The economic advantages of large cities

0197-3975/91$5.00 + 0.00 @ 1992 Pergamon Press Ltd

HABITATINTL. Vol. 15. No. 4. pp. 171-181.1991. Printed in Great Britain.

The Economic Advantages Cities

of Large

A Case Study of China’s Urban Centres ZHIHONG ZHANG Fudan University, Shanghai, China

ABSTRACT

This paper reviews the guidelines for China’s urbanisation with respect to the national contribution in terms of economic efficiency achieved by cities of different sizes. The findings indicate that, although lower order cities (especially small towns) indisputably prove to be of great assistance to the national economy, chiefly in absorbing the enormous surplus labour force from rural areas and alleviating the ponderous pressure of population influx upon giant cities, yet under no circumstances can they generate substantial productivity growth, originating from agglomeration economies characteristic of large metropolises. The work makes extensive use of available statistics.

INTRODUCTION

The foundation of every division of labour that is well-developed and brought about by the exchange of commodities, is the separation between town and country. It may be said that the whole economic history of society is summed

up in the movement of this antithesis.’ Mankind has lived without any cities for 99% of the time he has been on this planet. The emergence of cities took place some 5000 years ago. Karl Marx did not err in referring to the status thereafter. Urbanisation could scarcely be said to exist as late as 1850, and Britain was the only nation in the entire world that could be regarded as urbanised in 1900. The process, however, has been accelerating continuously since then; one-third of the world population was urbanised in 1960, and this share was recorded as being as high as 40% or over in 1985. It has been predicted by the UN that the 500 million city residents in the developing countries in 1950 could have grown to 4000 million by the year 2020. By comparison with the rest of the world, the level of urbanisation in China is notably lower than the developed nations, and even lower than that of other developing countries if allowance is made for the dramatic mushroom-like growth since 1980, which should not be counted as urbanisation2 (Table 1). Nevertheless, urbanisation in its context of territorial-demographic transition is bound to escalate in China in the presence of her modernisation drive. As a ‘Marx, K. Capiral, Vol. 1, p. 352. Wishart, London, 1970. ‘It has been pointed out that proportion of rural population in numerous small towns throughout China used to be unusually larger than stipulated. In particular, when the criteria for the establishment of small towns were amended and became more lenient, an impressive growth of small towns began to take place. It appears that most small towns’ rural population exceeds 50%. and populations well over 70% are not uncommon.

171

Zhihong Zhang

172

Table I. Urhanisarron in China vs the World (RI

Country Developed Developing China India USA UK France Germany USSR Canada Japan

19.50

1960

1970

1980

53.7 15.6 11.2 17.3 64.0 77.9 55.4 70.9 39.5 60.6 35.8

58.7 21.9 24.7 19.2 69.X 78.6 62.3 76.2 49.5 68.4 43.9

67.3 25.8 17.3 20.3 74.6 81.6 70.4 80.8 57.1 76.6 s3.3

72.8 27.3 19.1 24.9 82.7 X8.3 78.3 86.4 65.4 X5.8 63.3

Sources: UN publications Chinese Sratisrlcal Yearbook. Manual of China’s Population Data. 1986.

1983;

matter of course, this entails economic development and increases the productivity of the labour force, which is increasingly concentrated in metropolises as a result of the shift of agricultural workers to non-agricultural occupations. It seems to be a cliche to observe that over 50% of the gross national product of the less developed countries (LDCs) is created in urban areas (while sometimes as much as 70% of the labour force is engaged in rural activities). In the case of developed nations, the high productivity attained by metropolitan areas is even more amazing. Since the role of the urban sector as a generator of national savings and investments to propel economic growth is well founded, it follows that the efficiency with which cities work is of paramount importance inasmuch as it directly affects the source of national output. Much of the discussion on urbanisation in China has centred more or less on small cities and towns since 1980, when the third plenary session of the 11th Central Committee of the Chinese Communist Party (CCP) declared China’s urbanisation policy to be “Strictly controlling the size of large cities, rationally developing the intermediate-sized cities, and actively developing small cities”, reaffirming the statement made in 1956 by the State Council, but in more explicit terms. It is not surprising that most people (including academics and officials) have taken it for granted that top priority should be given to the development of small cities and even tiny little towns. Nevertheless, as time goes on, the advisability of developing or, more precisely, creating small cities and towns occasionally has been questioned by some scholars and even government cadres. This paper aims to provide an examination of the entirety of Chinese cities of different sizes from the point of view of growth and productivity, or rather economic efficiency, which in the final analysis seems to be the only sensible criterion in the judgement of policies on urbanisation, with special reference to city sizes.

THE RELATIONSHIP

BETWEEN

CITY SIZE AND ECONOMIC

EFFICIENCY

The optimum size for cities has remained a problem at least since Aristotle. Over the past few decades, developed as well as developing nations, capitalist and socialist, have increasingly become aware of the impact of city size upon economies, while framing their policies on urbanisation. More often than not, policies have taken shape under the assumption that the big cities of the nation have grown too big and that efforts should be made to restrict or depress their growth. It is often argued that, besides disamenities in the form of increases in crime, crowding, pollution and other evils associated with large cities, there

173

The Economic Advantages of Large Cities

exists the disadvantage that the economic return from investment in large metropolitan areas is less than that in medium- and small-sized urban centres (Hauser, 1957; Ward, 1969; and Johnson, 1963). However, a number of empirical studies in recent years have found that the returns to scale in an urban production function are positively correlated with the degree of urbanisation and/or city size (Shefer, 1973; Carlino, 1985; and Mera, 1975). In particular, Mera (1975) reached a conclusion that “large cities are more productive and the largest cities particularly are likely to be more productive relative to others in a less-developed country”. There are many other studies tackling this problem of political significance. Although the question of urban size - how big is too big and how big is big enough. 3 - cannot find a direct answer, all researchers have recognised that there is a definite relationship between agglomeration economies and total productivity factor and that an economic rationale can be provided for the existence of large cities, which form the central mechanism linking urbanisation to economic growth. While keeping these findings in mind, the author tries to make an assessment of the performance of Chinese cities of various sizes. Relationship as shown by comparison in terms of output

Comparison in terms of output can best be made with respect to two sensitive indicators, i.e. , industrial workers’ per capita output, and the non-rural population’s per capita output. By output we mean the total value of industrial production, industrial tax plus profit, and industrial profit (Table 2). It is abundantly clear that there exists a positive correlation between city sizes and their output, with respect either to industrial workers or to non-agricultural population (Table 2). Table 2. Size-specific output of Chinese cities in 1985

City size (population X 1000) Average 324 cities >2000 1000-2000 500-1000 200-500 <200

Industrial output per capita (yuan) Industrial Profit + tax production Profit 17,470 21,207 17,722 16,467 15,810 14,832

3785 5143 4117 3700 2814 2809

2115 3182 2333 1934 1491 1288

Non-rural output per capita (Juan) Industrial production Profit + tax Profit 4888 6265 5195 4561 4604 3382

1059 1519 1206 1024 819 640

592 798 581 388 213 89

Source: State Bureau of Statistics, Statistical Yearbook of Chinese Cities, 1986. Notes: (1) Industrial production measured in terms of fixed price (not including tax and profit); (2) in China, tax and profit from enterprises constitute the main source of government revenues, and profit reflects in a great degree the performance of enterprises as viewed by the state authorities.

Economic efficiency in terms of output can be appraised by estimating the amount of industrial products (in value), profit plus tax and profit generated by a certain amount of funds and fixed assets. This reflects the efficiency with which industries work in cities of various sizes. It is justifiable to show the performance of cities of different sizes by employing these indicators because, as mentioned above, it is the agglomeration economies unique to urban centres that play a major role in the creation of national output. Figures in Table 3 may perhaps give a better description of the relationship between urban size and output. One can have a more clear-cut perception of the positive correlation between urban size and its volume of industrial output by converting the figures in Tables 2 and 3 into indices with the value of 324 cities as the base, and then combining them into a single indicator - Efficiency Index I (Table 4, last line).

Zhihong Zhang

174

Table 3. Size-specific output of Chinese cities in 1985 (unit City size (population

Total output value created per 100 yuan* Profit + tax created per 100 yuan’ Profit created per 100 yuan” Total output value created per 100 yuan fixed assetst Profit + tax created per 100 yuan fixed assetst Profit created per 100 yuan fixed assets?

yuan) X 1000)

Average of 324 cities

>2Ooa

looo-2Ow

500-IWXI

125.71 27.24 15.22

160.12 38.83 24.02

143.48 33.33 18.89

112.15 ‘5.49 13.17

112.19 20.10 10.64

102.51 19.39 8.90

131.17

175.77

132.66 30.82

111.00

121.01

105.71

28.42

42.62

24.94

21.36

20.30

15.88

26.37

13.03

11.32

9.19

17.47

20sso0

*Fund made up of : (1) government funding for each establishment; (2) operational or working enterprise; (3) loans from banking institutions; (4) money payable or collected in advance. t Buildings, machines, equipment, facilities. etc., necessary for production, original value. Source: State Bureau of Statistics, Statistical Yearbook of Chinese Cities. 1986.

Table 4. Size-output

capital

<200

of an

relationship of Chinese cities in I985 City size (population

Average of 324 cities

12000

1000-2000

X 1000) 500-1000

200-500

<200

Non-rural per capita Industrial production Profit + tax Profit Average

100 100 100 100

128 143 135 136

106 114 98 106

93 97 66 85

94 77 36 69

69 60 15 48

Industrial per capita Industrial production Profit + tax Profit Average

100 100 100 100

121

136 150 136

101 109 110 107

94 98 91 94

91 74 70 78

85 74 60 73

per

100

127

114

89

89

82

Profit + tax created per 100 yuan Profit created per 100 yuan Industrial production created per 100 yuan fixed assets Profit + tax created per 100 yuan fixed assets Profit created per 100 yuan fixed assets Average

100 100

143 15x

122 124

94 87

74 70

71 58

100

134

101

85

91

81

100

150

108

88

75

71

100 100

166 146

110 113

82 87

71 78

58 70

Efficiency

100

139

109

89

75

64

Industrial production 100 yuan

Index

*Calculated

created

I*

by averaging

the three

sets of averages

above

It can be noted by taking a brief look at the Efficiency Index I that large cities surpass the medium-size and small cities in terms of economic efficiency to an impressive extent. One can safely claim that, as far as the capacity of generation of output is concerned, large cities, each with a population of more than 2. million, are more than twice as efficient as the small ones, and it is true that the efficiency index series, beginning with the largest cities, scales down steadily with every reduction in urban size. We present data in Table 5, analogous to those in Table 4, for the years 1986, 1987 and 1988, in order to show that the same holds true, although the former refers to state-owned enterprises while the latter refers to all enterprises.

The Economic Advantages of Large Cities

175

Table 5. Size-specific economic efficiency of state-owned enterprises (unit yuan)

Total output value created per 100 yuan fixed assets* Profit + tax created per 100 pan fixed assets* Profit + tax created per 100 yuant Per capita net output workers

of

Productivity of the entire work force @an/person)

Average of: 353 cities (1986) 381 cities (1987) 434 cities (1988)

>2000

(1986) 107.0 (1987) 119.3 (1988) 116.3 (1986) 22.0 (1987) 21.0 (1988) 21.6 (1986) 23.1 (1987) 21.5 (1988) 21.8 (1986) 6369 ( 1987) 6423 (1988) 8037 (1986) 17.456 (1987) 17,038 (1988) 26,161

143.9 143.2 151.0 32.4 29.1 28.5 31.2 27.4 26.7 7883 7977 9514 23,386 23.902 33,206

City size (population looo-2000 SOO-loo0 111.5 115.7 117.9 24.6 23.2 22.8 25.7 24.3 23.2 6707 7172 8023 18.449 19,531 26,340

93.8 96.6 103.1 19.1 19.1 20.7 21.2 19.8 22.4 6577 7592 8889 16,021 17.387 25.908

X 1000) 200-500 93.4 94.5 101.1 17.2 16.8 17.3 15.1 17.4 17.9 5169 6382 7054 14.653 16,159 22.731

<200 87.0 93.9 104.8 17.0 16.6 18.3 18.3 17.1 18.5 5444 3678 6773 13.797 9506 21,911

*Including buildings. machines. equipment. facilities. etc.. necessary for production, original value. tFund made up of: (1) government funding for each establishment: (2) operational or working capital enterprise; (3) loans from banking institutions; (4) money payable or collected in advance.

of an

Relationship as shown by comparison in terms of input

One could argue that big cities owe their higher output generation capacity to higher levels of funding in the form of investment, giving them access to capitalintensive technology to increase production. They are in a more favourable position than smaller cities, benefiting from government funding. Since ours is a country badly short of financial resources, it is important whether the higher productivity of large metropolises should be attributed to their receiving a larger share of government funding. Therefore, comparison of the economic efficiency of cities of different sizes has to be made also in terms of economic inputs (refer to the tables). Figures in Table 6 indicate that small- and medium-size cities necessitate more input in the form of fixed assets and pecuniary resources than big cities, when non-rural residents in urban areas are taken into account on a per capita basis. Big cities need to spend much less on the same per capita basis. If comparison is made with respect to industrial workers, the portion of the urban population most closely associated with productive activities, the merit of large urban areas is more pronounced. As shown in the last line of Table 7, while small- and medium-size cities call for input at a level slightly higher than the average of all cities, or the national average (109, 102 and 104), the giant cities (especially the megapolises) need much less than the national average (95 and 93). The foregoing analysis has demonstrated that large cities are capable of achieving higher generating output with less expense, on average, than cities of lower order (especially the smallest ones). This finding can be reached by a different approach. The amount of fixed assets and financial resources (or funding as commonly designated) in contrast to fixed assets, has been employed to create a fixed amount of profit. Profit plus tax and products in value are perhaps another way to evaluate the total productivity factor of enterprises (mainly secondary industry accommodated by cities of different sizes). It is interesting to note the impact of different urban sizes upon the efficiency of the utilisation of inputs, in the form of fixed assets and funding or financial resources other than fixed assets. The officially released data, and corresponding calculations by the author (Table 8), illustrate this point.

176

Zhihong Zhang Table 6. Size-specific input of Chinese cities in 1985 (unit -

Per caprta fixed assets non-rural population % national average* Per capifa industrial fund,? non-rural population % national average* Average of two sets of averages above *Figure

pertaining

yuan)

Average of 324 cities

>2000

City size (population X 1000) 500-1000 100@2ooo 200-500

3726 100

3564 96

3916 105

4109 1 IO

3837 103

4907 132

3888 100

3913 101

3621 93

4067 105

4078 105

3304 85

100

99

99

108

I04

109

to 324 cities taken as the national average. funding for each establishment; (2) operational institutions; (4) money payable or collected in advance.

t Fund made up of (1) government loans from banking

Table 7. Size-specific input of Chinese ciriesin 1985 (unir -

Per capita fixed assets,’ industrial population % national averaget Per capita industrial fund industrial population % national averaget Average of two sets of averages above

or working

capital;

(3)

yuan)

Average of 324 cities

>2000

13,319 100

12,066 91

13,359 100

14,835 111

13,714 103

14,031 105

13,898 100

13,246 96

13,252 89

14,684 106

14,004 101

14,490 104

100

93

95

109

102

104

*Including buildings, machines, equipment, facilities, t Figures pertaining to 324 cities taken as the national Sources: as Table 6.

City size (population X 1000) 1000-2000 SOO-loo0 200-500

etc., necessary average.

<200

for production.

Table 8. Size-specific efficiency of Chinese cities in the utilisation of input in 1985 (unir -

Fixed assets needed per 100 yuan profit + tax % national average Fixed assets needed per 100 yuan profit % national average Fixed assets needed per 100 yuan industrial production % national average Fund needed per 100 yuan of profit + tax % national average Fund’ needed per 100 yuan profit % national average Fund* needed per 100 yuan industrial production % national average Average of six sets of averages above

1200

City size (population 500-loo0 1000-2000

yuan)

Average of 324 cities

>2oOtl

x 1000) 200-500

352 100

235 67

324 92

401 114

468 133

499 142

630 100

379 60

573 91

767 122

884 140

1089 173

76 100

57 75

75 99

90 118

83 109

95 124

367 100 657 100

258 70 416 63

300 82 529 81

397 108 759 116

497 135 939 143

516 140 1124 117

80 100

62 79

70 88

89 112

89 111

98 123

100

69

89

115

129

146

Source: State Bureau of Statistics, Statistical Yearbook of Chinese Cities. 1986. *Fund made up of: (1) government funding for each establishment; (2) operational or working enterprise; (3) loans from banking institutions; (4) money payable or collected in advance.

<200

capital

of an

Just as we treat indicators in Table 4, combining three sets of averages to construct an Efficiency Index I to show the performance of cities of different sizes from the output perspective, so we can also compile an Efficiency Index II to reflect the differences, if any, in performance of cities of various sizes from the perspective of how well the input is utilised. Thus we first enlist the three sets of

The Economic Advantages of Large Cities

177

averages separately recorded in the last lines of Tables 6-8 as follows (Table 9, lst-3rd lines), and then average them to obtain a series of mean values (Table 9, 4th line). This is really an index of inefficiency, on account of its higher value being indicative of more consumption of input (either on a “per capita of nonrural or industrial population” basis, or on a “fixed amount of output” basis, as shown by the three sets of averages in Tables 6-8 and 9). Therefore, reciprocals of this series of mean values are taken (Table 9, line 5), in order to present an efficiency index, or Efficiency Index II as formally named, in the true sense. A glance at the Efficiency Index II shows at once that cities with a population in excess of 1 million attain a higher level of efficiency (115 and 106) than those cities of smaller sizes (91,89 and 83). This is not at the expense of more intensive inputs from the state or other resources, but on the contrary, by drawing less inputs via its better utilisation and overall more effective performance. So far, the relative economic efficiency of different urban sizes has been analysed with reference to the national average. It seems necessary at this point to make direct compa~son between large cities and smaller ones to see how large is the gap between these two categories of city, each containing several size groups, as far as their economic efficiency is concerned. The above-mentioned comparison can be facilitated by making use of Efficiency Indices I and II. The relative economic efficiency of smaller cities and ( i.e., that of cities with a population of below 200,000, 2~,~0-500,O~ 5~,~-1,~,~), in terms of output, can be computed by reducing their Efficiency Index I into percentages, as compared with the Economic Index I of large cities (i.e., that of cities with a population of l-2 million and above 2 million). Likewise, the relative economic efficiency of smaller cities in terms of input can be calculated in a similar way, except for the substitution of Economic Table 9. S~~e-~~pat relationship of Chinese cities in 1985 Average of 324 cities Per capita input of non-rural population as compared with national average Per capita input of industrial population as compared with national average Input needed for a fixed amount of output* Mean value of three lines above Efficiency II

>2000

City size (population X 1000) 1000-2000 500-1000 200-500

<200

loo

98

99

107

104

108

IO0

93

95

109

102

105

100 100 100

69 87 115

89 94 106

115 110 91

129 112 89

146 120 83

*As can be seen from Table 8, in the officially released data. input implies the inclusion of fixed assets and funds while output implies the inclusion of profit-plus-tax, profit and industrial products.

Table IO. Relative economic efficiency of small- and medium-size Chinese cities in 1985 compared with larger cities <2OO City size (population X IO-“) 12ooo looo-2ooo 500-1000 200-500

output W) 45.9’ 58.6 71.8 84.7

Input (%) 72.lt 78.3 91.2 93.2

200-500 output W) 54.1 69.2 84.7 100.0

Input (%) 77.3 83.9 97.8 100.0

500-1000 output W) 63.9 81.7 100.0 118.0

Input f%) 79.1 85.8 100.0 102.2

Note: the illustrations marked by * and t can exemplify the computation. *As Economic Efficiency Index I of cities with a population of less than 200,000 is 64 when reduced to a percentage, as compared with an index of 139 for the largest cities, each with a population of more than 2 million, the result comes to 64039 = 0.459 or 45.9%. t As the Economic Efficiency Index II of the smallest cities and that of the largest ones stand respectively at 83 and 115, the computation is as follows: 83015 = 0.721 or 72.1%.

178

Zhihong Zhang Table I I. Relative economic efficiency of large Chinese ciries in 1985 compared with small- and medium-size cities >2ooo

looo-2ooo output Input

City size (population X lo->)

output (%)

( %)

(%I

(“h)

>2OOO 1000-2000 500- 1000 200-500 <200

100.0 127.5 156.1 185.3 217.1

100.0 108.4 126.3 129.2 138.5

78.4 100.0 122.3 145.3 170.3

92.1 loO.0 116.4 119.7 127.7

Input

Efficiency Index II for Economic Efficiency Index I. Results of the computation are provided in Table 10. The diseconomies of the small- and medium-size cities in comparison with the larger cities, particularly in terms of output, are demonstrated in Table 10. Much in the same way, the relative economic efficiency of large cities with a population of l-2 million or more than 2 million can be shown by direct comparison with that of smaller cities. Table 11 pinpoints the remarkable superiority of big metropolises over smaller urban centres in achieving greater total productivity factors. POLICY IMPLICATIONS

OF THE HIGH PERFORMANCE

OF LARGE CITIES

The above empirical analyses have fully demonstrated the undeniably high performance of large cities in China, in the sense that they are economically far more efficient than small cities. It is not surprising that the findings of many scholars in this context suggest that even the largest cities have not reached excessive sizes from the point of view of growth and productivity (e.g., Alonso, 1971). It is only natural at this point to bring up the question of whether the existing guidelines of China’s urbanisation are appropriate. As is well known, China is a country badly short of financial as well as physical resources on a per capita basis. In the process of urbanisation, which is synonymous with industrialisation and, in a certain sense, modernisation, every effort should be made to save money or, technically speaking, to ensure the best utilisation of industrial input. Now let us suppose that there are 100 million labourers engaged in agriculture to be transferred to urban areas to become industrial workers. It is of paramount importance to opt for cities of optimal size to accommodate them. As the foregoing analyses have expounded, the best choice should be the largest cities. Taking the input requirement in 1985 as a point of departure, the absorption of 100 million labourers from rural areas by cities, each with a population of more than 2 million, needs an input of fixed assets amounting to 1,206,600 million Chinese yuans (see Table 7 for per capita fixed assets requirement), whereas if small cities each with a population less than 200 thousand take the place of the largest cities, this sum will rise to 1,403,100 million Chinese yuans. A net increase of 16.2%! As for input in the form of industrial funding, the giant cities, in comparison with the small cities, are able to save an appreciable sum totalling 124,500 million Chinese yuans (449,000 million minus 1,324,600 million Chinese yuans; for per capita funding needs, see Table 7). Of course, while saving an enormous amount of financial resources in the process of receiving the population influx from the countryside, megacities still make greater contributions concomitantly to the national product by taking advantage of their higher productivity (attributed to agglomeration economies). For instance, the per capita profit plus tax capacity of industrial workers in the highest order cities in 1985 was 5143 Chinese yuans (Table 2), and that in the

179

The Economic Advantages of Large Cities

lowest order cities was 2809 yuans (Table 2). Hence, with the shift of 100 million rural iabourers to urban areas, there would be a large gain for the former over the latter, because the former is capable of generating 514,300 million yuans with the reinforcement of the additional 100 million workers, whereas the latter can only offer 280,900 million yuans if they accommodate the 100 million rural labourers. In other words, the contribution of large cities to the total of profit plus tax, the part of output as important as industrial products, is 83% more than that of small cities. Apparently this is another important reason why big cities are much to be preferred when suggestions are made as to where the growing rural population should be accommodated. No doubt, maximisation of industrial output should be a national goal in the process of urbanisation.

EFFICIENT LAND UTILISATION - ANOTHER IMPORTANT FACTOR IN THE ECONOMICS OF URBAN SIZE

China suffers severely from shortages of land resources, and of arable land in particular. In 1979 its per capita cultivable land (0.1 ha) was about 27% of the world average. With continuous population growth, though at a rate slower than before, the per capita acreage has been decreasing. Urbanisation in the sense of transfer of rural population to urban areas necessarily lessens the amount of arable land, and thus drives the situation from bad to worse. On this account, the efficiency of land utilisation has to be considered as another important factor in the economics of urban size. It can be noted that, as far as occupancy of land is concerned, large cities are superior to small ones, and megacities are the most economic (see Table 12). More importantly, the output per unit of land area of large cities is about 100 times that of small ones (Table 13). Therefore, there is every reason to believe that reliance has to be placed on large cities if efficient utilisation of land resources is the chief concern in formulating guidelines for urbanisation in China. The striking differentials shown in Table 13 serve to show that the high performance of large cities originating from agglomeration economies (derived from spatial clustering) can never be overestimated. For a land-hungry nation like China, it seems worth paying special attention to such factors if guidelines for urbanisation are re-examined.

Table 12. Size-specific iand occupancy of Chinese cities

City size (population X 1000) >1000 100-1000
60 100

120

90 150

200

Source: Research in City Planning, No. 4. 1984.

Table 13. Size-specific output in relation to unit area of land of Chinese cities in 1985

Industrial production, % national average

10,OGflyuanlkm’

Profit + tax 10,000 yuanikm’ % national average

Average of 324 cities

>2ooo

70 100.0

1079 1541.4

634 905.7

138 191.7

12.8 100.0

223.0 1742.1

124.0 968.7

26.5 207.0

City size (population loOO-2Oc@ 500-1000

Source: State Bureau of Statistics, Statistical Yearbook of Chinese Ciries, 1986.

X 1000) 200-500 lE.0

12.1 94.5

<200 12 17.1

1.9 14.9

180

Zhihong Zhang

THE SPONTANEOUS SHIFT IN GROWTH TO SMALL CITIES IN MORE DEVELOPED COUNTRIES

It can be observed that the prevailing situation in most more developed countries nowadays is the slackening or rather downward growth rate of large metropolises, instead of their expansion in earlier times. It has been found that the rates of growth of big cities have been falling since the peak in the 1950s - from 5.2% annually in the last half of the 1950s to 3.4% in the 1980s (Harris, 1988). In the USA, big cities sustained a decline of 3.9% (from 31% to 27.1%) in their population among the urban total during the period 1970-1980. The drop in London was even more pronounced (the resident population there decreased by 11%) (Zhang, 1988a,b). Furthermore, in many countries, there has been a spontaneous shift in growth to smaller cities (Harris, 1988). In reality, this is a phenomenon begun when the process of urbanisation entered an unprecedented new phase, an upshot of the restructure of the urban system as economic progress reached a new high. This must not be mistaken for an intended remedial measure to cope with difficulties ensuing from the overgrowth of higher order cities (Zhang, 1988a,b). Hence it is groundless to claim that the relatively higher growth rate of smaller cities indicates a detour experienced by more developed countries, owing to their vigorous development of giant metropolises in earlier days. What is more, the small cities - let alone the small towns (of which the development has been called for in China) - possess no features in common with those small settlements in richer countries. The latter are closely linked with one another and their economies are primarily urban in nature; while the former comprise many loosely connected, if not entirely isolated, small groups of inhabitants, and their economies are predominantly of a rural type. Most Chinese small cities and towns used to accommodate an unusually large portion of rural population per se, surpassing the official standards for urban sectors, and also in excess of the criteria stipulated in other countries. These small cities and towns are often geographical and/or economic centres in different regions, surviving with the help of the countryside as their supporting hinterland. With the growing openness of China’s policy and invigoration of the domestic economy, quite a few small cities have become prosperous in recent years, engaging in industrial processing, assembly and other activities. Nevertheless, such small cities are too few to make any significant contribution to the national economy in the sense of increasing output by raising productivity, or substantiating industrialisation. The growth of small cities in China only suffices to prove that the ‘central place theory’ of Christaller still works, but it is unlikely that industrialisation per se can be greatly assisted by the role played by such small cities, no matter how large their number. After more than 30 years’ implementation of the policy of giving the development of small cities top priority (remember the formal declaration of the policy was simply a reiteration

Table 14. Number of Chinese City size (population X 1000) >2ooo looo-2000 500-1000 300-500 100-300
cities by size’ in selected years

1952

1964

1982

1985

1986

1987

1988

4 5 16 10 68 63

7 9 34 30 69 19

13 25 47 4x 89 22

13 44 85 78 93 11

13 49 99 84 91 11

15 58 115 90 90 13

17 64 141 109 88 13

size groups adopted here are different from those presented earlier. State Bureau of Statistics, Chinese Statistical Yearbook, published in selected

years.

The Economic

Advantages

181

of Large Cities

of the statement made by the State Council in 1956), the record seems to be somewhat negative in identifying its feasibility (Table 14). It seems necessary to point out that small cities have to be differentiated from small towns, which have thrived since 1984 when the criteria of grouping inhabitants under the name of towns became more lenient. They are mostly informal settlements and often emerge and perish of themselves, assuming sole responsibility, for their survival, much depending on the soundness of the rural economy and to a lesser degree on that of urban development. For reasons mentioned previously, their being regarded as part of urbanisation can hardly be justified, despite their contribution to the national economy, at least temporarily.

GUIDELINES FOR CHINA’S URBANISATION IN THE LIGHT OF ECONOMICS OF URBAN SIZE

All the foregoing analyses seem to have stressed the point that the development of big rather than small cities should be strongly recommended, on the grounds that the former are far more efficient economically than the latter, not only in output generation but also in input utilisation. The findings conform with those documented in the worldwide literature of urban studies and are likely to contain some universal truth for which the relevant status quo of China is simply a case in point. Of course, while advocating that China redouble its efforts to develop large cities, under no circumstances does this imply constraining the growth of medium-size cities, or even small cities, when urbanisation enters into a certain stage. Perfect functioning of an urban economy entails a proper hierarchy of cities, which comprises naturally urban centres of various sizes, so that a harmonic interaction can be secured among them to bring about the full play of the ‘engine of growth’ as a whole.

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