An Economic Analysis of Emerging Urban Institutions in China

Abstract

By summarizing relevant literature and introducing a theoretical framework for analyzing urban institutions, this paper studies emerging urban institutions in China from an efficiency perspective. In the last decade, homeowners associations have been booming across Chinese cities, especially through the promotion of Ministry of Construction. In the meanwhile, Ministry of Civil Affairs has been promoting community service centers. Facing these two newly emerging urban institutions, the traditional hierarchical structure of Chinese urban government (municipality, district, street office, residents' committee) is also undergoing transformation. Through an integrated analysis of these three main types of urban institutions in China, it is argued that the devolution of some land use controls to districts or even street offices may be desirable and many so-called community services may be more efficiently provided at larger scale or by private companies. Although gated communities may not be socially desirable, homeowners association is a promising new institutional form that may become important catalyst for political reform and democracy. In spite of bureaucratic turf-fighting and political manipulation, China's urban institutions are showing signs of responding to the efficiency needs of a market economy.

Keywords: Urban institutions, local governance, private community, homeowners association, gated community, China

JEL Classification: D23, P20, R52