Lin Jiabin

Research Report No 139, 2003

Under the powerful push of a sustained fast economic growth, China has entered a stage of rapid urbanization. In the Yangtze River delta, the Pearl River Delta and the Beijing-Tianjin-Tangshan region, space frameworks for city belts or large city rims are in initial shape.

In the perspective of the development of regional economies, inter-regional conflicts of interests or frictions of interests will occur in an unprecedented frequency and on an unprecedented scale as a result of rapid urbanization. It is especially so under China’s existing administrative management system. This is because: Firstly, urban development and its radiation and attraction to neighboring regions are mutually complementary. Cities compete with each other in order to maintain or heighten their own status and to expand their own spheres of influence. Secondly, under the existing personnel system, the promotion of officials depends mainly on the appraisal of their performance by superior authorities. The need for local leaders to create "performance" has, to a very large extent, dictated the behavioral direction of local governments. The motive to maximize economic development in their regions has in fact aggravated inter-regional competition. Thirdly, development of urbanization requires the local governments to establish all kinds of infrastructure so as to meet the needs of urban production and living activities. But different types of infrastructure can bring about different interests or influence for regions. This tendency can further evolve into vicious inter-regional competition and shifting troubles onto others, thus jeopardizing the healthy development of regional economies and even the entire national economy. Numerous facts have indicated that China’s pattern of "administrative division economies" or "block economies" arising from system factors is seriously in conflict with the new development trend of regional economies. For this reason, establishing an effective inter-regional coordination mechanism has become a matter of urgency.

I. Lack of Inter-regional Coordination Mechanism Has Induced Diverse Problems

1. Overlapping Construction of Infrastructure

In the process of rapid urbanization, competition between different regions to become the "dragon head" (leader) has led to serious overlapping of infrastructure facility construction in the Pearl River Delta and the Yangtze River Delta. Take port construction for example. In the Yangtze River Delta, the river has densely-located ports on both sides. However, because of disorderly construction and uncoordinated planning, all ports are blindly competing with each other for the sources of freight traffic. As a result, many ports are idling their facilities due to inadequate source of freight traffic. The construction of the large and small Yangshan ports by Shanghai has landed Ningbo’s Beicang Port in an awkward position. The latter was originally planned and built to serve Shanghai. The Pearl River Delta already has the Huangpu Port in Guangzhou, the Yantian Port in Shenzhen, the Gaolan Port in Zhuhai and the Zhongshan Port, all of which are of a considerable scale. But Fanyu is catching up with the building of a Nansha Port. Take airports as another example. In the limited space of the Pearl River Delta, there are several airports, respectively in Guangzhou, Shenzhen and Zhuhai. The Zhuhai Airport, which claims to be the most modern in China, is now in a difficult situation due to insufficient source of passengers. In the Yangtze River Delta, Suzhou, Wuxi and Changzhou all have their own airports. The result is that no one can become a hub of air traffic. This is a gross waste of the valuable land resource for this region. Another example is that Suzhou City and its subordinate cities of Wuxian and Wuxi and its subordinate city of Xishan are respectively located in the same city. However, each of these cities built a television tower of its own. In the Yangtze River Delta, many cities and counties are located in the same city (which means one city houses both a city government and a county government). But the two governments in one city cannot coordinate themselves in the construction of municipal facilities. As a result, overlapped construction of municipal facilities such as television towers, water plants and water supply networks is very common (see the Report on the Adjustment of Some Provincially-controlled City Administrative Divisions in Our Province delivered by Ji Yongshi at a meeting of the Standing Committee of the People’s Congress of Jiangsu Province on January 9, 2001).

2. Shifting one’s troubles onto others

As every local government has the motive to maximize its own economic development with a minimum cost, it gives no consideration to the negative impacts on neighboring regions when it plans some projects that have negative external effects. In the middle and down-stream areas of the Yangtze River, some cities takes water from the river and at the same time dumps untreated sewage into the same river. Therefore, it is a common phenomenon that "chamber pots are washed at the upper-stream and rice is washed at the down-stream". In the place where Shanghai and Zhejiang adjoin, each side built a thermal power plant in their "domains" close to the boundary. The two plants, no more than 50 kilometers away from each other, serve their respective power grids. This practice is clearly irrational in terms of power distribution. But the reason behind it was that on the one hand each power company designs its power system only to serve its own province and on the other hand both sides try to minimize emission pollution in their own jurisdictions.

In building trans-regional highways, it is also a commonplace that the local governments concerned overemphasize their own interests and shift their troubles onto others. The regions that believe trans-regional highways can help their own economic development tend to be enthusiastic about building such highways on their own side, while those regions that fear trans-regional highways can help their neighbors attract investment tend to be inactive in building such highways. Worse still, some regions try every possible means to delay the construction of such highways even though they have reached agreement on the projects. The result is that the conditions of the same road can be drastically different at the provincial or city boundaries. This is a serious impediment to the display of the efficiency of trans-regional highways.

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