Li Shantong, Feng Jie & Hou Yongzhi

I. Regional Gap Will Continue to Exist for a Long Time and Tend to Become Wider, But Positive and Effective Policies Could Help Slow Down the Widening of the Gap

Since China started its reform and opening to the outside world in 1978, the gap in regional development can be roughly divided into three periods of changes. The first period was before 1990 when regional gap presented a tendency of becoming small. The second period was in the 1990s when the regional gap grew large. The third period was after the year of 2000 and since then no big changes have taken place. In general, the present level of regional disparity is lower than that of the initial period of reform. Between 1978 and 2000, the Gini coefficient in terms of per capita GDP reflecting regional disparity had dropped from 0.3494 in 1978 to 0.2658 in 1990, and then increased to 0.3358 in 2000. Since the beginning of the 21st century, the Gini coefficient has maintained at a level of about 0.337. The general regional disparity consists of the town-country gap and the rural-rural gap. The town-country gap and rural-rural gap are estimated to account for more than 40% respectively of the general regional gap in the country.

Factors causing regional gap are varied, including objective factors in terms of natural and geographical conditions and resources, and subjective factors in terms of development strategy and policy. Regional gap is not only a comprehensive reflection of a historical process of the long-term regional development, and also a result of the general impact of differences in internal and external conditions. It is also related to the economic and social development level and specific stage of different regions.

In the future regional economic development, on the one hand, the main factors (such as factor condition, industrial foundation, geographical position and cultural environment) which lead to the expansion of regional gap will continue to exist; and on the other hand, factors favorable to restrict further enlarging of the gap will take shape in the country. They include 1. As the country is paying increasing concern over the expansion of regional gap, it is making and will continue making efforts to help boost development in the central and western regions of China from the aspects of development strategy and policy making. 2. The central and western regions of China, as the latecomers, can avoid mistakes and roundabout course in structure reform, mechanism designing, policy drafting, operation model selection, and introduction of advanced technology by learning and summing up the successful experience gained by the developed areas in eastern China in the past time, so as to achieve development by leaps and bounds. 3. Development in eastern China will need all the more the integration and participation of central and western China, especially when the area is facing a rising demand for basic raw materials such as energy, land and labor resources. This together with its industrial restructuring and shift of part its industrial production will create new opportunities for development of western China. Here comes the judgment that the regional development gap will continue to enlarge in the coming 20 years, but its speed will slow down.

Although the regional development gap is likely to continue expanding in the coming years, the gap of welfare treatment for residents in different regions will become small with the implementation of new development policy and the "five overall planning", the enforcement of the general strength of the state, as well as the increasing support from the central government to less-developed areas. In fact, the regional gap in term of resident consumption has long been smaller than that of regional development, proving the important role of the supporting policy of the central government for less-developed areas. The gap of welfare level for residents of different regions is also possibly to be narrowed as long as appropriate policies are implemented.

II. Urbanization Will Develop at a Fast Speed and Cities Will Play an Increasingly Important Role in Economy

The long-term rapid and sustainable growth of the national economy and swift improvement of productive forces have helped accumulate a huge stock of energy for urbanization in China. The high-speed growth of economy in the past 20 years, the rapid expansion of industry and the boosting development of township enterprises have made about 200 million rural labor force enter non-farming sectors. The non-agricultural production and peasants moving into urban areas have greatly boosted urbanization. China’s urbanization level increased from 19.4% to 39.1% from 1980-2002, a rise of 20 percentage points. But, the country’s urbanization is still lagging behind industrialization in general terms. China’s urbanization level is obviously lower than countries with comparable same level of per capita GDP. Currently, China has a huge rural population of about 800 million and the function of central cities is incomplete with weak capability in helping local development. There is still a long way to go for China in terms of urbanization and urban development.

With the implementation of the central government’s policy on speeding up urbanization, the number of cities will increase in China, and urban system and scale will further expand and the competitive edge of large cities will be sharpened. China’s urbanization rate is expected to reach about 60% by 2020. With the rapid concentration of population and economic and social resources in cities, and increasing urban economic aggregate, cities will play an increasingly important role in economic development, while big and super-large cities will play a leading and radiation role in the surrounding areas. Urbanization will help promote concentration of industry and improve efficiency of allocation of resources, thus becoming a key engine for economic growth in the next stage.

III. Economic Ties among Cities Will Be Further Strengthened and Large-City Spheres Will Become the Leading Force in Regional Economic Development

As there exist differences in city economic activities, city space structure is usually featured by coexistence of large, medium-sized and small cities. It is the general rule in world economic development that with the concentration of resources to urban areas and promotion of urban division of labor, large-city spheres will take shape in prosperous areas in the process of industrialization. According to the development of urbanization in various developed countries in the world, most of them have gone through the process of concentration from country to town, and then from scattered small and medium-sized cities to central cities. China’s characteristics of dense population, insufficient available land, rapid growth of industry, IT and service sectors and strong tendency of global economic integration have all required urban areas to develop in a mode suitable to the large-city spheres.

China is now in the stage of industrialization and rapid urbanization. With the progress of market economy, improvement of urban infrastructure, convenience of transport tools, as well as enhancing of economic ties among cities, central cities will grow strong, ties between central cities and surrounding small and medium-sized cities will strengthen and their impact will grow big, and then large-city spheres will be formed under the impact and leadership of the central cities. In the future process of forming large-city spheres, the relations among cities will change from the form with central cities as main body influencing and leading the surrounding cities to a form with central cities as the core. Cities will have mutual complementary division of labor in terms of functions and industry to achieve common survival and win-win effects. Large-city spheres in the coastal prosperous areas will have the feature of city groupings. Large-city spheres will play an important role in social and economic development, becoming the most dynamic and strong economic forces in the country.

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