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Habitat International 27 (2003) 459483
Reinterpretation of Chinas under-urbanization:a systemic
perspective
Li Zhanga,*, Simon Xiaobin Zhaob
aDepartment of Geography and Resource Management, The Chinese
University of Hong Kong, Shatin, Hong KongbDepartment of Geography
and Geology, The University of Hong Kong, Pokfulam Road, Hong
Kong
Received 2 September 2002; accepted 28 October 2002
Abstract
Under-urbanization, dened as the achievement of a high
industrial growth without a parallel growth ofurban population, can
be plausibly viewed as a typical phenomenon of socialist economies
and is widelyrecognized in the special case of China. This paper
highlights the characteristics of Chinas under-urbanization and
demonstrates system-related elements with specic linkages to the
process ofurbanization. In contrast to the thrust of the extant
literature on urbanization in the context of socialisteconomies,
where industrialization strategies alone are taken as fundamental
in explaining the nature ofChinas urbanization, we have focused,
rather, on systemic characteristics to interpret Chinas
under-urbanization.r 2003 Elsevier Science Ltd. All rights
reserved.
Keywords: Under-urbanization; Socialist system; State-biased
development; China
1. Introduction
Chinas road to urbanization has been thought of as unique for it
is neither identical to theparallel-urbanization experience of
developed economies nor does it duplicate the over-urbanization
situation found in many developing countries (Lardy, 1983; Ran
& Berry, 1989;Lin, 1994; Lin, Cai, & Li, 1994; Young &
Deng, 1998; Dong & Putterman, 2000). In developedeconomies the
process of urbanization is generally closely connected with the
level of economicdevelopment, especially the level of
industrialization, while in developing countries increases inthe
urban population have far outpaced economic development (Davis
& Golden, 195455;Chenery & Syrquin, 1975). China has been
widely viewed as a case of under-urbanization.
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*Corresponding author. Tel.: +852-260-964-75; fax:
+852-2603-5006.
E-mail addresses: [email protected] (L. Zhang),
[email protected] (S.X. Zhao).
0197-3975/03/$ - see front matter r 2003 Elsevier Science Ltd.
All rights reserved.
PII: S 0 1 9 7 - 3 9 7 5 ( 0 2 ) 0 0 0 7 1 - 1
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Under-urbanization, rst dened by Konrad and Szelenyi (1977) as
the achievement of a highindustrial growth without a parallel
growth of urban population, implies an irregular de-linkageof
industrialization and urbanization. Though controversial to
conceptualization (Ronnas &Sjoberg, 1993; Sjoberg, 1999) and
hard to be assessed in full quantitatively, under-urbanizationcan
be plausibly viewed as a typical phenomenon of socialist economies
(Konrad & Szelenyi,1977; Ofer, 1977, 1980; Musil, 1980; Murray
& Szelenyi, 1984) and has also been empiricallyobserved in
post-1949 China (Cell, 1979; Orleans, 1982; Whyte, 1983; Ran &
Berry, 1989; Ebanks& Cheng, 1990; Chan, 1994b; Yu, 1995; Tang,
1997; Song & Timberlake, 1996; Lin, 1998; Dong &Putterman,
2000). In both the pre-reform era and the period of economic
transition, China hastried to restrict the magnitude of ruralurban
migration and the number of people entitled to anurban citizenship,
while its economic growth seems impressive. Despite very dynamic
ruralurbanmigration recently, ofcial gures as well as academic
estimates on urbanization level remain low(Zhang & Zhao, 1998;
National Bureau of Statistics of China, 2000).Explanation of
under-urbanization under socialism has drawn the attention of a
number of
scholars. As Ofer (1977) hypothesized, under-urbanization in
socialist countries was due, on theone hand, to a pushing-up
industrialization strategy and, on the other, to efforts to cut
down onthe costs of urbanization by using highly capital-intensive
production techniques in manufactur-ing and highly labor-intensive
modes of production in agriculture. He (1980) also showed
thatsocialist development strategies together with historical
legacies operated to bring about lowerlevels of urbanization
relative to a given degree of industrialization. Fallenbuchl (1977)
analyzedthe interrelationships between the changing levels of
economic development and socialistdevelopment strategies in Poland,
where the economic system was rebuilt in accordance with theSoviet
model. He argued that under socialism one would expect a lower
propensity to migrate intocities due to the promise of a greater
degree of income equality, the maintenance of fullemployment, and
more uniform levels of economic and social development across
regions.In an attempt to understand the Chinese phenomenon of
under-urbanization, past studies have
looked for explanations in policy choices based on Communist
ideological preferences (Murphey,1976; Buck, 1981; Parish, 1987, to
name just a few) or policy responses to the
forging-aheadindustrialization strategy (Kirkby, 1985; Kang, 1993;
Chan, 1994b; Solinger, 1999). Few studieshave made reference to, or
analysis of, the institutional logic of under-urbanization in the
contextof the Chinese economic system, though the role of that
system has not been entirely neglected.Besides, many existing
explanations are valid only for a given historical moment before
theeconomic reforms. Their analytical frameworks cannot accommodate
the changes which occurredin the reform period.The objective of
this research is to revisit the question and to come up with a
better
understanding for the persistence of under-urbanization in
China. Unlike current interpretations,in which the Chinese
experience is couched in ideological or economic terms, this
research wouldopen up a new line of inquiry based on the
institutional logic of an economic system that hashitherto shaped
Chinas slow tempo of urbanization. The overriding argument is that
under-urbanization is fundamentally constrained by the essential
nature of the Chinese economicsystem, where public ownership, as
one of the founding tenets of socialism, has been
ambiguouslydened.Under the central theme of exploring the systemic
impact on urbanization, the paper rst
highlights the Chinese characteristics of under-urbanization. It
proceeds into a review of current
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L. Zhang, S.X. Zhao / Habitat International 27 (2003)
459483460
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interpretations, which have largely inuenced the orientation of
this work. This is followed by aninquiry on the underlying
determinant of under-urbanization in China. Some concluding
remarksare offered in the last part of the paper.
2. Chinas characteristics of under-urbanization
2.1. A question of under-urbanization
Data released by the statistical authority have shown that
Chinas urbanization level hassteadily increased over time, though
not without uctuations (Fig. 1). Compared with mostcountries,
however, the level of about 36%, reported in the 2000 census, is
still low, even though isthe highest in the history of the Peoples
Republic of China (PRC). According to the statisticspublished by
the Population Reference Bureau (PRB, 2001), 46% of worlds
population lived inurban places by 2001. For most of the developed
countries the current urbanization levels arehigher than 75%. The
level in China is not only lower than the average level of
developingcountries as a whole, about 41% in 2001 when China was
excluded, but also lower than that ofsome socialist states such as
Cuba (75%) and North Korea (59%). Table 1 shows that
urbanpopulation grew at the rates much lower than, during 19651990,
and closer to, in other times,those of non-agricultural employment.
This suggests that many people have engaged in non-agricultural
employment, but not an urban way of life. Though the denitional
controversiesmight raise questions about the data comparability
across time and countries, it can be arguablyconcluded that China,
on the whole, has long been under-urbanized, despite the fact that
itseconomy has experienced impressive growth and that ruralurban
migration is increasinglyescaping state controls since economic
reforms.
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0
5
10
15
20
25
30
35
40
1952 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996
2000Year
Urba
niza
tion
Leve
l (%)
Fig. 1. Chinas urbanization level. Note: Data in year 2000 are
obtained from the advance tabulation of the 5th
national population census, with zero hour of November 1, 2000
as the reference. Source: National Bureau of Statistics
of China (2001a, p. 200).
L. Zhang, S.X. Zhao / Habitat International 27 (2003) 459483
461
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2.2. State control and under-urbanization
Under-urbanization in China is, as scholars generally perceived,
a consequence of urban-restricting policies with regard to
ruralurban migration, especially in the pre-reform period.Before
the reform, the regulation of domestic migration was carried out by
means of practicescomparable to those for controlling international
borders (Chan, 1996). Movement from villagesto urban areas was
largely de-personalized. Ruralurban migration was organized and
directed bythe state in accordance with its own needs and
priorities.1 There was a so-called closed citynetwork, where a
number of preconditions had to be met before one worked and resided
in a city,particularly a big city (Chan & Zhang, 1999). The
police was actively involved in overseeing themigration process
(Dutton, 1992). The state possessed full rights to refuse to issue
traveldocuments or to refuse to register a citizen at the abode of
his/her own choice.State control does not simply take the form of a
blanket prohibition and is not always outcome-
effective. First, the overriding intent of state control is to
permit no more urbanization of peasantsthan necessary for the
interests of the state, rather than to suppress any urban-ward
migration.This amounts to saying that control by the state is not a
purpose in its own right, but a means toensure its interests. In
fact, the state permitted increasing ruralurban migration as the
demandfor workers in the urban-based economies increased. In the
history of the PRC, there have beenseveral waves of authorized
migration into the cities. Second, while the system of
controlscontinuously maintains, it is not evident that it has been
consistently effective. Research onundocumented migration suggests
that people seemed to be able to circumvent regulations incertain
circumstances, but to what degree remains an open question (Yang,
1996). Under-urbanization obviously comes about in the context of
stringent (on paper) but somewhatineffective (in practice) state
controls.In the process of systemic reform and opening up, the
Chinese economy is increasingly bound
to outside market systems. This raises questions as to the
continuation of state control in the
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Table 1
Annual growth rates of urban population and employment (%)
Period Urban population Employment
Agricultural Non-agricultural
195265 4.72 2.34 3.41
196580 2.59 1.47 6.33
198090 4.66 2.81 6.77
19902000 4.27 0.8 3.39
Note: Data in year 2000 are obtained from the advance tabulation
of the 5th national population census, with zero hour
of November 1, 2000 as the reference.
Sources: National Bureau of Statistics of China (2001a, p. 200;
2001b, p. 108).
1By state, we mean the structure of power consisting of the top
leadership and the various agencies of the ofcial
bureaucracy, both Party and government, established for the
protection and maintenance of society. The interests of the
state, therefore, represent the interests of that power
structure, not the common interests of citizens living in a
given
territory with internationally recognized political
boundaries.
L. Zhang, S.X. Zhao / Habitat International 27 (2003)
459483462
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process of systemic reform and globalization. State intervention
with regard to urbanizationduring the transitional period of the
economic system remains signicant in various ways. Thoughstate
regulations are now less intrusive and less effective in preventing
rural people from movingto the cities, the state reserves its power
to grant full urban citizenship and to limit the destinationsof
peasants on the move (Zhang, 2000). The large number of temporary
urban residents thesedays is a reection of concrete effort on the
part of the state to control the urbanization process.2
Restrictions on the employment rights of rural labor in cities
are another sign reecting that thestates continued attempts to
exert controls over ruralurban migration. The practice of
hiringpeasant labor for urban jobs has been codied in a series of
regulations issued by variousdepartments of the central government
since the economic reform (Table 2). The frequentmodication of
urban administrative system has put a large portion of the rural
economy andsociety under some forms of state control (Tang, 1997,
p. 55). When it comes to an accounting forthe changes up to now,
one would have a hard time concluding that urban migration in
thecurrent transitional period, albeit on the upswing and more and
more market-driven, is genuinelyfree from state
control.Under-urbanization in China, in effect, also represents a
seriously distorted relationship
between economic development and urbanization as conventionally
understood on the basis ofWestern experience in several regards:
notably the politicization of urban settlements and
urbancitizenship, the discretionary terms of trade against
agricultural products to generate economicsurpluses for state
needs, and the biased allocation of resources in favor of state
interests at theexpense of peoples interests as individuals.
2.3. Politicization of the size of urban population
In the Chinese case, the level of urbanization can be affected
through administrativedesignations that spell out the ofcial
qualications for urban settlements and for urbanpopulation (Zhang
& Zhao, 1998). Urban status has to do with a settlements
hierarchicalposition and prestige in the Chinese economic system as
well as with the level of the statesnancial responsibility. Though
the designation criteria are set down on paper, the rules as
carriedout in practice vary widely. Politically, in all versions of
the urban designation criteria, room isalways reserved for
administratively important settlements regardless of size and other
urbanattributes. Financially, urban designation is often linked to
commitment made by the state. Citystatus can bring economic
benetsbesides carrying a prestige factor which is hard to
quantifybecause cities enjoy considerable advantages denied to
other kinds of settlements. The fact thatthe state is reluctant to
designate certain settlements and deliberately remove some from the
urbansystem may arise from its desire to avoid its nancial
obligations and to have greater exibility inuse of its resources.
As a result, the number of urban settlements has uctuated
periodically, onthe face of it because of changes in the
designation criteria but mainly because of changes in thestates
political and economic perspectives. Such irregularities in the
working of the urbanclassication schemes can be seen as causes of
serious distortion and devaluation of the count ofurban centers and
of their populations.
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2Depending on the denitions used, the estimates of the stock of
temporary urban residents from the countryside
vary from 33 to over 70 million by year 2000 (for example, see
Ma & Xiang, 1998; Wu, 1999; Wang, 2000; Smith, 2000).
L. Zhang, S.X. Zhao / Habitat International 27 (2003) 459483
463
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Table 2
Policies concerning recruitment of rural Labor in certain urban
industries since 1979
Issued date
(dd/mm/yy)
Issuer Document title
24/10/1979 Ministry of Coal Guanyu meikuang zhaoyong gongren
ruogan wenti di
tongzhi (Provisions concerning some issues in the
recruitment of coal worker)
11/12/1981 Ministry of Coal Industry, State General
Bureau of Labor
Guanyu guoying meikuang shiyong nongcun xieyigong
bixu naru guojia laodong jihua de tongzhi (Circular on
undoubtedly bringing the employment of rural contract
labor of state-owned coal-mines into the scope of state
employment planning)
18/08/1982 Ministry of Metallurgical Industry,
Ministry of Labor and Personnel
Guanyu tongyi zhongguo huangjin zonggongsi zai
kuangshan jingxia jinxing nongmin hetonggong zhidu
shidian de tongzhi (Circular on approving the pilot
scheme suggested by State Gold General Company
concerning the system of rural contract labor in mine-
excavating enterprises)
30/06/1984 State council Guanyu Kuangshanqiye shixing nongmin
lunhuangong
zhidu shixing tiaoli (Circular on the tentative regulations
for the application of the system concerning the
recruitment of rural rotating worker in mine-excavating
enterprises)
18/07/1984 Ministry of Labor and Personnel,
Ministry of Post and Telecommunications
Guanyu xiang youdiyuan he zhuduan xianwuyuan cong
nongmin zhong zhaoyong hetongzhi gongren de shixing
banfa (Tentative regulations for the application of the
system concerning the recruitment of contract mailmen
and wiremen from rural labor)
05/10/1984 Ministry of Labor and Personnel,
Ministry of Urban and Rural
Construction and Environmental
Protection
Guanyu guoying jianzhu qiye zhaoyong nongmin
hetongzhi gongren he shiyong nongcun jianzhudu
zanxing banfa (Interim measures for the recruitment of
rural contract labor and the employment of rural
construction team by state-owned construction
enterprises)
19/12/1984 Ministry of Labor and Personnel Guanyu jiaotong,
tielu bumen zhuangxie banyuan zuoye
shixing nongmin lunhuangong zhidu he shiyong
chengbaogong shixing banfa (Tentative measures
concerning use of rural rotating workers and use of
responsibility workers in the goods loading and
transporting posts of transportation and railways
industries)
07/02/1985 Ministry of Labor and Personnel Guanyu dizhi
kuangchang deng bumen zhaoyong
nongmin lunhuangong wenti de tongzhi (Circular on the
recruitment of rural rotating workers in the geology and
mineral resource industries)
10/11/1986 Ministry of Labor and Personnel Guanyu waishang touzi
qiye yongren zizhuquan he
zhigong gongzi, baoxian fuli feiyong de guiding
(Regulations for the authorization of decision-making
for the employment, salary, and welfare in foreign-
invested enterprises)
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459483464
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The overall changes in the urban population may be, to a large
extent, the result of the frequentredenition of urban
administrative boundaries via territorial annexation and
de-annexation, notthe result of ruralurban migration. During
administrative reorganizations, many rural areas wereannexed by
cities with a legislative basis but without a standardized form.
This administrativeannexation of rural territory was constrained by
different political and economic considerations atone time or
another (Kirkby, 1985; Ma & Cui, 1987). No matter what the
purpose, the boundariesof designated urban settlements were
arbitrarily demarcated by the state, often involving theaddition
and deletion of urban population.Urban population is not regarded
as one population category based on residence and
occupation but is politically dened as a controllable social
segment. In most cases, urbanpopulation ofcially refers to the
non-agricultural household registration (hukou) populationonly.
This ofcial denition, with its emphasis on the hukou status,
de-emphasizes the signicanceof actual differences in occupation and
place of abode between the rural and urban
populations,respectively. The hukou treatment of the urban
population allows the state to manipulate urbancitizenship to its
own advantage in order to maintain loyalty or to redress the
grievances of certaingroups who are perceived as essential to
national development. The political conferment of urbanstatus
trumped economic rationale in the process of urbanization. The
actual size of the urbanpopulation, showing itself to be more than
a simple addition of statistical feats, never trulyreected the
economic need for a shift of the labor force from agricultural to
non-agriculturalsectors in the drive toward industrialization.
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Table 2 (continued)
Issued date
(dd/mm/yy)
Issuer Document title
13/02/1987 Ministry of Geology and Mineral
Resources, Ministry of Labor and
Personnel
Guanyu dizhi kuangchan bumen gaige laodong zhidu
wenti de tongzhi (Circular on some issues concerning the
reform of employment system in geological and mineral
enterprises)
05/10/1989 State council Quanmin suoyouzhi qiye linshigong
guanli zanxing
guiding (Tentative provisions for the administration of
temporary workers in the state-owned enterprises)
25/07/1991 State council Guanyu quanmin suoyouzhi qiye zhaoyong
nongmin
hetongzhi gongren de guiding (Provisions for the
recruitment of contract peasant workers for state-owned
enterprises)
02/11/1992 General Ofce of Ministry of Labor Guanyu guanche
quanmin suoyouzhi qiye zhaoyong
nongmin hetongzhi gongren de guiding zhong youguan
wenti de fuhan (Response to some issues concerning
implementation of provisions for the recruitment of
contract peasant workers for state-owned enterprises)
17/11/1994 Ministry of Labor Nongcun laodongli kuasheng liudong
jiuye guanli
zanxing guiding (Tentative provisions for the
administration of cross-province employment of rural
labor)
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465
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Whatever their size and importance for the urban economy in the
reform period, personsholding agricultural hukou but engaging in
non-agricultural activities and regularly residing inurban areas
have been ofcially excluded from the urban population. They are
forced to remain inthe category of urban temporary population and
are also given little likelihood of acquiringurban hukou despite
their de facto urban occupation and domicile. The exclusion of
certain partsof the de facto urban population from the states tally
of urban population is not statisticallyaccidental, but rather
follows from the states concerns with regard to urban citizenship
(Solinger,1999). It is the citizenship question that has caused the
Chinese experience with trying to dene theurban population to
deviate from international practices whereby urban populations are
normallytallied on the basis of actual occupation and de facto
place of abode.
2.4. Resource generation and allocation, and
under-urbanization
Chinas under-urbanization can be associated with, moreover,
questions of resource generationand allocation. The historical
experience of developed countries shows that the
economicdevelopment process and accompanying urbanization represent
a structural transformation froman economy dominated by agriculture
to one dominated by non-agricultural activities. Therefore,it is
generally believed that the agricultural sector needs to make a net
transfer of resources, bothcapital and labor, to other sectors in
the processes of economic transformation and urbanization.Two
crucial issues in the Chinese context of resource transfers to be
singled out are the terms oftrade offered by the state in its
seizure of the resources required for industrialization and the
owof resource spending geared to achieve the paramount state
interests.Through its use of discretionary revenue extraction, the
state rapidly expanded its investment
on non-agricultural sectors (particularly on military-related
industry and on state administration)in the past decades.3 On the
basis of an analysis of the scissors pricing mechanism
(underpricingagricultural products relative to industrial products)
to which the state had recourse for nancingits industrialization,
it has been argued that this kind of resource transfer did not
necessarilyfavor a high rate of urban employment, regardless of the
magnitude of the seizure of resourcefrom the agricultural sector
(Zhang & Zhao, 2000). When resources were articially
extractedfrom the agricultural sector and diverted to manufacturing
sectors, investment policies favoredthe unbalanced expansion of
industry. The structural change in terms of output values
seemedimpressive. Simultaneously, however, various constraints were
created to limit the role ofagriculture with regard to changes in
the structure of employment. Ironically, it made agriculture,a
rickety foundation for any development strategy in predominantly
agricultural societies, anobstacle rather than a spur to
industrialization. Conversely, the policy of
underpricingagricultural products had little effect on declines in
the proportion of the total labor force thatwas engaged in
agriculture.Looking at the key areas of state expenditures, it
would seem that the state had used up its
limited resources at the expense of civilian interests (Zhang
& Zhao, 2001). Signicant spendingon the military and on
bureaucratic organizations had drained a substantial portion of
itseconomic and human resources. This pattern of resource
mobilization and allocation, rooted in
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3The means of resource extraction and the patterns of resource
allocation and their impacts on Chinas urbanization
have been intensively examined elsewhere. For example, see Zhang
and Zhao (2000), Zhang and Zhao (2001).
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459483466
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the needs of the system, has sufced to maintain generally high
rates of industrial growth at theexpense of civilian interests and
has led to a relatively comprehensive industrial structure with
anemphasis on heavy industry. However, such a strategy has certain
features which clashed sharplywith the resource endowments and
capacities in China. It exacerbated employment problems witha low
level of non-agricultural job creation in the Chinese labor-surplus
economy. This wasassociated with a low demand for urban labor and
thereby produced a less than positive impacton urbanization during
the process of structural change. It is also easy to show that the
pace ofurbanization tended to be determined more politically than
economically by politicizing theacquisition of urban residence
rights (Zhang & Zhao, 2001, pp. 518520). The diversion
ofresources by the state contributed relatively little to the
promotion of urbanization.The various kinds of evidence we have
presented should sufce to demonstrate that Chinas
under-urbanization is characteristically linked to state control
on the one hand, and state-biaseddevelopment patterns on the other.
It can be argued that the underlying logic and the drivingforces
that have led to under-urbanization in China should be
conceptualized in terms of thejuxtaposition of indispensable state
control and of state-biased development inherent in itseconomic
system. Before we elaborate this argument, let us rst review many
ne studies that havebeen devoted to the explanation of Chinas
under-urbanization.
3. Extant interpretations
The extant literature on the logic of Chinas under-urbanization
can be crudely divided into twogenerations of thought. The rst
generation, known as the rural-bias school, prevailed beforethe
early 1980s. It saw the Chinese pattern of limited urbanization as
a by-product of anti-cityideology (Salaff, 1967; Murphey, 1976;
Lewis, 1971; Chen, 1972; Kojima, 1987; Buck, 1981;Jameson &
Wilber, 1981; Parish, 1987). The second generation, categorized as
the urban-biasschool in this paper, viewed the restricted urban
population as a consequence of developmentstrategies that favored
the industrial/urban side (Kirkby, 1985; Kang, 1993; Chan,
1994b;Naughton, 1996; Solinger, 1999; Liu, 1999). To date, the
notion of the urban-bias school iswidely read and inuential.The
rural-bias school held that the ideology of anti-urbanism or
pro-ruralism was heir
to the rural essence of the Chinese Communist Party (CCP) and
represented a Marxist analysis ofantagonistic class contradictions
between city and country. It was noted that the CCP had deeppeasant
roots4 and that the Chinese communist revolution was historically
the last of many ofrural-based peasant rebellions (Lieberthal,
1995). It was instinctive for this peasant party, afterhaving
seized power, to aunt its ruralist sympathies. From the perspective
of ruralurbanantagonism, the traditional ruralurban relations
embodied various forms of urban dominanceand exploitation
(Harrison, 1972; Murphey, 1974; Ma, 1976; Nolan & White, 1984;
Prybyla,1987). The countryside was politically ruled, economically
exploited, and culturally oppressed forthe benet of the city. The
city was seen as a political center where ruling elite would impose
lawonto peasants, an economic center where rural taxes would be
collected and agricultural surplus
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4 In the initial period of the CCP takeover, over 90% of the
members were of peasant origin and most of the leaders
came from peasant stock (Lieberthal, 1995).
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467
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would be absorbed, and a parasitic center of consumption where
capitalism could take shape.Since the Communist revolution was
rural-based and reected rural interests, the urbanexploitation of
the countryside could not be tolerated and urban consumption was to
besuppressed. It was the task of socialist construction to
eliminate ruralurban antagonisms and toreform city functions. A low
rate of urbanization was an outcome of anti-urban
ideologicalpreferences. Maos famous article On the Ten Great
Relationships, his notable articulation ofthe need for the
simultaneous development of industry and agriculture, and his goal
ofultimately eradicating ruralurban differences were all mentioned
as theoretical grounds for therural-bias school. Empirical evidence
to illustrate the stance of anti-urbanism included thereduction of
agricultural taxes, rural industrialization, the development of
pro-agriculturalindustries, and the relocation of urban
intellectuals and young people to the countryside under thebanner
of political slogans handed down from above (Chen, 1972; Bernstein,
1977; Ma, 1977).5
For a certain historical period, the concept of anti-urbanism
offered a ready explanation for theurban hiatus in China.
Nonetheless, this school was ultimately discredited by its
misconception ofChinese development strategies, as evidence
gradually appeared of urban-bias policies and theirimplementation
in practice.Contesting the notion of anti-urbanism, a group of
scholars, mainly Kirkby and Chan, came up
with a different perspective on the complexity of the
urbanization process in the context ofsocialist industrialization
strategies. This school of thought, addressing the notions of
urbanbias6 and economizing on urbanization costs,7 rejected the
ruralist interpretation as amisreading of the nature of Chinas
development strategies and suggested an economic ratherthan an
ideological interpretation. They argued that urban bias represented
a realistic descriptionof crucial economic policies with regard to
sectional interests in China. Those policies includedcity-based
industrialization (Kirkby, 1985; Kang, 1993; Chan, 1994b; Liu,
1999), a scissors gappricing system (Oi, 1993; Naughton, 1996), and
favorable measures to protect the privileges ofurbanites (Chan,
1994b, 1996). Taking into account the impact of the
industrialization favored bythe state, this school viewed
urbanization primarily as a cost incurred in the pursuit of
thatindustrialization. It proposed that it was the socialist
industrialization imperative, whichattempted to maximize industrial
output while simultaneously maintaining urban manageabilityand
minimizing urban costs, that provided the rationale for government
urban-closed and
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5For instance, well-known political slogans for mobilizing urban
residents to the countryside were constructing a
new socialist countryside and abolishing the three major
differences (between manufacturing and farming, between
city and country, and between manual and mental labor).6The
notion of urban bias has a long history, dating from the 1920s when
policymakers in the Soviet Union
considered agricultural/industrial as well as rural/urban
relations in the context of socialist industrialization. It was
a
deliberate choice among possible answers to the question of how
industrialization was to be nanced from the
standpoint of the central planners (Bideleux, 1987). The terms
of trade between rural and urban products were policy-
biased in favor of the urban formal sector. In the non-socialist
context, the idea was put forward by Lipton (1977) to
explain why poor people stayed poor in underdeveloped countries.
It is dened in terms of resource allocations that are
both inequitably and inefciently pro-urban and, at the same
time, in terms of institutions and policies that are against
agriculture. There are different institutional requirements,
consequent upon the pursuit of urban-bias policies in the
socialist and non-socialist countries, respectively.7
Economizing on urbanization costs was rst raised by Ofer in his
study of the structural change in socialist
economies. He argued that the choice of economizing on
urbanization costs was one requirement for maximizing
industrial investments and therefore for fast industrialization
(Ofer, 1974a, b).
L. Zhang, S.X. Zhao / Habitat International 27 (2003)
459483468
-
urban-restricting policies.8 The existence of the rigid hukou
system to control spontaneousmigration, the ofcial or quasi-ofcial
revelation of wide inequalities between rural and urbanareas, and
discriminatory policies against agriculture and the rural
population were offered asstrong empirical evidence in support of
urban-bias arguments.Despite their profoundly different handling of
specic research questions, there were indeed
some points of commonality between the two schools in theorizing
why pervasive industrializa-tion came with a low level of
ruralurban migration and relatively slow urbanization. Bothschools
explicitly recognized that free ruralurban migration had always
been unacceptable inChina, which meant that the role of state
control on urbanization was crucial in anyunderstanding of the
Chinese experience. They agreed on the critical importance of
theconicting relations between industry and agriculture, and
between town and country inexplaining Chinese urbanization.
Specically, both made much of a strict and antagonisticdivision,
created and maintained by severe institutional and administrative
measures, between cityand country. Therefore, neither disagreed
about the signicance of resource misallocation amongthe various
economic sectors in shaping Chinese urbanization. They suggested
that thediscriminatory policy decisions acted like a weighted dice
to tilt economic and social advantage(particularly with regard to
scal demand and resource allocation) toward one side against
theother.9 By looking at the pattern of inter-sectoral conict, they
inferred that the process ofurbanization in socialist China was a
function of underlying development strategy. And nally,they
emphatically related the role of the state to any explanation of
urbanization in China.Judging from their focal areas and regardless
of their convictions, we can conclude that bothschools were trying
to come to grip with the critical issues of socialist urbanization:
that of directstate control and the role of the state, the choice
of development strategies, and agriculture/ruralas opposed to
industry/urban relations. To be sure, their studies, respectively,
have offeredthoughtful insights with regard to slower urbanization
in China.One inference, from the review of prior studies, is that
the process of urbanization is, in general,
historically and socially embedded in specic political and
economic systems. As they came todevelop their own conceptions,
both schools recognized the uniqueness of the Chinese
experienceunder socialism and the irrelevance of Western theories
for interpreting the Chinese case. Mostof the inuential
urbanization theories are based upon an analysis of market-based
capitalism.Since markets have been mostly absent from pre-reform
China and are still seriouslyunderdeveloped even now in the current
transitional period, meaningful interpretation is
ARTICLE IN PRESS
8These policies, as Chan (1994b) pointed out, included tight
control of ruralurban migration, rustication of urban
residents to the countryside, restriction of the urban dependent
population, intensive use of the urban infrastructure
and limited expansion of the service sectors.9For instance, both
schools agreed that the patterns of urbanization in China were
strongly related to the differential
allocation of resources between industry/city and
agriculture/countryside. But a controversial aspect of the
debate
between the two schools was the extent to which agriculture had
provided capital funds for industrial accumulation and
for urban development, and the desirability and the ability of
policy intervention to accelerate the rate of this
accumulation by trying to manipulate the direction and magnitude
of the ow of the agricultural surplus. While the
rural-bias school emphasized resources into the countryside from
the state through the invisible account (for
example, large government subsidies to the agricultural sector
on the input side), the urban-bias school maintained
that, in the sectoral allocation of government investments and
in resource extraction, the agricultural sector was largely
sacriced. This argument was often supported by claims that
agriculture had made its contribution in the form of
underpriced agricultural products sold to the state for nancing
the non-agricultural sectors (Lardy, 1983).
L. Zhang, S.X. Zhao / Habitat International 27 (2003) 459483
469
-
impossible without serious scrutiny of the non-market nature of
the Chinese economic system.The critical issues addressed by
current notions might suggest, implicitly at least, a logical
relationbetween the evolution of the Chinese economic system and
the process of urbanization. Therefore,we propose an analysis of
the socialist ownership relations, the dening basis of socialist
economicsystem, as a starting point for our analysis.In line with
this perspective, one could argue that any theory to explain
processes and outcomes
in socialist countries should take into account the
institutional logic specic to the socialisteconomic system. The
role of the socialist state in development and in the choice of
developmentstrategies should be seen in terms of the changing
requirements of specically socialist ownershiprelations, not simply
as a reection of state preferences. Similarly, urbanization
patterns should beseen as having been fundamentally shaped by the
de-personalized character of Chinese propertyrelations. As the two
schools have acknowledged, direct state control and the rush
toindustrialization have largely determined the rate of Chinese
urbanization. However, statecontrol and development strategies
cannot be understood apart from the socialist economicsystem in
China. The logic of state control and the absence of markets were
rooted in deeperinstitutional necessities. So was the forging-ahead
development. By the same logic, any changesin the forms and
intensity of state control and in development policies should be
linked to changesin the nature of the underlying economic system.
From this standpoint, our interpretation ofurbanization in the
Chinese context shares the view of those institutionalists who
treat thefunctional interaction between the state and property
rights as decisive in any attempt atunderstanding the important
issues underlying the ongoing development process (North,
1990;Eggertsson, 1990). Chinas under-urbanization, in effect, is
interpreted not merely as the result ofgood or bad government
policy but as the outcome of a series of urbanization checks
inherent inthe contradictions of the Chinese economic system. Those
contradictions (such as a disconformitybetween advanced property
relations and a backward economy, and conicts between
stateinterests and civilian needs, see discussion below) had
functioned as constraints on the policypriorities in the rst place.
Those variables (state control, resource spending, unbalanced
ruralurban relations, etc.) commonly identied in current literature
as having negatively affectedChinese urbanization are to be
re-conceptualized, in our analysis, within the framework of
theinstitutional necessities of the Chinese economic
system.Arguably, the processes of urbanization cannot be understood
without accounting for the
economic system as determined by the characteristics of property
relations. The role of propertyrelations is fundamental in that
constraints are imposed on the formulation of
developmentpreferences and an institutional foundation is provided
for the implementation of designateddevelopment choices. This does
not mean that other forces are without inuence, but their role
isperceived as secondary.10 As Kornai (1992, pp. 8788) argued, the
socialist system differs rst andforemost from the capitalist system
in having replaced private ownership with public ownership.Given
that the role of the state could be dened as an automatic
consequence of socialist propertyrelations, state-biased
development, which determines the basic shape of the Chinese
politicaleconomy, is, therefore, a rational product of state
ownership dominance. In this context, it isunderstandable that
state interests are paramount in the formulation of development
policies,
ARTICLE IN PRESS
10This would be controversial to many. Few would argue that
property relations are unimportant, but there would
not necessarily be agreement on the weight we have assigned
them.
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459483470
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overriding all other interests. Again, state-biased development
was not just a by-product ofbureaucratic ambitions but was a result
of the socialist ownership relations in China. State-biased
development privileged military-orientated industry over the
civilian sectors, pushedquantitative industrialization ahead of
qualitative economic progress, production over consump-tion,
political priorities over economic rationales, and autarchic
tendencies over relations with theworld outside China. These
stylized aspects of state-biased development were all
associatedwith and are joint products of the Chinese economic
system. Many characteristic aspects ofstate-biased development,
such as rapid industrialization, unbalanced resource
allocationbetween the agricultural and the industrial sectors, and
their impact on urbanization, have beenintensively examined by the
prevailing urban-bias school (Chan, 1992, 1994a; Liu, 1999).
Buttheir discussion has been largely focused on the role of the
state on urbanization in conjunctionwith industrialization
strategies. Our interpretation attempts to extend the narrow connes
of theexisting hypothesis that the urbanization process in China is
perceived as a function of socialistindustrialization alone.
4. Chinese economic system and under-urbanization
The Chinese economic system, broadly dened, is comprised of a
group of political andeconomic elements that are congured in such a
way as to express and serve the specic goals ofthe CCP.11 In
classical terms, these include a structure of power characterized
by one-partydominance under the organizational principle of
democratic centralism, Marxist ideology,domination of public
ownership of the means of production, centralized bureaucratic
processes ofdecision-making, planning mechanisms for economic
activities, administrative mobilization andallocation of resources,
and other institutional mechanisms of bureaucratic control. An
intensiveself-industrialization, or so-called socialist growth
strategy, viewed both as means fordemonstration of the superiority
of socialism and for building a defensive capacity againsthostile
powers, was also an integral part of the Chinese system.12 Within
the system, there is a lineof causality that forced organic growth
of the whole. Based on the Marxian critique of capitalismand on the
experience of the Soviet Union, the Chinese state, to begin with,
erected its publicownership system by revolutionary actions and
dened a conguration of property rights itdeemed compatible with the
given political structure in order to survival politically
andeconomically. The specication of the public property relations
then reciprocally determined therole of the state in the course of
economic development. All those systemic elements, of course,change
over time, partly as numerous and complex interactions among them
and partly as a
ARTICLE IN PRESS
11Because this is not the place to survey the voluminous
literature on socialist systems, the Kornai (1992) framework
for analyzing system changes in socialist countries will be
taken as representative for the purpose of this study.12The
socialist systems and socialist growth strategies, although
extensively described in the literature, are usually
treated separately. Few actually discuss in detail the
relationship between system and strategy, with the exception of
Kornai (1992), so far as we know. In the literature, socialist
growth strategies generally refer to the common,
ambitious goal of socialist regimes to stimulate economic
development. Socialist economic system is narrowly dened
as centrally planned. In this study, growth strategy is seen as
integral to the system because it is largely dictated by
systemic needs and implemented by substructures such as the
system of central planning, though the growth strategies
clearly interact with other systemic elements to shape the
entire system.
L. Zhang, S.X. Zhao / Habitat International 27 (2003) 459483
471
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function of changes in the Partys perspective on itself and on
development. Changes in the systemcan be observed through changes
in the structures of ownership and in the mechanisms ofresource
allocation as well as in growth strategies. However, public
ownership remains as a core ofthe system.
4.1. Socialist ownership relations and under-urbanization
The essence of Chinese socialist identity is to be seen in the
public ownership of the means ofproduction. In accordance with the
ideas of Chinese socialism, new productive relations, whichrequire
a socialist transformation of the private ownership of the means of
production, are crucialpreconditions for a new socialism society.
Socialist transformation is to serve not only as apolitical
foundation for such a society but also as a preoccupation of the
radical industrializationstrategy pursued by the Chinese state.
Thus, socialist transformation was put at the top of thedevelopment
agenda in the early days of the PRC and was completed within a
relatively shortperiod (by the end of the 1950s) by various
expedients. These included tax imposition, controls onprices, and
limitations on the sphere of activities. Private businesses and
industrial rms weremade to accept state leadership in a system,
which, at rst, amounted to state capitalism. Then,state capitalism
was turned into socialism.Socialist ownership relations matter
because of their role in the rationalization of state control
of urbanization. The essential of urbanization control in
socialist China was intrinsically rooted inthe non-market nature of
traditional public ownership system, where the means of
productionwere publicly owned by people on paper but, in fact,
belonged to none of them, and where theenforcement of various
property rights was centralized. This conguration made the
Chinesesystem of public ownership of the means of production only
titular, characterized as undividable,non-pecuniary, and
inalienable in actual practice. Undividable means that the means
ofproduction cannot be separated out for possession by individuals.
Non-pecuniary refers to thefact that no actual monetary value is
attributed to productive properties. Inalienable meansthat no
production properties can be obtained from, or be placed on, the
market. Thus,traditional public ownership made for an absence of
legitimate markets that could function insocial and economic
activities as a mechanism for intervention and constraint. Were
there noother external control mechanisms to replace the market
ones, individuals would be free to act inaccordance with personal
preference without taking collective concerns into account. In
itsrestriction of private property rights and of market operations,
public ownership, in practice, wastantamount to state or government
ownership because, from the standpoint of any givenindividual,
public ownership was meaningless. Without binding rules as dictated
by unambiguousproperty rights, the state logically must control and
take responsibility for all kinds of decision-making in lieu of
market regulations. State control restricted, more and more, the
role of themarket. The bureaucratic apparatus of economic control
sprang up and spread everywhere(Kornai, 1992). In the case of
ruralurban migration, the state had absolute power to decide whohad
the right to move and under what conditions. The non-market control
mechanisms for ruralurban migration can be identied under three
categories: rules and regulations, central planning,and political
indoctrination. These control mechanisms heavily curtailed the
autonomy ofindividuals. From the perspective of property relations,
it is evident that, in the absence of privateownership and the
decentralization of property rights, the state must
institutionalize, not as a
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matter of bureaucratic irrational preference but of necessity,
non-market control forces in everycircumstance. The processes of
urbanization are inherently subject to direct state control.Another
inuential role of underlying ownership relations in explaining the
slow pace of
Chinese urbanization lies in the rationale of state-biased
development as a logical extension ofthe ambiguously dened public
ownership system. Unlike state control acting so as to
encroachdirectly on individual autonomy, state-biased development
translated party-state priorities intomaterial terms that
transcended economic justications. It made the growth in industrial
outputfar exceed the growth in the capacity to absorb ruralurban
migrants. That public ownership ledto such a development pattern
can be justied on two empirical grounds: the overall orientation
ofdevelopment and the political and economic abilities whereby the
state was empowered tofacilitate state-biased development.The
logical relationship between public ownership and state-biased
development can be
understood most readily against the historical background that
the establishment of publicownership was, almost without exception,
linked to underdeveloped economies. Although Marxdeveloped a
historical framework for predicting the triumph of socialism over
capitalism, hecontributed little to guide what development
strategies a socialist country should adopt and how asocialist
country could achieve success in economic development. Marx,
furthermore, did notclearly foresee that socialist economies might
arise in nations that were considerably lessdeveloped than the
leading capitalist nations he had in mind. To Marx, the historical
evolutionfrom primitive societies to communism represented an
inevitable progress of society from lower tohigher stages of
development. Capitalism, characterized by evils stemming from
private propertyand from a class structure based on private
ownership and inequality (Marx, 1891), would bereplaced, in turn,
by socialism and communism. Both Lenins and Maos versions of
socialismstressed the feasibility of making socialist revolution in
backward economies, particularly in pre-capitalist or
less-developed capitalist countries. In fact, most socialist
revolutions succeeded andsocialist relations of production came to
be established in countries where the economy had beendominated by
a backward, under-productive agricultural sector, and a weak,
underdevelopedindustrial sector without basic heavy industries
(Kornai, 1992). Once, the private ownership ofproductive means had
been forcibly replaced by public ownership, however, the question
ofdevelopment goals and strategies arose immediately with little in
the way of theoretical guidelines.The paradox between the Marxist
assumption with regard to the superiority of socialist
ownership and the relatively uncongenial reality socialist
ownership found itself embedded inlimited the development choices
open to decision-makers in socialist countries. Superiorsocialist
ownership, as a Marxist given, implicitly created both political
and practicalrequirements for socialist economic development. The
partisan emphasis on the superiority ofsocialist state limited, at
rst, by its backward agricultural economy generated a political
need forforced industrialization. To protect the socialist
foundation of public ownership, to demonstratethe superiority of
the socialist system, and to guarantee the socialist state
legitimacy, it wasnecessary for socialist countries to catch up
with advanced capitalist countries as soon as possible(Po, 1964).
Since socialism was ideologically antagonistic to capitalism and
was therefore isolatedin a capitalist-dominant world, priority had
to be given to the development of military powerindependent of
unfriendly international markets. Industrialization efforts on the
part of thesocialist state were essentially driven by a concern for
self-preservation. Twin considerations ofsurvival and
self-sufciency required that the pattern of economic development in
socialist
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countries, at least in the initial stages, be skewed toward
yielding a high rate of growth, a largeconcentration of military
power, and a low risk of international interference. In a
closed,agriculture-dominated economy this meant, in effect, an
emphasis on military-oriented heavyindustry, largely nanced by
agriculture.13 The Chinese choice of accelerated
industrializationunder socialist ownership relations was dictated
not only by the fact that public ownership inChina had been built
upon a backward economic base, but also by a Marxian vision that
thesocialism was superior to the capitalism.Why state-biased
development is relevant to the public ownership system can also
be
explained by the unrivaled state power that came as a result of
the public ownership to carry outits development strategy.
Ambitious development goals, however good as expressions of
thepreferences of the socialist state, need supporting mechanisms
to guarantee fulllment. From theperspective of property relations,
state power in a socialist economy is not to be understood as
anintrinsic entitlement but as an authority derived from an
ambiguously dened publicproprietorship. Since indivisible and
inalienable public property relations became, in
practice,equivalent to state or government ownership, the state
empowered itself to create the institutionalpreconditions for
political and economic control and to override the conicting
interests of civilsociety. The property acquired by the state is a
key constituent of the state power. The geneticpolitical system
determined by the dominance of state ownership is a state
dictatorship. Theproletarian dictatorship is endorsed in every
version of the Chinese constitution. Nonetheless, theproletarian
dictatorship is a matter of rhetoric, not of fact, since,
naturally, the proletariat as awhole cannot exercise a
dictatorship. Its dictatorship must be enforced by a suitable
representativebody. While the workers/peasants as the collective
working class are, in theory, the hegemonicclass in China, the CCP
is actually the vanguard of the working class. So the
proletariandictatorship, in effect, amounts to a party/state
dictatorship over social and economic initiatives.This dictatorship
can politicize the development process by undermining personal
freedom andany economic rationale as necessary.From the standpoint
of the economy, the mechanisms of state control, arising from
the
ineluctable necessities of the socialist ownership system,
provided institutional supports for theprioritization of rapid
industrialization. The fact that public ownership was ambiguously
denedallowed the legitimization and the empowerment of the states
monopoly position by the de factoreplacement of public ownership
with state ownership. All economic issues, from investment
toconsumption, were the business of the state, not the market. The
state, rather than the market,determined which sectors were to
expand rapidly or were to be given low priority and how
surplusvalue might be generated. With the dominance of state
ownership, the state can also establisheconomic institutions for
the arbitrary accumulation and for the bureaucratic allocation
ofresources in line with its needs and interests. For instance, the
state can arbitrarily generate
ARTICLE IN PRESS
13According to the Marxist economic law of expanded
reproduction, the larger the portion of resources devoted to
the production of investment goods, the faster the rate of
growth as measured by total output. Socialist economists
believe, moreover, that there is strong correlation between the
share of total resources that an economy devotes to
heavy industry and the capacity of that economy to manufacture
military hardware (Gregory, 1970). In a closed
economy dominated by agriculture, the creation and accumulation
of crucial capital for industrialization can be
achieved only by the adoption of terms of trade unfavorable to
agriculture and ratios biased toward production at the
expense of consumption. The more ambitious the industrialization
goals, the more dependent the industrial sector on
the agricultural sector at least in the initial stages of
industrialization.
L. Zhang, S.X. Zhao / Habitat International 27 (2003)
459483474
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economic surpluses by constructing a pricing system not
determined by the law of supply anddemand and by the efcient
resource allocation but by its needs for nancial accumulation
andthe mobilization of resources. The state can minimize the
resources devoted to the sectors it needsleast and divert massive
resources to the sectors it needs most. The overwhelming
mobilization ofresources would be unattainable without the
dominance of state ownership. Overall, the statecould enforce its
demands in accordance with its own interests by a minimization of
theconstraints imposed by private ownership that might
instinctively emphasize greater economicrationality and produce
conicts to state-required development. It might seem that, under
thedominance of state ownership, state bias would be guaranteed by
several facts. First, statepolitical dictatorship was legitimized.
Second, the property acquired by the state was a veryimportant
constituent of the state power. Third, the means of production were
employed in theinterests of the state. Fourth, the state possessed
absolute authority and discretion over thedisposition of resources.
It would be impossible, in the absence of preponderance of
stateownership, for the state to achieve the needed accumulation
and planned allocation of resourcesfor its own purposes.Thus, the
relationship between the ownership setup and economic strategies
determined
that the patterns of development were very much biased in favor
of the state, especially inpre-reform China. The state took upon
itself the ultimate authority and discretion toinstitute
development and resource distribution very much in its own
interests. Financial owswere mostly directed to generate resources
as needed and any surplus was siphoned off to favoredsectors, all
in the best interest of the state at the expense of any other
economic rationale and ofcivilian interests. The link between the
state and economic development had becomepathologicalthe interests
and continued well-being of the state itself were intertwined
withthe maintenance and reinforcement of state-directed development
and of high levels of resourceextraction. Under-urbanization was
unavoidably associated with state-biased development, asoutlined
earlier.
4.2. Economic reforms and urbanization
Some elements of the Chinese economy have undergone reform since
the late 1970s because ofthe lackluster economic performance
resulting from intrinsic systemic problems. Behind theofcial gures
of high growth in agricultural and industrial gross outputs driven
by highinvestment were economic inefciencies, deciencies in supply,
an acute imbalance between heavyand light industries, and an
extremely slow growth of per capita income, both rural and urban.
Asdocumented by Chen (1990, p. 2), out of a total of 600 billion
yuan capital investment madebetween 1958 and 1978, one-third was
wasted because of mistakes in planning, one-third wasnever
translated into productive capacity, and only one-third had any
real practical result. Duringthe period 19701978, the national
income produced by per 100 yuan of xed assets was 35 yuanon the
average, similar to the level of the early 1950s. Rural income at
constant prices was largelystagnant, rising from 103 yuan per
person in 1957 to no more than 113 yuan per person in 1977.Eight
hundred million farmers had only 76 yuan annual income per person,
and 25% of them hadless than 50 yuan and less than 3000 catties of
raw grain per person. The wages of state workershad remained
virtually frozen for the 20 years after 1960. These domestic
problems, together withthe new perception, on the part of the
leadership, of the international environment and of Chinas
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role in the world, gave impetus to reforms of the Maoist
economic system (Chen, 1990; Gao,1998).Economic reforms were
initially couched primarily in terms of eradicating inefciency
within a
basically unchanged system. Nonetheless, reforms have created a
series of sequences that havegradually altered the institutional
base of state control and undermined the states despotic powerover
the path of development. The original idea of the reform was to
decentralize the previoussystem of centralized control, offering
more decision-making autonomy and material incentives tolocalities
and individuals, in the hope of improving overall efciency and of
invigorating thesocialist economy. Material incentives were
introduced in line with these initial intentions. This inturn
created appreciable changes of once centralized property rights and
partial abandonment ofthe centralized control, though there had
been only timid moves to transform the ownershipanatomy. It also
created growing consumer pressures on readjusting the ratio between
investmentand consumption, after years of having suppressed
consumption, and, therefore, the balancebetween heavy and light
industries, which had favored the former since the early days of
the PRC.Given a necessary link between material incentives and
market forces, the introduction of materialincentives, in effect,
generated changes not only in the structure of the economy but also
in its day-to-day operations. A variety of modications of the
earlier economic institutions, from thedifferent kinds of incentive
contracts, at one time, to the more recent various
risk-bearingschemes, were promoted. Market forces have gradually
led to the restructuring of the nature ofChinese economic system
and nowadays have more and more inuence on the course of
economicdevelopment. To be sure, the state capacity to regulate
ruralurban migration has dwindled andstate control over
urbanization is no longer all-inclusive. Changes in development
strategies arecreating new channels of ruralurban migration that is
driving up urbanization.As the Chinese economic system becomes more
and more marketized and migration is more
and more a matter of individual initiative in the transitional
era, one is forced to raise questions asto the similarities and
differences between the new patterns of Chinese urbanization and
those inestablished market economies, and to the relevance of
Western migration and urbanizationtheories to the Chinese case. In
other words, would systemic changes lead to the end of
under-urbanization, as Szelenyi (1996) predicted?At the
micro-level, there seems to be some evidence in China to support
the arguments of
various Western theorists who assume migration behavior to be
mainly motivated byeconomic rationality based on personal knowledge
for perceived realities. Many studieshave suggested that a variety
of incentives, usually referred to as push and pull factorsin
accordance with neoclassical macro-economic theories, have been
largely responsible forthe extent of ruralurban migration in todays
China. These factors include, above all, therelative lack of
opportunities and the pressure to nd a way out of the huge pool of
surplusrural labor and income and social disparities between one
region to another, as well asbetween city and country. Migrants are
self-selected with regard to their demographic andsocial
characteristics. Most ruralurban moves in the reform period are
initiated by personalor family decisions, either for income
maximization or risk minimization. A given individualscultural
background and social network play a signicant facilitating role in
ruralurbanmigration, which is what is postulated by network
theories. It is easily observable thatmigrant laborers in the
Chinese urban labor market are sharply segregated in the
variousinstitutional settings they come into contact with (Chan,
1996; Wang, 1997) and that occupational
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and social subgroups are emerging among them (Ma & Xiang,
1998). The situation of migrants inChina resembles those of
undocumented workers in Western cities as adduced in one oranother
Western theory of social segregation. The impression seems justied
that Chineseurbanization will nally fall into line with the
patterns found in other market economies and thatWestern theories,
by implication, will be somewhat applicable.Despite the fact that
Chinese urbanization in the new era exhibits many similarities
to
corresponding phenomena in other market economies undergoing
similar processes, at the macro-level it also manifests unique
features that are the resultant of holdovers from the old system
andsystemic change introduced under the rubric of economic reform.
One cannot view thetransformation of an economic system over time
without taking into account its initial state. TheChinese economic
system is evolving with the persistence of the old political
structures and theirsocialist labels. Despite considerable changes,
the Chinese economic system has preservedimportant socialist
components. As of now, at least, a diversity of property forms
cannot bedeveloped outside the framework of public ownership. The
national economy over the past twodecades has operated within an
institutional environment where preexisting bureaucraticregulatory
mechanisms have only been partially demolished but effective new
market mechanismshave not yet taken root. The curious mixture of
socialist and market elements in the Chinesesystem is such that
only selected features of Western models are readily applicable.
The causalfactors underlying the current patterns of urbanization
in China, as a result, are rather unlikethose to be found in
ordinary market economies.There are, of course, many good reasons
the implementation of economic reforms in China has
been somewhat slow. There are always forces for keeping the
status quo, above all, to forestall anychallenge to established
interests. The Party/state had been accustomed to playing a
powerful role.Substantive economic reform requires turning
authority over to managers and to impersonalmarket forces and a
concomitant reduction in the powers of Party bureaucrats. In a real
sense,therefore, it is difcult to fully transplant market
mechanisms into a planned system. In addition,the Party wants to
minimize the risk of political unrest. The need for stability means
that anyreform must balance the interests of the various groups who
might benet disproportionately. Thecombination of a still
relatively underdeveloped economy with the huge size of the
populationmakes the state reluctant, in practice, to indulge in
restructuring of its economic system at theexpense of social
stability. Taking these factors into account, one can expect that
thetransformation of the Chinese economic system will proceed only
incrementally rather than inone radical step. In this context, the
ongoing transformation has maintained the legitimacy ofstate
control and limited the possibilities of untrammeled
development.One can nd evidence to support a persisting inuence of
the old system alongside the expanded
role of marketization in the urbanization process. The
coexistence of both hukou and non-hukouurban migration in the
reform period is an example to illustrate the strong likelihood
that plan aswell as market factors are at work (Chan, Liu, &
Yang, 1999). The substantial socioeconomicdifferences associated
with these two types of migration suggest the need for caution with
regardto the explanatory power of Western theories in the Chinese
context. This peculiarity has leadsome to recommend a
disaggregated, dual approach to the study of the processes of
migration andurbanization in todays China (Chan, 1999; Chan et al.,
1999). This is an attractive approach, forit appears to be more
realistic than the more usual aggregated approaches. Nonetheless,
it mightbe difcult to jump from the plane of observable phenomena
in contrast to a more general theory
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of Chinese urbanization from the standpoint of a single
political and economic regime underwhich ruralurban migration is
neither wholly plan-driven nor wholly market-driven.It is also less
clear, judging from what we have seen so far, that development has
moved
decisively away from the earlier state-biased pattern. But it is
fairly evident that state-directedinuence on development is proving
far less malleable in reality than in theory. Though not asstrong
as before, the function of the state with regard to the economy is
not all that different frompre-reform days when it comes to
deciding development priorities and regulating the direction
ofdevelopment, a fact reected by the perennial failure to
streamline government bureaucracy (Liu,1998). Economic growth,
still characterized by quantity rather than quality, has not
changed somuch in nature as in magnitude (Gao, 1998). Financial ows
are mainly directed by governmentat various levels, though no
longer fully managed from the central government and not
necessarilyoriented in favor of heavy industry. Banks, as nancial
agents of the government, still conductmore activities driven by
top-down policy than purely commercial business. Key
economicresources are controlled by government bureaucrats. Another
new round of the reform startingfrom the late 1990s is again forced
into a pattern of incremental experimentation in the absence ofany
way to draw upon the practical experience of other transitional
economies. It is hard topredict, on a priori ground, whether the
entire economic system will be remade on the Westernmarket model
and how far development will end up diverging from the earlier
pattern. It will beyears, if not generations, before we can
conclude whether under-urbanization, once closely relatedto
state-biased development, would nally end.
5. Concluding remarks
This study seeks to understand Chinas under-urbanization after
1949 in terms of thefundamental characteristics of the Chinese
economic system. In contrast to the thrust ofprevailing
explanations, where industrialization strategies alone are taken as
fundamental inexplaining what we nd evolving through time, we try
to understand the patterns of urbanizationunder the constraints of
the Chinese socialist system. We have attempted to demonstrate how
theeconomic system acts as an important determinant of urbanization
in China. We believe that thetrends and patterns of Chinas
urbanization in the entire trajectory of development,
especiallysince the economic reforms, cannot be meaningfully
explained by referring only to the contents ofdevelopment strategy.
Instead, the processes and consequences of Chinas urbanization can
beproperly understood when the systemic characteristics are
comprehensively examined. Our work,of course, is not to impugn the
credibility of the established hypothesis, but rather to link it up
toa broader perspective for the formulation of a comprehensive
theory of urbanization undersocialism.We have viewed state control
and state-biased development as two coherent and interrelated
features of the Chinese economic system. To build up socialism,
China went through arevolutionary transformation when it was still
at a low level of economic development. While thechange brought
about a new system, it created appalling destruction at home and
was centeredaround adversaries abroad. Restructuring necessitated
state controls and resulted in state-biaseddevelopment, carried out
by means of a planned economy with high growth rates in industrial
andmilitary output. Urbanization was inevitably impacted in the
process.
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We have perceived that the states role in development is
fundamentally constrained by thenature of the Chinese economic
system where the public ownership is decisive. Socialist
ownershiprelations affected urbanization by legitimizing,
empowering, and materializing state control andby initiating
state-biased development. Therefore, the pace of urbanization was
essentiallyshaped by the nature of the system and not simply by the
states intention to slow urbanization.Policy choices were
constrained, in fact, by the nature of the system and should not be
judged onlyon the grounds of what the leaders wanted.
Under-urbanization was an inevitable butunintentional outcome of
other converging choices with regard to ownership relations.Our
approach for interpreting Chinas under-urbanization should serve to
stimulate the
formulation of a theory of socialist urbanization applicable
both to the regime of classic socialismand to the current period of
economic reform. Current explanations represented at least
aplausible story of some economic policies and the political
economy of sectional interests atdifferent moments historically,
but the story that had described seemed not to be
consistentlyrelevant to the PRC reality over a whole development
course. While addressed rst to the pre-reform system and the early
decades of urbanization in China after 1949, the approach
establishedhere should be also valid in any attempt to understand
the determinants of Chinas urbanizationin the ongoing period of
transition and beyond. During the current reform era, state
controls andstate-biased development have persisted, although
weakened in degree and changing in form.Nonetheless, the new
features of urbanization in post-reform China have to be seen as
bound upwith the legacy of the pre-reform system. Our approach
allows for the impact of systemic changeson the level and
characteristics of urbanization. A full understanding of the
evolution of Chinasurbanization in the reform era is therefore
likely to prove elusive, if not impossible, withoutadequate
consideration of changes in systemic characteristics posited in
this paper.Looking ahead, there are areas for further research.
First, there is a clear need for continued
study of the systemic characteristics of the Chinese economy
because this is crucial to anyunderstanding of urbanization on a
case-by-case basis. The impact of such characteristics, ingeneral,
has been somewhat neglected, particularly in the context of
socialist and transitionalregimes. As urbanization is a major
feature of economic development and modernization, it islikely to
be affected by any systemic factors involved in these processes.
Two prominent elementsof the Chinese system, state control and
state-biased development, which dictated signicantpatterns of
constraints and politicized the urbanization process, are still
felt to this day, asdemonstrated in the foregoing discussion,
though the specics inevitably vary from time to timeand from place
to place. Chinas economic system as a whole has been halfway
between a plannedand a market nature. The effects of continuity and
change in the context of state control and state-biased development
on urbanization in the transitional period merit further
studies.Second, the Chinese experience needs to be placed in a
comparative perspective to enable us to
see points of similarity and dissimilarity between the system in
China and that in other economies.The Chinese road to urbanization
as affected by the systemic transition invites such a
comparison.But a common fallacy in China studies is to try
explaining the Chinese case in terms of Westernconcepts without a
careful analysis of systemic differences. Comparisons between China
and theother so-called socialist countries, on the one hand, and
between China and the West, on theother, are woefully inadequate,
yet they are taken for granted, just the same, in much of
theliterature. Thoroughgoing interpretations of the contrasts and
comparisons between Chinese andWestern or other non-Western
economies are still scarce. In the absence of a suitable
comparative
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perspective, the picture of urbanization in China would be
notably incomplete. A betterunderstanding of the Chinese experience
and a better basis for policy formulation in the futurecannot get
along without a proper account of the differences among the causal
factors underlyingwhat, at the rst sight, appear to be observable
similarities.
Acknowledgements
This paper is a partial product of the project Reconsidering
ruralurban migration in Chinasupported by Mellon Seed Grant, Center
for Studies in Demography and Ecology, University ofWashington and
Chester Fritz Fellowship, Jackson School of International Studies,
University ofWashington. We would like to thank Professor Kam Wing
Chan, University of Washington, forhelping to think through issues
of this paper.
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