Challenges of Creating Cities in China: Lessons from a Short-Lived County-to-City Upgrading Policy

Posted: 22 Jul 2012

See all articles by Shenggen Fan

Shenggen Fan

International Food Policy Research Institute (IFPRI)

Lixing Li

Peking University - China Center for Economic Research (CCER)

Xiaobo Zhang

International Food Policy Research Institute (IFPRI)

Multiple version iconThere are 2 versions of this paper

Date Written: 2012

Abstract

It has been widely observed that China is under-urbanized. The central government has tried to use various policies to promote urbanization. In this paper, we evaluate one of these policies – count-to-city upgrading. Under China’s hierarchical governance structure, a city status can only be determined and awarded by the central government. In the 1980s and 1990s, China adopted a formula-based county-to-city upgrading policy. Based on a large panel dataset covering all counties in China, we find that the formula was not strictly enforced in the practice. Moreover, jurisdictions that were upgraded to cities prior to 1998 do not perform better than their counterparts that remained county status in terms of both economic growth and providing public services. Largely because of these problems, this policy was called off in 1997. Given the strong need for urbanization, more indigenous institutional innovations are needed to find a viable way of creating cities, which would also provide compatible incentives to local governments.

Keywords: Urbanization, City creation, Governance structure, Political centralization, China

JEL Classification: R11, H11, O40

Suggested Citation

Fan, Shenggen and Li, Lixing and Zhang, Xiaobo, Challenges of Creating Cities in China: Lessons from a Short-Lived County-to-City Upgrading Policy (2012). Journal of Comparative Economics, Vol. 40, No. 3, 2012. Available at SSRN: https://ssrn.com/abstract=2114935

Shenggen Fan

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

Lixing Li (Contact Author)

Peking University - China Center for Economic Research (CCER) ( email )

Beijing, 100871
China

Xiaobo Zhang

International Food Policy Research Institute (IFPRI) ( email )

2033 K Street, NW
Washington, DC 20006
United States
202-862-5677 (Phone)
202-467-4439 (Fax)

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