opportunity-china.co.uk
December 2014
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Beijing’s gridlocked roadways and smog have affected
around 100millionpeople living in the 216,000 square
kilometers that comprise the three areas. The plan to
integrate twomajormunicipalities directly under the central
government’s control alongwith a sizeable province such as
Hebei is intended not only to ease congestion and pollution
in the nation’s capital, it also intends to upgrade the industrial
structure among all three areas. Furthermore, integration is
expected to lead to positive developments in the treatment of
pollution inHebei andwill further develop the region into a new
economic hub.
In a bid to upgradeBeijing’s industrial structure, Wang
Lianfeng, deputy director of the city’sUrbanManagement Law
Enforcement Bureau, believes that moving low-end enterprises
out of Beijing is a necessary step in order to achieve this goal.
“Low-end businesses inBeijing should be relocated. However,
low-end businesses do not simply refer to heavily polluting
enterprises. For instance, (it also refers to places like) the
Dahongmen clothingwholesalemarket in Fengtai district,
themassivewholesalemarket groupwhich is located around
Beijing Zoo in Xicheng district, and the Automobile Spare Parts
Factory inChaoyang district. We’ve consultedwith different
cities inHebei and have basically reacheddeals on the
relocation of these projects.”
Wang points out, however, that although the integration
initiative is a crucial approach to treating city blights affecting
Beijing, its effect is unlikely to be immediately noticeable. Aside
from the issue of “fixing” the capital’s problems, people and
officials inneighbouring provinces and regions likely to be part
of any regional integrationprocess will no doubt be concerned
with the issue of even development. In addressing the concept
of evendevelopment, one starts to see possible problems
related to the process of regional integration as a policy tool
for improvingBeijing or guidingmigrants to second and third
tier cities.
Professor LuMing, Director of the China Centre for
EconomicDevelopment at Shanghai JiaotongUniversity,
points out that if local governments are purely seeking to evenly
distribute economic activities and populations, policy goals will
not be achieved. According to Lu, the ideal goal should
be equalising per capita resources, or per capita income.
“In the development process in developed countries, like theUS or European
countries like France, youwill find an inverseU-shape between the economic
development level and inter-regional income difference. During the early stages,
the income disparity between different regions and cities couldbewidening. But
after a turning point, the inter-regional income disparity will be narrowed.”
“When youmake economic resources or populationsmore unevenly
distributed, actually per capita income differencewill be narrowed. During
this process, the only thingwe need to do is improve life quality and economic
development by developing (key) industries in regions likeHebei. It doesn’t mean
that you have tomove those activities that enjoy agglomeration effects in big
cities out fromBeijing toHebei.”
Lu claims that moving such activities out of the city purely as the result of a
regional planning policy could reduce the efficiency of those industries that rely
on agglomeration effects and scale economy, thus causing them to lose their
competitiveness. Furthermore, Lu highlights the plight of the large groups
of people affectedwhen industries are transferred from city to city.
According to Lu, the government first needs to definewhat integration actually
means before implementing plans which could have negative effects. “Real
integration in themarket economymeans that the price of production factors is
determinedbymarket factors. And the flow of production factors including labour
should be free across regions. (We need to) develop the right (kind of) industries
in (places likeHebei) like tourism, or large-scale farms. At the same time, we
need to subsidise those population-losing regions by providing themwith better
public services, education andmedical care. This is the real and ideal meaning
of integration. It doesn’t mean that you plan the regional development as awhole
and then you just use your government policies tomove out some industries to
Hebei; it’s not a planned economy.”
Pursuing a planned approach to integration is likely to be troublesome
considering the vast scale of the three regions involved. AsHuoDeming,
Professor at the China Centre for EconomicResearch of PekingUniversity
explains, regional integration in this case is a “very difficult task if youwant to go
through a government directed planning (approach).” Professor Huo adds that
integrationmust take amarket-oriented approach rather than being forced as a
result of environmental concerns.
“I would like to postpone this grand scale of integration and I’d say let’s
think about how to resolve the smog problems in this part of the country…
Why don’t we just look at the problems and try to solve them. If central planning
is necessary, just deal with that problemwithout resorting to other kinds of
bureaucracies.”
Regional Integration should not be seen as a panacea to the problems faced
by each respective region. If implemented correctly, integrationwould certainly
benefit many areas of society and business but amuch broader approach to
implementing policy is required. For instance, pollution control has to be tackled
across areas rather than tackling it at a city level; a huge task considering the
vast areas involved. Meanwhile, a regional approach to household registration
poses serious challenges in the context of urbanisation, especially when one
considers how difficult it is for people to gain household registration, and all the
benefits that go alongwith that, within the capital (see page 25). Ultimately, if
regional integration is tackled lightly, it may lead tomore layers of bureaucracy
at a timewhen huge inflows of people require access to social benefits.
Real integration
in themarket
economymeans
that thepriceof
production factors
isdeterminedby
market factors.
