Lin Jiabin

In the past two years, "city management" has become a buzzword. First, the municipal governments in various parts of the country accepted this concept and began putting it into practice. Then, some people made practical summaries and theoretical explanations. A number of forums and symposiums on this topic were also held.

From an on-looker’s perspective, the rise of the "city management" concept helped expedite the pace of municipal construction and improve the efficiency of municipal management. But on the other hand, it also resulted in misguided government behaviors, encouraging land requisition and selling, harming the interests of the peasants and inducing other social problems. This article attempts to analyze and explore the issues such as the present state and nature of China’s city management, the origin of the city management fever and ways for preventing misguided city management.

I. The Meaning and Nature of China’s Current City Management

A review of the discussions so far on the issue of city management reveals pros and cons. At first, some municipal leaders extolled city management as a "brand-new concept of municipal construction" (Wang Hongzhong: City Management – A Powerful Leverage for Promoting Regional Economic Development, China Personnel Publishing House, April 2002) and as a "revolution in the mode of municipal development" (Qingdao Municipal Construction Commission: Managing a City – a Revolution in the Mode of Municipal Development, a speech at the Mayors’ Forum on City Management and Regional Economic Development in September 2002). Later on, some scholars challenged this, arguing that city management implied a government overstepping its administrative functions, a loss of control over the scale of municipal construction, an exhaustion of arable land resources, a rise in regional protectionism and an increase in corporate tax and fees. In all, it implied five major risks. They explicitly pointed out that "city management is in nature an act of government overstepping its functions and should not be advocated" (Sun Yongzheng: Risks of City Management, The Tide, No. 2, 2003). So we must first ask what city management is and what it really implies.

Opinions are currently widely divided on the meaning of city management. Some people define it as the "government’s capitalized operation and management of its various resources and assets by employing market tools under market economy conditions" (Qingdao Municipal Construction Commission: 2002). Others said it meant the government, using market economy tools and through market mechanisms, reorganizes and operates the natural capital (such as land, rivers and lakes), the carrier of city space and city functions, and the human capital (such as roads, bridges and other municipal facilities and public buildings) as well as their extended capital (such as the naming of roads and bridges and the use of advertising devices), uses social capital for municipal construction, applies the market economy’s management knowledge and techniques into municipal construction and management, and carries out concentration, reorganization and operation of municipal assets (Wang Hongzhong: 2002). Still others said that city management is "an operation that takes the city as a special asset", and that "the city should be operated in a market mode to diversify investors, marketize project operations and commercialize facility usage"

From the above abstract concepts, one still finds it difficult to see the true nature of city management. But just as Karl Marx said, a single action could defeat a dozen plans. In order to accurately understand the actual meaning of city management, we should look at what the governments in various places have done under its banner. A classification of large amounts of practical examples of city management reveals that China’s current city management can be divided into the following categories.

The first is to receive earnings from selling land. We may say this is the most fundamental content of city management in most cities, for this is the most convenient and fastest way for governments to reap large amounts of earnings. The statistics of the Ministry of Land and Resources indicate that the total earnings from land sales reached more than 730 billion yuan at the end of 2002. In many places, the earnings from land sales even matches tax revenues and became an important and even the principal funding source for municipal construction. The "land reserve centers" established by city governments monopolize the primary land market and acquire land at low prices through non-market methods for selling at high prices at the secondary land market. This has become a "set mode" the city governments in various places are adopting.

The second is to attract foreign and private capital into the areas of municipal infrastructure construction and operation by establishing return profits on investment mechanisms for infrastructure projects. For example, the Changsha Municipal Government signed an agreement with Hong Kong Changjiang Construction Company, under which the BOT (Built-Operation-Transfer) system was employed to build two bridges across the Xiangjiang River. The company was responsible for financing and construction and for fee collection and operation after completion and will hand them over to the municipal government in 50 years. Similarly, Changsha Municipal Government authorized through agreement the local enterprise, Changda Group Corporation, to build the No. 8 Cement Plant and to hand it over to the municipal government after 17 years of operation.

The third is to sell the property rights of government-owned assets to outside investors, including government-owned small and medium-sized enterprises and office buildings.

The fourth is to sell by auction the licensed operating rights of municipal public facilities and the naming and advertising rights attached to public facilities. Those to be sold by auction include the naming rights of tourist routes, transit routes, public lavatories at scenic spots, cold drink outlets and newsstands, and the naming and advertising rights of roads, bridges, squares and other facilities.

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