MCLC: Chengdu model vs. Chongqing model

[Denton, Kirk]

MCLC LIST
From: kirk (denton.2 at osu.edu)
Subject: Chengdu model vs. Chongqing model
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Source: NYT (1/7/12):
http://www.nytimes.com/2012/01/08/opinion/sunday/what-china-can-teach-europ
e.html?

OPINION
What China Can Teach Europe
By DANIEL A. BELL

FROM the outside, China often appears to be a highly centralized
monolith. Unlike Europe¹s cities, which have been able to preserve a
certain identity and cultural distinctiveness despite the homogenizing
forces of globalization, most Chinese cities suffer from a drab uniformity.

But China is more like Europe than it seems. Indeed, when it comes to
economics, China is more a thin political union composed of semiautonomous
cities ‹ some with as many inhabitants as a European country ‹ than an
all-powerful centralized government that uniformly imposes its will on the
whole country.

And competition among these huge cities is an important reason for China¹s
economic dynamism. The similar look of China¹s megacities masks a rivalry
as fierce as that among European countries.

China¹s urban economic boom began in the late 1970s as an experiment with
market reforms in China¹s coastal cities. Shenzhen, the first ³special
economic zone,² has grown from a small fishing village in 1979 into a
booming metropolis of 10 million today. Many other cities, from Guangzhou
to Tianjin, soon followed the path of market reforms.

Today, cities vie ruthlessly for competitive advantage using tax breaks
and other incentives that draw foreign and domestic investors. Smaller
cities specialize in particular products, while larger ones flaunt their
educational capacity and cultural appeal. It has led to the most rapid
urban ³economic miracle² in history.

But the ³miracle² has had an undesirable side effect: It led to a huge gap
between rich and poor, primarily between urban and rural areas. The vast
rural population ‹ 54 percent of China¹s 1.3 billion people ‹ is
equivalent to the whole population of Europe. And most are stuck in
destitute conditions. The main reason is the hukou (household
registration) system that limits migration into cities, as well as other
policies that have long favored urban over rural development.

More competition among cities is essential to eliminate the income gap.
Over the past decade the central government has given leeway to different
cities to experiment with alternative methods of addressing the
urban-rural wealth gap.

The most widely discussed experiment is the ³Chongqing model,² headed by
Bo Xilai, a party secretary and rising political star. Chongqing, an
enormous municipality with a population of 33 million and a land area the
size of Austria, is often called China¹s biggest city. But in fact 23
million of its inhabitants are registered as farmers. More than 8 million
farmers have already migrated to the municipality¹s more urban areas to
work, with a million per year expected to migrate there over the next
decade. Chongqing has responded by embarking on a huge subsidized housing
project, designed to eventually house 30 to 40 percent of the city¹s
population.

Chongqing has also improved the lot of farmers by loosening the hukou
system. Today, farmers can choose to register as ³urban² and receive equal
rights to education, health care and pensions after three years, on the
condition that they give up the rural registration and the right to use a
small plot of land.

While Chongqing¹s model is the most influential, there is an alternative.
Chengdu, Sichuan¹s largest municipality, with a population of 14 million ‹
half of them rural residents ‹ is less heavy-handed. It is the only city
in China to enjoy high economic growth while also reducing the income gap
between urban and rural residents over the past decade.

Chengdu has focused on improving the surrounding countryside, rather than
encouraging large-scale migration to the city. The government has shifted
30 percent of its resources to its rural areas and encouraged development
zones that allow rural residents to earn higher salaries and to reap the
educational, cultural and medical benefits of urban life.

I recently visited a development zone composed of small firms that export
fiery Sichuan chili sauces. Most farmers rented their land and worked in
the development zone, but those who wanted to stay on their plots were
allowed to. So far, one-third of the area¹s farmland has been converted
into larger-scale agricultural operations that have increased efficiency.

More than 90 percent of the municipality¹s rural residents are now covered
by a medical plan, and the government has introduced a more comprehensive
pension scheme. Rural schools have been upgraded to the point that their
facilities now surpass those in some of Chengdu¹s urban schools, and
teachers from rural areas are sent to the city for training.

Empowering rural residents by providing more job opportunities and better
welfare raises their purchasing power, helping China boost domestic
consumption. And in 2012, Chengdu is likely to become the first big
Chinese municipality to wipe out the legal distinction between its urban
and rural residents, allowing rural people to move to the city if they
choose.

Chengdu¹s success has been driven by a comprehensive, long-term effort
involving consultation and participation from the bottom up, as well as a
clear property rights scheme. By contrast, Chongqing has relied on state
power and the dislocation of millions to achieve similar results. If
Chengdu¹s ³gentle² model proves to be more effective at reducing the
income gap, it can set a model for the rest of the country, just as
Shenzhen set a model for market reforms.

There are fundamental differences, of course: Chengdu¹s land is more
fertile and its weather more temperate, compared to Chongqing¹s harsh
terrain and sweltering summers. Life is slower in Chengdu; even the chili
is milder. What succeeds in one place may fail elsewhere.

Ultimately, the central government will decide what works and what
doesn¹t. And that¹s not a bad thing; it encourages local variation and
internal competition.

European leaders ought to take note. Central authorities should have the
power not just to punish ³losers² as Europe has done in the case of
Greece, but to reward ³winners² that set a good example for the rest of
the union.

Daniel A. Bell is a professor at Shanghai¹s Jiaotong University and
Beijing¹s Tsinghua University, and co-author of ³The Spirit of Cities.²