). From 1979 on the urban population share starts to rise quickly (more than 0.7 percentage points per year) and even more strongly from 1996 onward (more than 1.0 percentage points per year), reaching 54% in 2014 and surpassing the world average in 2013. Panels b and c of Figure 3 show the impact on the absolute number of people living in cities (panel b) and in rural areas (panel c). For the high-income OECD countries the urban population rose by 86% or 400 million people in the period 1960–2014 (from 463 to 863 million), while the rural population declined by 20% or 50 million people (from 257 to 207 million). In the same period, the Indian urban population rose by 420% or 339 million people (from 81 to 419 million) and the rural population by 137% or 507 million (from 369 to 876 million). In absolute terms, the population increase in India is thus larger in the villages than in the cities. China takes care of the largest urban population increase in this period, namely by 587% or 634 million people (from 108 to 742 million). The increase in the number of people living in Chinese cities is thus higher than the current population size of the European Union, and about twice the current population size of the USA. In the Chinese rural areas, the population increased only by 11% or 63 million people (from 559 to 622 million). Those numbers are distorted, however, by the fact that there was a peak of 836 million people in the Chinese rural population in 1991 (meaning an increase of 50% or 277 million people in the period 1960–1991) and a substantial decline since then (a fall of 26 percent or 215 million people in the period 1991–2014). Under the simple assumption that the Chinese population growth is the same in the cities and the rural areas, the implied migration flow from the villages towards the cities in China is a staggering 461 million people in the period 1960–2014. 4 If the population growth rate is higher in the rural areas, the implied migration flows are even larger. The Chinese Hukou system, that limits migration from rural regions to the city, is partly motivated by the desire to handle these enormous migration flows towards cities (see Bosker et al., 2012 ). 5 China’s (urban) development is dramatically different before and after the Economic Reform (ER) process started by Deng Xiaoping in December 1978, as illustrated in Figure 4 (panel a in levels and panel b in changes). Before 1979 the urban population share is stagnant (at about 17.5%), as is income per capita relative to the world average (at about 3.3%). In the early 1960s income declines as a result of Mao’s Great Leap Forward, causing the death of millions of people, while urbanization rises slowly. From 1966 to 1976 the effects of the Cultural Revolution become visible, in part with forcible re-location of people to the countryside and a decline in urbanization. China: urbanization and income per capita since 1960. Source : World Development Indicators online; urbanization: urban population (% of total); income per capita: GDP in constant 2005 USD (% of world average GDP in that year); changes in percentage points. Mao’s death in September 1976 led to a reinstatement of Deng Xiaoping, who soon afterwards adopted Economic Reform policies to expand rural incentives, encourage enterprise autonomy, reduce central planning, open up to international trade flows with the outside world, establish foreign direct investment in China and pass new legal codes. This led to a sharp increase in both the degree of urbanization and relative income per capita since then, with a peak in 2009 when China’s income per capita level rises 3.9 percentage points faster than the world average and urbanization rises 1.34 percentage points. As indicated in Figure 4 and briefly discussed above, the degree of urbanization tends to go hand in hand with rising income per capita, not only for China but also for all other countries. In China’s case, several researchers have argued recently that China is under-urbanized: see Lu and Tao (2009) , Fujita et al. (2004) and Au and Henderson (2006a , b ). Institutional restrictions on internal migration, notably but not exclusively the Hukou system, are largely held responsible for this outcome ( Bosker et al., 2012 ). The case for China’s under-urbanization is illustrated for the year 1995 in the bubble diagram of Figure 5 , which depicts the log of income per capita (in constant 2005 US$) on the horizontal axis and the degree of urbanization (urban population as percent of the total population) on the vertical axis for 186 countries. 6 The size of the bubbles is proportional to population in 1995. There is, obviously, considerable variation in the degree of urbanization and in the log of income per capita, but on average these two variables are strongly related: the slope of the regression line depicted in the figure is 10.9 and this line explains more than 55% of the urbanization variance. Since the observation for China is clearly below the regression line, it could be argued that China is ‘under-urbanized’ relative to other countries. A similar case can be made, in fact, for India, as also illustrated in Figure 5 . Urbanization and income per capita, 1995. Source: based on data from World Development Indicators online; income per capita: GDP in constant 2005 US$; urbanization: urban population (% of total); bubbles proportional to size of population in 1995. Without going into a discussion of causality as to the relationship between urbanization and income per capita (see also Brakman et al., 2014 ), we simply use the cross-section methodology illustrated in Figure 5 for 1995 as a method for determining a country’s degree of under- or over-urbanization in terms of the deviation (in percentage points) of the cross-section regression line in any given year (the slope in Figure 5 , 10.9, can be found in Figure 6a for 1995). Urbanization and income per capita regressions over time, 1960–2014. Source : see Figure 5 . Panel a of Figure 6 illustrates the estimated slope coefficient and (minus) the estimated constant for every year since 1960. The estimated slope tends to decline over time (from around 15 to 12), as does (in absolute value) the estimated constant. As panel b of Figure 6 shows, these effects are to some extent related to the number of countries for which we have information available in any given year, which rises from 91 countries in 1960 to a peak of 198 countries in 2005 and then declines again to 168 in 2014. This panel also shows that the explained urbanization variance is inversely related to the number of included countries, while a comparison with panel a shows that the number of included countries also has an impact on estimated slope and intercept. We take these issues as given and now turn to a discussion of the degree of over- or under-urbanization in China, based on this terminology. 7 Using the methodology explained anove, Figure 7 illustrates the degree of over- or under-urbanization in China since 1960. This suggests that China’s recently highlighted under-urbanization (with a smaller share of the population in cities than would be expected on the basis of its income per capita level) is a recent phenomenon, starting only in 1986. Before 1986 China was actually over-urbanized, with a higher share of the population in cities than expected on the basis of its income per capita level. The degree of over-urbanization reached a peak of 24.5 percentage points in 1964 and rapidly declined since then (although substantial throughout the 1960s and 70s). Deviation of urbanization for China and India, 1960–2014. Source : under- or over-urbanization in terms of the deviation (in percentage points) of the cross-section regression line in any given year (see Figure 5 for an illustration for 1995). China’s maximum level of under-urbanization occurred in 1995, with 8.1 percentage points fewer people living in cities than what would be expected on the basis of its income level, hence the reason to choose this year for our illustration in Figure 5 . Since 1995 China’s degree of under-urbanization has declined to only percentage points in 2014. The 1964 peak level of over-urbanization is illustrated in panel a of Figure . The recent level of modest under-urbanization in 2014 is illustrated in panel b of Figure . All in we that China’s degree of under-urbanization as in the recent have been substantial in 1995, but has by now (in line with Brakman et al., 2014 ). China’s more substantial degree of over-urbanization in the 1960s to have no in the Urbanization and income per capita, 1964 and 2014. Source : see Figure 5 size of bubbles proportional to population in 1964 (panel a ) and 2014 (panel b ). For comparison Figure 7 also shows the degree of over- or under-urbanization for India over the period 1960–2014. developments are similar to of China, in the that it from to to recently developments are different in the that its degree of over-urbanization was more modest percentage points in while its degree of under-urbanization is more substantial percentage points in and to to From this it a for the to start degree of than This our on urbanization in China. out is that the largest in the world in terms of population has seen a history of it has been to the largest cities in the world, a the and is rapidly since the of the economic reforms in 1978, urbanization in China also to other countries. Given the size of the and the variation in urbanization over time, China can a on the causes and consequences of urbanization. This is the topic of this issue. Since urbanization is related both to the level and growth of income per capita a of other understanding the process of urban development and its for economic development is key to understanding the process of economic development 5 and illustrate the positive relationship between urbanization and income per This positive relationship has been by to urbanization in to economic development ( World Bank, 2009 ). this relationship is far from from the of can or high in cities more urbanization and income per capita are by a of other like depicted in 5 and are in the more than simple A line of in urban and or economic that more urbanization and hence more economic development comes at a more uneven distribution of economic and income and people within countries. this is not it that the of 5 and are of as spatial disparities are of a of urban and economic development in China, the articles in this issue of the Cambridge Journal of the Regions, Economy and Society each of the that depicts urban development in China. They on a number of topics and can be grouped they also important of urban and economic development in the at A first topic the role of in Chinese and the effects within and between and cities. The of capital is addressed. A topic deals with the of population dynamics and migration for urban development in China. The growth of the population as well as the spatial of the population is both a and driver of urban development. In the first topic the role of or capital in Chinese urban and economic development, the the role of A topic the role of transport and infrastructure for urban and economic development in China. It does by the or spatial of this development the of the impact of infrastructure and also by a of a in China. The and final topic the role of the financial in economic development. the other topics focus on trade and this topic the financial and into the impact of for economic development in China. to the first the by and the rise of China from a to world over the two using a Chinese in and are to of the countries of the (the European Union, and the as well as to of other large India, and The both in and China an to that of the areas of the world than that of other countries. it comes to the central of this issue, it is found that Chinese is much more than in other countries. This of have until now in China, but it is argued to in terms of the of the The by and the effects of on and the size of effects for and high point towards the important role that has on increasing some that regions a of The also however, that increasing and disparities in between This uneven development in China. The and that the topic is by and who use data of the Chinese from to 2011 to the distribution of and high-income from they show that an important role in for role is important in They this to the in the the is to the sector. The topic the of population dynamics and migration for urban development in China. There are two articles that this The by and uses data to the between population dynamics and economic development by the spatial between the Hukou and Hukou population. They show that economic development is of more Hukou population. growth development and on where Hukou population for a larger than its that the Hukou is still to the by economic development and social The on urban population dynamics and migration, by and on the migration of in China. They migration from the of the of each migration in a migration history. They that at first migration, the of and the and of cities have effects on the of to other cities. The role of transport and infrastructure is the topic in our issue on urban development in China. The by and the effects of and infrastructure on the growth of cities using a panel Chinese cities over to the of infrastructure for of city that of The cities are found to more from these than cities. the impact of transport on economic growth are in the but in central China. China strongly from in infrastructure even infrastructure is already The on infrastructure and transport is by and it and to the on an of and it on the of and for in this It more spatial over internal and and thus have been in this while at the same time Beijing the in all The final in this issue is on the role of the financial and more particularly on for economic and development. and the relationship of financial development to income growth in China that by for investment in capital and held back the growth of by and They variation in growth to that the effects are with more The are with an investment in China’s development They that a more and more of would The topics in this issue are but all contributions that China is currently rapidly and is to the of urbanization and The of urbanization in terms of more spatial inequality and social and problems however, also and on urbanization in China be to more on the when it comes to the and of urbanization.