Chinese Urban Planning in Transition: Market Economy and its Way Forward

Chinese Urban Planning in Transition: Market Economy and its Way Forward Li Yu Cardiff University, Cardiff, UK* Abstract This paper examines urbanisation process in China as it has been closely associated with the transition. The main features of Chinese transition and their influence to the Chinese urban planning system and practice in terms of social and economic development were discussed. It is clear from analysis that although economic development in China has been rapid during last decades, there are several serious problems, particularly those in environment, sustainable development, and social equality. All these creates challenges for urban planning. The ways forward of Chinese urban planning is raised within the present social and economic context in China. 1. Introduction Urban planning has always been influenced by the social, economic and political milieu of a time. Urban planning has to reflect, express and cope with these social and economic contexts and to adapt to fit the social, economic and political changes, instead of the other way round. Planning has to fit the needs of the political and social demands of society. It cannot be isolated from shifts of society. This paper will firstly try to examine the urbanisation process in China as it has been closely associated with the transition. Cao (2002) argues that the transition from socialist central planned economy to market economy is the transition or a movement from dictatorship to democracy. It is also the transition from a closed society to an open one. From this historical and social point of view, it is the transition from an agricultural society to an industrial and commercial society, or a part of an urbanisation process. It is evident that the transition to the market economy has been one of the impulses for rapid urbanisation process. The paper will also assess the present social and economic development in China, and identify those main features of Chinese transition and their influence to the Chinese urban planning system and practice. 2. Urbanisation Process in China A simple definition of urbanisation is that it is a process of transfer from agriculture to urban land use and population. But it is not only migration from the rural to urban areas, nor the expansion of cities, but a changing process of living styles and industrial patterns. It is the process of changes from agriculture, or primary industry to secondary and then tertiary industries. Figure 1 shows the changes of different industries in China during last 50 years. * School of City and Regional Planning, Cardiff University, Email: yul@cardiff.ac.uk. 21

Figure 1: Composition of Gross Domestic Product in Percentage. % 60. 0 50. 0 40. 0 30. 0 20. 0 10. 0 0. 0 Primary Industry Secondary Industry Tertiary Industry 1952 1955 1960 1965 1970 1975 1980 1985 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Note: Data in value terms in this table are calculated at current prices. Source: China Statistic Year Book 2000 With the rapid growth of the national economy and social development, urbanisation in China has been hastened. The number of cities has increased to 667 in 1999 from 192 in 1978 (China Statistic Book 2000) (see table 1). According to Chinese definition, cities can be divided into 4 categories, i.e., metropolitans with urban population more than one million, large sized city with urban population between 500,000 to one million, medium sized city with urban population between 200,000 to 500,000 and small cities with urban population less than 200,000. During the same period, the urban population has reached 456 million (36.1% of total population) from 170 million (17.9% of total population). (Census, 2000). Table 1: Numbers of Cities in Different Categories and their Percentage, 1949 to 1999 Total Metropolitans Large city Year Cities No. No. of Cities % No. of Cities Medium cities % No. of Cities Small cities % No. of Cities 1949 136 5 3.7 8 5.9 17 12.5 106 77.9 1958 176 11 6.3 19 10.8 36 20.4 110 62.5 1963 174 15 8.6 18 10.4 54 31 87 56.5 1970 176 11 6.3 21 11.9 47 26.7 97 55.2 1978 192 13 6.8 27 14.1 60 31.2 92 49.4 1983 289 19 6.6 29 10 73 25.3 168 51.8 1988 434 28 6.5 30 6.9 110 25.3 266 58.6 1992 517 32 6.2 31 6 141 27.3 313 60.5 1999 667 37 5.5 49 7.4 216 32.4 365 54.7 % Source: China Statistics Year Books 22

Urbanisation in China has been closely associated with economic growth and the transition to the market economy. The transition is one of the main impulses to urbanisation. One main characteristic of urbanisation is unbalanced development of the whole country. The growth rate of both the economy and urbanisation in the Eastern coastal area has been much faster than that of Middle and the Western areas. There are several reasons for this phenomenon. Unlike the former Soviet Union, China had diverse economics (Wei, 2000). State owned enterprises, collective enterprises and a few small private businesses have always been mixed even during the period of tight central control. The non-state owned sectors were mainly located in the Eastern coastal areas. This helped economic development and urbanisation progress rapidly in the eastern part of China, particularly since the transition to the market oriented economy in the 1980s. The non-state sectors have made a great contribution to development. Of course there are also some other reasons for this, typically the favourable policies given by Central government to attract the foreign direct investment (FDI), traditional linkages with overseas in business and trades, higher education standards and a convenient transport network. Figure 2: Six Major Co-urban Areas in China Source: Quoted from Minister Wang Guangtao's Speech, October, 2002. It is for these reasons that economic growth and its promotion of urbanisation have been so rapid in the Eastern area. The major and most important co-urban areas in China are all located to the Eastern coast area, i.e., Yangtze River Delta, Pearl River Delta, Beijing- Tianjin-Tanshan area, Liaoning Middle and South Area (Liaoning Peninsula), Shandong Peninsula, and Fujian Coast (South) area (Figure 2). Among these six co-urban areas, the first three, i.e. Yangtze River Delta (with Shanghai as its central city), Pearl River Delta (with Hong Kong and Guangzhou as their central cities), and Beijing-Tianjin-Hebei Province area (with Beijing and Tianjin as cores. It is also called "Greater Beijing Area") are the most crucial ones. These three co-urban areas as development poles, occupy 9.92% of the total population with 2.04% of the total territory. But they contribute 31% of the total GPD and attract about 65% of the FDI (Table 2). 23

Table 2 : Main Index of the Three Main Co-urban Area in 2000. Population ('000) Area (Km2) GDP (100 million Yuan) GDP Per Capita (Yuan/person) FDI (100 million US Dollar) Beijing-Tianjin-Tanshan 30970 48629 5402 17442 53.87 Yangtze River Delta 69050 92937 14800 21433 104.01 Pearl River Delta 25640 54747 7522 29336 104.67 Percentage in Whole Nation 9.92 2.04 31 64.67 Source: Quoted from Minister Wang Guangtao's Speech. Migration from rural to urban areas has been an important process in urbanisation. According to the estimate by the Ministry of Construction, People s Republic of China, there have already been 80 millions rural migrants who have moved to work in urban areas during the last few decades. Among these 80 million migrants, 60% have gone to the cities and towns of the Eastern area; 30% of them went to the cities and town of the Middle areas, and 10% stayed in the Western area. If they are divided by the categories of various types of cities, 40% went to the mega-cities or large cities; 40% are working in the medium and small sized cities; and 20% are in their local towns (Wang, 2002). The direction of migrations was decided by job possibilities, which were determined by economic development levels. According to the fifth Census in 2000, Shenzhen, as the city of most rapid development had a population of 7 million in 2000. There are only 1.24 million registered urban citizens. In Shanghai, there is a population of 16.74 million. Among which 3.87 million are not locally registered urban citizens, but migrants who have stayed in Shanghai for more than 6 months. These statistics from the census illustrate that the former policy of Keeping strict control over the size of large cities and developing rationally medium-size cities and small cities, so as to promote a rational structure of productivity and population (Planning Act Article 4, 1989) has not been appropriate or practicable. 3. The Transition to the Market Economy and its Main Features The transition from the Centrally Planned Economy to the market economy is associated with three main features of devolution, globalisation and marketisation in China. This includes the operation of the economy transferred to the market from the government. Within the government system itself, more powers have been decentralised to local governments from higher hierarchical levels. 3.1. Devolution The major innovation in devolution is the emergence of the municipality as the key player in urban development in the economy with the objective of promoting GDP increase and urban construction. The function of local government has shifted from implementation of plans made by Central government to the operator of the development of the local economy. To support this change fund raising capability for development at the local level was needed. The reform of fiscal investment systems was the most important devolution. In the fiscal system, the tax revenue sources were separated and shared between central government and 24

local governments. Tax was divided into local taxes, central taxes and shared taxes. The division of taxes is complicated. They are collected by the Local Tax Bureau and the State Tax Bureau separately. This is summarised by Wang, et al, (1999) as explained in Table 3. The devolution in the fiscal system gave local governments much financial power. It is because of the division of the state tax, the local tax and the shared tax, the tax collection activities of local governments have been encouraged. Local fiscal capacity has been increased so rapidly that local finance is even higher than that of the state government (Table 4). But vice versa, the state income has declined. The share of state income in total national income dropped to only 16.3% in 1990 from 32.8% in 1978. (Wang, et al,1999). Besides, the capability of budget control by Central government has been reduced dramatically. Associated with the fiscal system reform there was reform in investment. After 1984 investment decentralisation policies were implemented (Wei, 2000). Except for some large investment projects, or those projects which might impact on the national social economic development, local governments have authority to make decisions in investment, particularly in urban infrastructure development and construction. Table 3: The Taxes Categories Type of tax State Tax Elements of Tax Category 1, Consumption tax; 2, Value-added tax and consumption tax collected by Customs Office; 3, Income tax on state-owned enterprises; 4, Income tax on banks and non-banking financial enterprises; 5, Business tax, income tax and urban maintenance and construction tax levied on bank and insurance companies; 6, Tariffs. Local Tax 1, Business tax and urban construction and maintenance tax; 2, Income tax on local enterprises; 3, Individual income tax; 4, Urban land tax; 5, Cultivated land occupation tax; 6, Fixed asset investment direction adjustment tax; 7, Vehicle use and licence tax; 8, Real estate tax, contract tax; 9, Stamp duty tax; 10, Animal slaughter tax, agricultural tax and animal husbandry tax. Shared Tax 1, Value-added tax, of which central government s share is 75%; 2, natural resource tax. The resource taxes on offshore oil belong to the central government while the resource taxes associated with land belong to local government. Source: Wang et al, 1999 With devolution, especially in the tax and the investment systems, local governments have begun to seek economic objectives and increase their fiscal capacity. Increasing of economic capability and local fiscal raising has then been the priority of local governments. Especially since the reform in the urban areas in the 1980s, as a part of the devolution, achievement of economic and urban development have also been regarded as main targets (Wang, 2000). For economic development objectives, local governments have to attract inward investment and seek the various financial resources, including land leasing and real estate development projects (Logan, 2002), for urban development and increasing of GDP. 25

Table 4: Total Extra-budgetary Revenues and Expenditures of Central and Local Governments (100 million Yuan). Total Central Government Local Government Total Revenue Expenditure Central Government Local Government 1982 802.74 270.70 532.04 734.53 227.05 507.48 1983 967.68 359.90 607.78 875.81 300.38 575.43 1984 1188.48 470.54 717.94 1114.74 420.24 694.50 1985 1530.03 636.10 893.93 1375.03 562.05 812.98 1986 1737.31 716.63 1020.68 1578.37 640.94 937.43 1987 2028.80 828.03 1200.77 1840.75 741.61 1099.14 1988 2360.77 907.15 1453.62 2145.27 842.86 1302.41 1989 2658.83 1072.28 1586.55 2503.10 975.87 1527.23 1990 2708.64 1073.28 1635.36 2707.06 1037.69 1669.37 1991 3243.30 1381.10 1862.20 3092.26 1263.27 1828.99 1992 3854.92 1707.73 2147.19 3649.90 1592.81 2057.09 1993 1432.54 245.90 1186.64 1314.30 198.87 1115.43 1994 1862.53 283.32 1579.21 1710.39 225.02 1485.37 1995 2406.50 317.57 2088.93 2331.26 351.38 1979.88 1996 3893.34 947.66 2945.68 3838.32 1034.92 2803.40 1997 2826.00 145.08 2680.92 2685.54 143.91 2541.63 1998 3082.29 164.15 2918.14 2918.31 139.74 2778.57 Source: China Statistic Year Book 2000. Nevertheless, the devolution in terms of fiscal and investment further worsen the problem of inequality and disparity in the regions and among the cities. Some less developing regions or cities, particularly those in the Middle and Western areas, are neither able to generate more local fiscal resources, nor to attract inward investment because of their poor or less developed capacity. More developed regions and cities will find more opportunities in fiscal resources and inward investment. Their development will be further hastened. These successful cities have been growing so rapidly that there are some changes every year. There are places where everything is changing before one's eyes, and a visitor can return after a year's absence and be surprised at the transformation (Ibid). The situation is then the rich areas become richer, but the poor areas poorer. 3.2. Globalisation Globalisation and the Open Door Policy have stimulated the growth of foreign investment in China (Wei, 2000), which has made crucial contributions to economic growth and urbanisation. The foreign investment enterprises (FIE) also provide many job opportunities. Many factories funded by Hong Kong and Taiwan investors are mainly labour intensive 26

processing and assembling industries. They do not need qualified and experienced skilful workers. The majority of their workers are from the rural areas. Some researches found that there have been at least 150 million migrants from rural to urban areas (Shao, 2001, Wang, 2002). These migrants have to do the work without skills or with lower skill requirements. These workers normally stay in dormitories provided by the factories. Figure 3: Usage of Foreign Capita. 700 600 500 400 300 200 100 0 1979-1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 Total value Loans Value FDI Value Other FDI 1995 1996 1997 1998 1999 Source: China Statistic Year Book 2000 Foreign investment provides capital for economic development. Figure 3 illustrates the continuing increase in value of the foreign investment in China. Although FDI is a fluctuating process, generally it is an increasing direction in China. The research of Wei (2000) shows that foreign investment has become an important source of financing development, as evidenced by the increasing proportion of fixed investment provided by FDI from 3.6% in 1985, to 6.25% in 1990, and 11.5% in 1995. He suggested that the contribution of FDI to capital formation is the primary purpose of China s open door policy. Involvement of foreign enterprises also helps transfer technologies from overseas to China to increase the capability of adopting more advanced technology. With the coming of foreign investment enterprises to China, integration of the Chinese economy with the global economy is promoted. At the beginning of the Open Door and Reform Policy, the first foreign investment enterprises entering China were processing, or assembling industry with highly labour intensive products, such as clothes, shoes and watches. These enterprises produced the goods according to samples designed outside of China, assembling parts supplied by investors or clients from overseas. Materials for the products were imported from abroad, and the products were exported, too. The advantage of the low labour cost in Mainland China was used. While driving the Chinese economy to global economy by these means, they also provided many job opportunities for migration from rural areas. Globalisation in China can also be illustrated by the changes of the three major indexes for international trade, foreign investment and international tourism. Table 5 shows changes in these three aspects. 27

Table 5: The Major Index for Globalisation (100 million US Dollars). 1985 1990 1995 1998 1999 Foreign Direct Investment 46.5 102.9 481.3 585.6 526.6 Total Import and Export 696 1154.4 2808.6 3240.5 3606.3 International Tourist Income 12.5 22.2 87.3 126 141 3.3. Marketisation and Urban Entrepreneurialism Source: China Statistics Year Book 2000 Marketisation started from the rural areas. The economic reform in the late 1970s and the beginning of the 1980s gave the peasants freedom to operate their businesses depending upon the market. Rural productivity increased rapidly. Township and rural enterprises contributed to rural economic development and urbanisation. Success of rural economic reform encouraged reform in the urban areas. In 1984, it was decided by the government to shift reform from rural to urban areas. From 1984 to the beginning of the 1990s, the reform of state owned enterprises was the separation between ownership and business operation. State owned enterprises began to enjoy more rights to undertake their business operation depending on the market. Price reform was released to the market but macro controlled by the government at first. In the 1990s, the prices of industrial consumption goods, agricultural products, and raw materials were all decided by the market instead of government, except some important products and commodities. The term the "socialist market economy formally appeared in the Third Plenary Session of the 12 th Central Committee of the Chinese Communist Party in October 1984. Marketisation in China has been an incremental and graduated process. It can also be expressed in the diversity of ownership enterprises, especially the increase in privately owned businesses. During the last two decades, private businesses have made a contribution to economic development and urban construction. This can be illustrated from the percentage of the investment in fixed assets by other source of revenue instead of the governments' (Figure 4). It is clear that the state investment has declined and is less significant when compared with other source of revenue, typically fund raising in the market locally. Figure 4: Structure of Funded sources for Total Investment in Fixed Assets in Percentage 1999 1995 1990 1985 0% 20% 40% 60% 80% 100% State Budgetary Appropriation Domestic Loans Foreign Investment Fund raising from privates Source: China Statistic Year Book 2000 28

Nevertheless, the process of marketisation has not been smooth. There are several problems, which might not have been created by marketisation, but are by-products of this process. During last 30 to 40 years, the State owned enterprises (SOEs) have played an important role not only in economy, but also in the private life of ordinary people. The SOEs provided all the welfare, i.e., health treatment, housing, pension, and the primary and secondary education to the employees and their families. With reform and marketisation, benefits will also be marketised. For employees who used to rely for nearly all their life on the SOEs, with low level of wages but reasonable benefits, are facing the problems of losing all these benefits they have come to expect, and believe they should enjoy. It will be even more serious for these employees if the SOEs they work for meet problems with finance or become bankrupt. This situation threatens attempts to achieve poverty reduction. Marketisation and the importance of foreign direct investment (FDI) in revenue and income generation have stimulated competition among local governments. To attract FDI, local governments have offered more preferential policies by providing more land, improving infrastructure, protecting the interests of foreign investors and forming local-global alliances. Many developing zones have been established and huge areas of agricultural land have been converted to urban and industrial use, leading to the rapid decline of cultivable land (Wei, 2000). To attract scarce resources for investment Chinese municipal government has to compete with other cities both in China and even in the world. The importance of FDI from inside and intercity competition for FDI from outside strongly drove municipal governments toward entrepreneurialism (Fu, 2002). 4. New Challenges of Urban Planning in the Transition Development in China during the last two decades has been so rapid that it has attracted the attention of the world. Nevertheless, Chinese development is always accompanied by several serious challenges. These are also the tasks that urban planning in China has to deal with while pursing the further promotion of economic development. 4.1 Unemployment The Chinese population is about 22% of the world's. But its labour force occupies about 26% of the global total. Employment opportunities have always been the main issue in China. At the beginning of the Reform and Open Door Policy, economic development policy was following the principle of high increasing rate of growth and high employment. But in the transition to the market economy, especially after entering WTO, there will be more and serious competition from other countries. Increasing efficiency has been regarded as a priority by both private and state owned enterprises. The former policy and practice of a high increasing development rate and high employment will have to be changed. China is facing the risk of a serious increase in unemployment. Urbanisation may help to deal with the problems in the rural area, i.e., the surplus rural labour force, lower income of the peasants, and polarisation between urban residents and rural residents, and improving the living quality of rural residents. But it also creates some problems in the pressure to provide enough jobs in the urban areas, where there has already been a serious problem of increasing unemployment, especially in traditional industrial cities with many state owned enterprises. 29

Unemployment risk has already attracted the attention of the government. According to a report by the main Chinese News Agency- Xinhua News Agency, creation of more jobs to relieve the urban poor was the major issue in the First Section of the 10 th National Committee of People Congress in March 2003. It was reported that based on statistics from the Ministry of Labour and Social Security, the young labour force will reach a peak during the period 2001 to 2005, averaging an annual growth of 2.9 million. This will bring total unemployment up to 22-23 million every year, including those members of the labour forces who are laid-off from inefficient state-owned enterprises. The number of jobs created each year will only be 7 to 8 million. This leaves a deficiency of 14-15 million jobs. In addition, there are nearly 150 to 200 million surplus rural workers seeking jobs in cities, exerting a mounting pressure on employment. (Xinhua New Agency Website: http://news.xinhuanet.com/english/2003-03/07/content_763937.htm ). 4.2. Inequality and Polarisation The Third Plenary Session of the Eleventh Central Committee of the Chinese Communist Party in December 1978, the Milestone of Open Door and Reform Policy, formally decided that the major tasks of the Chinese government should transfer to economic development and modernisation. The strategy since then has been to promote economic development and attract inward investment. Development in China started from the East Coast areas. The objectives were to use the advantages of these areas of a comparatively highly skilled labour force, convenient location to link with other parts of world, existing industrial bases, the tradition of the business atmosphere, and the close relationship with overseas Chinese. This policy has shifted from the former one which attempted to reducing regional inequalities. From then on, the East Coast areas have developed so rapidly that the gap and polarisation has been expanded between East China and Middle and West China. The calculation of the data from the China Statistic Book of 2000 illustrates the polarisation of the regions (Table 6), which is divided into three areas of the East, the Centre and the West. Table 6: GDP by Three Areas. Region Gross Domestic Product (100 million Yuan) 1996 1997 1998 1999 Eastern Area 39532.08 44453.40 48070.92 51564.22 Central Area 19167.58 21642.90 22871.37 23974.36 Western Area 9613.22 10728.88 11552.05 12132.55 Source: Calculation from China Statistics Book of 2000 The data illustrate that although economic development of the three areas has all been growing, the rate of growth has been very different. The rate of the centre area was double that of the western area, and that of the east is double that of the centre area (Table 6). In the case of capital construction projects, the numbers in the eastern area were more than that of the centre and the western area, but the difference was much less than that of the GDP (Table 30

7). This illustrates that during last few years, the intention of Central government has been to develop the western area to reduce poverty as well as to promote the development to the west of China. Investment in capital construction projects has been the priority of the Central government's policy. Central government has issued some favourable policies to encourage investment and development of infrastructures to the western area. Table 7: Total and Selected Items of Government Expenditure by Region (1999) (10,000 Yuan). Regions Total Capital Construction Agricultural Comprehensive Development City Maintenances Subsidies Eastern Area Average (Yuan/person) 931.46 107.55 8.03 48.42 28.38 Central Area Average (Yuan/person) 561.36 58.57 6.62 20.86 40.23 Western Area Average (Yuan/person) 605.33 72.44 7.02 23.22 20.95 Source: calculation from China Statistics Book of 2000. Polarisation was the other serious problem in China in the decades after launch of the reform policy. After economic reform there are many billionaires and millionaires in China. Nevertheless, the number of people in absolute poverty without access to appropriate food and clothes, is much larger than the number of the wealthy. This is not only a problem in rural areas, but in urban areas as well. This has been regarded as a priority problem for government to tackle in the next 20 years. In November 2002, at the Sixteenth Central Committee of the Chinese Communist Party, A well-off society in an all-round way, as government's policy was raised. This policy emphasised prosperity of all the 1.3 billion people in this society instead of a few people becoming rich. 4.3. Sustainability and Ecological Protection Sustainable development has been a huge challenge in China and a major issue to be considered during its rapid development. China has about 22% of the world s population but only 6.4% of its land resource and 6% of its fresh water. Rapid economic development at the cost of damage to the natural resources, especially the land and water, and environmental pollution will be a continuing problem for the Chinese people. China has a serious problem of shortage of cultivated land. The total area of China is 9.6 Million Km 2, but the available land for agriculture or urban development only amounts to 7.7 million km 2. (Yeh and Wu, 1999). 62% of cultivated land is located north of Huaihe River and its catchment areas. The water resources in these areas only take less than 20% of the total water resources in China. The areas with excellent water resources in the South part along the coast only include 38% of the total cultivated land. (Chen, et al, 1999). The sustainability issue in China will greatly influence the whole world as the country has such a large population. 31

Rapid urbanisation and economic development during the last two decades has been at the cost of environmental pollution, and a great reduction of cultivated land. China is a country short of cultivated land. There are 1.3 billion Chinese and the average area of cultivated land per capita is only 0.1 Km 2. After the Reform, the total volume of GDP increase has always been the priority; the rate of development are the main objectives in the urban macro plans. These plans have often sought as indicators total GDP scale and total volume of industrial output instead of efficiency and quality. This has resulted in proposals by urban plans to expand city size and to increase population. One phase often appears in many urban plans. It is "To be Stronger, and to be Larger". It refers to stronger in competition, and larger in city size (population and physical area) and economic scale. To reach the targets, the possible measures are to expand the existing built-up areas, or to let the city sprawl. The consequence will occupy more cultivated lands. The more rapidly developing areas, which demand land for city extension, are usually those areas with available and better quality cultivated land. Besides a lack of land resources, shortage of water will be a more serious constraint. There are about 300 Chinese cities with insufficient water supply, among which more than 100 cities have a serious water shortage (Qiu, 2005, The State administration of Environment Protection, 2005). These include the cities of the coast, rapidly developed cities and some mega-cities, e.g., Beijing, Tianjing, Nanjing. The average water usage in Beijing is about 4 billion M 3. The deficit between demand and supply is about 16 million M 3 per day (Chen el at, 1999). Development also causes water pollution and seriously impacts on water supply. According to the investigation by the Ministry of Water Resources in the Eighth Five-Year Plan period (1991 to 1995), polluted rivers were 46% of the 700 rivers and 75% of the 50 major lakes in China. The decline in quality of the water system further damages the ecology system, and more seriously creates problems of water shortage. With the increase of population, economic development and the hastening of urbanisation, the water risk, illustrated in the shortage and pollution of water, and flooding, will greatly affect sustainability in China. 5. Ways Forward of Chinese Urban Planning This paper has analysed urbanisation in China and studied the three main characteristics of devolution, globalisation and marketisation in the transition to a market economy in China. It is clear that because of devolution, local government has more authority over and responsibilities for economic and urban development. Municipalities have become key players in development. The requirement for plan approval by central government increases the time taken and makes the plan very rigid, lacking flexibility. Globalisation drives local municipalities to compete, particularly to attract the limited international capital flows. With the pressure of competition, local governments have to introduce entrepreneurialism. Urban planning within this context has to be adjusted, or amended to meet these demands, and to cope with rapid social and economic changes, and to consider critically the interests of the local communities and sustainability. The marketisation in the transition means more diverse resources and an increase of the privatised stakeholders in development. In these circumstances, urban planning has to consider the interests of developers, investors and other stakeholders. The tasks of urban planning are to negotiate and bargain during development. While making policies and development schemes in urban plans, it cannot ignore the fact that profit seeking is the target of developers and investors, but it is significant for urban planning to consider and protect the benefits of society as a whole in the long-term at the same time. 32

The present urban planning system and the planning concepts, which was developed to serve the Centrally Planned Economy, is inappropriate in the era of a rapid development, pluralistic society. The pressures of competition and rapid social and economic change have driven municipalities to undertake innovation, to seek an alternative planning approach to deal with the pressures and uncertainties created by the following: The changes of relationship among the regions and cities in the transition to the market economy; urban planning is needed to promote competitive capacity and to encourage more inward investment as its priority; The changes of economic and industrial structure as a consequence of globalisation, requires urban planning to be flexible in order to consider economic concepts and the influence of the international market and capital flows, and to establish a self-adjustment mechanism to deal with the changes and uncertainties as a consequence; Pressure to create a stable society by increasing urban population because of rural to urban migration, needs urban planning to promote economic development and increase employment, whilst reducing poverty to create a well-off society all-round; Pluralistic stakeholders social structure, and the conflicts between different interests, need urban planning to consider the importance of communication and collaboration among different stakeholders during the plan making process; Pressures for conservation of the historical and cultural heritage and protection of human cultural resources needs urban planning to change the traditional concept of "negative conservation" to apply "positive conservation" note 1, instead, and to balance between development and conservation to respect local characteristics; Pressures to protect natural resources and the ecological environment demands urban planning to have a rational allocation of resources in a sustainable way and to avoid damage to later generations; The function of government within the transition, including devolution, requires urban planning to consider local development interests, be more business like while following and still being concerned with national general policies and regional coordination; The market and the requirements of developers and investors when there is major dependence upon private investment for the execution of public planning initiatives, creates a challenge for planners to consider opportunities and long-term benefits for society as a whole, while short-term returns and profits are for investors and developers. These pressures and the new requirements for urban planning as a consequence will greatly affect the development and innovation tendency of urban planning in China. They will also influence the concepts and value of the urban planners. More significantly, the pressures and uncertainties cannot be tackled if present planning concepts, process, and systems have not been changed or improved. It has to realise that Chinese urban planning has tried to improve its function to encourage the development and to try to keep pace with economic development. Nevertheless, there are some critical problems and weaknesses need to be identified and amended. Among all the major ones, the key issue is that the basic value of the urban planning has been ignored. Urban planning should not forget its major task of and its basic functions of equality of opportunity to all and the democracy in term of open and transparent planning process. Besides, there are several concepts which need to be applied in Chinese urban planning. 33

5.1. Planning a Harmonious Society with Scientific Concept of Development It was decided in the fifth plenary session of the 16th Communist Party Central Committee to pursue harmonious society with scientific concept of development (China Daily 10/12/2005). The policy requirements sustainable development with an energy-saving and environmentally-friend approach, and a harmonious society with increasing of employment, social security and poverty reduction. This indicates a shift in the government's development philosophy. In city and regional planning, the policy requires urban planning to consider the interests of local people, the public and sustainability, while listening to and meeting the demands of developers. The target of planning should be to achieve a "win-win" solution. This requires a change of existing development and planning philosophy which emphasising too much the market-oriented and economic-oriented positions, while ignoring the protection of public interests, especially those of the disadvantaged (Wang, 2000, Liu, 2000). Sustainable development seeks diverse objectives but focuses on delivering those objectives now and for future. Economic development is only one, but an important objective, as it will secure a better living quality. Nevertheless, it should be realised that economic development should not be at the cost of enlarging inequality, the objectives of economic development should also target poverty reduction, and improvement of the existing environment, while protecting the non-renewable resources. Since the Rio World Summit 1992, the Chinese government has prepared the Sustainable Development Agenda, which consists of all aspects of social and economic development. The Agenda has been regarded as national development policy. The crucial issue is to have specific or detailed proposals for sustainable development action and proposals in planning instead of giving too great emphasis to the economic objectives (Wang, 1999; Wu, 2000). 5.2. Urban Planning as one of Important Means in City Image and Marketing The application of urban entrepreneurialism concepts includes the image of a city, like an image of an enterprise. A city will be able to attract more inward investment and compete with other cities to promote local economic development through its perfect image as an environmentally desirable place to live. It is then that the establishment of a city image will help to increase the confidence for potential investors and developers. Healey (1998) raised several examples for deciding where to select the place to live or to invest. People like to know if they will be comfortable with the neighbourhood. They would like the living environment to be perfect and to be able to accomplish the challenges of their daily life. Education facilities are also important for the decision while considering what kind of social world the children may encounter. People seek out places, which could provide particular life styles. Urban plans and the relevant development policies can provide some information to help their decision making. In this case, urban plans will be used as one of the important means for city marketing to attract inward investment. 5.3. Application of Call In Mechanism instead of Plan Approval Procedure The main problem of the existing planning institution is its designated and complicated contents and the procedure of plan formulation and approval. It is my opinion that the approval of the urban macro plan by the higher hierarchical governments may not be necessary. This is especially so when urban development and construction has been decided as the responsibility of the local municipality. Since the reform and the transition to the 34

market economy, devolution has been one of the main features. In the National Conference of Urban Planning in October 1980, a decision was reached that the major task of local governments should plan, build and manage the city. This was a part of the devolution, which has been the main core of the reform in China. This plan approval regulation seems unrealistic and unreasonable, while the procedure is time consuming. It creates a problem for urban planning to cope with the rapid social and economic changes. It forces local municipalities to find alternative solution. It is my opinion that those national significant issues in the urban development and planning, and the local development policies which conflict with the national policies, could be tackled by the "call in" mechanism authorising to Central government to deal with some national significance projects, or where local urban planning and development contradicts national development policies. This should be defined by amendment of the City Planning Act. 5.4. Update of Urban Planning Concepts Chinese urban planning concepts and system was initiated in the Central Planned Economy era. In the Centrally Planned Economy, the urban planner normally could safely ignore market forces, which did not exist when producing the plans. The intention and decisions of government were the main consideration in the planning process. This was practicable as investment in development and construction were the tasks of the government; especially with investment as a type of allocation of revenue from Central government. Urban planning in China has always been regarded as the governments policies and spatial proposals for urban development. The top down hierarchical urban planning system is designed to carry out the policies of Central government and to influence the development of the local municipality. Nevertheless, it is because of devolution and marketisation in the Chinese transition to a market economy, that the role of Central government has been declining greatly. Local government, including agencies responsible for infrastructure provision, as well as planning, housing and other aspects, is playing a critical role in development. This has greatly influenced the other stakeholders, e.g., developers, local residents and other interesting groups. Urban planners produce plans from a stand point of planning rationality, yet the rationality of the planners, as one of a number of diverse disciplines, is not enough to deal with the complex inter-relationship of many diverse interests, especially when the implementation of public planning initiatives mainly depend upon private investment. Development is then with great uncertainty (Bruton, et al, 2005) Besides, urban planners do not have the power and resources for implementing development, which is dependent upon the diverse investment channels in the market and the pluralistic stakeholders. In this situation, it is also necessary for Chinese planners to understand that planning is a process which involves negotiation and bargaining among the interest groups. 5.5. Urban Planning as a Framework Establishment Urban planning should be flexible, with built-in opportunities and procedures that can be adjusted later. The target of planning should be to help the stakeholders to understand what they are doing and what they should do next. Urban planning has to advance with the times. This is the core of understanding urban planning and its performance in the transition. It is my view that Chinese urban planning should move towards a planning framework establishment incorporating various planning approaches under the existing social, political 35

and economic context, but depending upon the diverse situation, development rate and different stage of planning process. No single planning approaches is better than the others, each depends on the different context and planning stages. The policies and proposed development schemes indicated by rational planning would initiate the framework for communication with other stakeholders. The views of other stakeholders would provide input to the planning framework. The compromise solution would result from this communication. The critical issue of the final solution is that it has to consider the interests and benefits of the public, and society as a whole, while bearing in mind the return on investment for developers and investors. Through planning theory studies, existing Chinese social, political and economic analysis, and urban planning practices in China, this research clarifies that realistic multiple planning approaches are appropriate to China under its current process of transition to a market economy. Urban planning approach should be diverse depending upon the different context and development rate to achieve the shared visions and objectives in a framework of planning (Figure 5). 36

Figure 5: Planning Framework of diverse planning approaches at different planning stages. Participants Planning Approaches Technologies and Actions Time changing and direction of urban planning process from beginning of plan formulation toward Municipal Government Urban planners &other professional disciplines Different hierarchical Governments Urban planners & other professional disciplines Developers Investors & Local communities Other interested groups Call in by Central Government Local government (mainly politicians) Investors Developers Urban planners & other professional disciplines and Local social and economic analysis Systematic and Rational Planning Approach Cost and benefit analysis Communicative and Collaborative Planning Approach Pragmatic Planning Approach Sustainability, environmental threshold analysis Equal opportunity Research and planning methodology based Inputs of schemes, programme, objectives and views of pluralistic Coordination, negotiation, compromising, mediation Place marketing Project oriented investment and disinvestment and Negotiation, bargaining and compromising Achievement of Shared Objective and Visions 37

Notes 1 The term "negative conservation" refers to conservation of control without use and development; "positive conservation" suggests the conservation while available for use and development at the same time. References Bruton, M. Bruton S, and YU,L., (2005), Shenzhen: Coping with Uncertainties in Planning, Habitat International, 29(2), pp. 183-374 Cao J, (2002), From Closed Society To Open One: Review and Prospects of 20 Years' Reform, Speech at Huaxia Times on April 12, 2002 China Statistics Year Book 2000 Chen, S., Yao, S., Zhang Y., (1999), "Comprehensive Thoughts of Urbanisation in China", Economic Geography, 19 (4), 111-116, (in Chinese) Fu, Z., (2002) The State, Capital, and Urban Restructuring in Post-reform Shanghai, in John R. (eds.), The New Chinese City: Globalisation and Market Reform, Oxford and Malden: Blackwell Publishers Ltd. Healey, P., (1998), "Collaborative Planning in A Stakeholder Society", Town Planning Review, 69 (1) 1-21 Liu, Q., (2000), Urban Planning Decisions, Planners, 16(4), (In Chinese) Logan, J., (2002), Three Challenges for the Chinese City: Globalisation, Migration, and Market Reform, in John R. (eds.), The New Chinese City: Globalisation and Market Reform, Oxford and Malden: Blackwell Publishers Ltd. Speech by Qiu Baoxin, Vice Minister of Construction at Conference of Water Investigation by Universities Students: http://news.xinhuanet.com/newscenter/2005-03/22/content_2728764.htm Shao, L. (2001), Impulse Mechanism and Development Models of Chinese Urbanisation, Shanghai Urban Planning, No.1, pp.15-17, (in Chinese) The State administration of Environment Protection, (2005), Gazette of Chinese Environment, Wang F., (2000), From Urban Planning System to Urban Planning Mechanism: Evolution of Urban Planning in Shenzhen, Urban Planning Review, 25(1), p.28-33, (in Chinese) Wang, J., Ge, C., Yang, J., Song, A., Wang, D., and Liu, Q. (1999), Taxation and the Environment in China: Practice and Perspectives, in Environmental Taxes: Recent Developments in China and OECD Counties, Paris: OECD Publication Service. Wang, G., (2002), The Consideration of the Chinese Urbanisation, Speech to the Ministry of Sciences and Technology, P. R. China, October 15, 2002. Wang, L., (1999), Planning Decision-making and the Authority of the Planning, Shanghai Urban Planning Review, No.4, P.2-5 (in Chinese) Wei, Y. (2000), Regional Development in China-States, Globalisation, and Inequality, London, New York: Routledge Wu, W., (2000), The Milieu and the Direction of the Urban Planning Reform in the New Times, Planners, 16 (5), (in Chinese). Yeh A. and Wu F. (1999), The Transformation of the Urban Planning System in China From A Centrally-Planned to Transitional Economy, Progress in Planning, 51(3), pp.167 252. 38