The politics of land use conversion in china case study of a guangdong county 4

Chapter Four
Land Development and Urbanization
4
Land Development and Urbanization
Urbanization in China has been transformed from a centrally-controlled phenomenon
to a contentious process among local states.
1
In 2005, Wang Guangshou, Minister of
China’s Ministry of Construction censured local governments that set unrealistically
high targets in city building. Whereas the Chinese capital of Beijing had positioned
itself as only a “modern international city” (xiandaihua guoji chengshi) in its city-
building plan, there were 183 cities all over China that proposed to turn themselves
into “modern international metropolis (xiandaihua guoji dadushi),” a target that even
the capital had yet to achieve.
2
Furthermore, the Ministry of Construction also
disclosed that around 20 percent of China’s 662 cities and over 20,000 designated
towns were culpable of “image engineering projects” (xingxiang gongcheng) such as
huge squares, wide roads and luxurious office buildings.
3
The city building fever that the Ministry described has been commonly termed as
“chengshi jingying” or “city building as a business” by Chinese media and experts.
4
It
is characterized by the inordinate expansion of a city through the extensive
requisition of land for property development and infrastructure construction, financed
1
For an overview of the process, definition and measurement of urbanization in China, refer to Zhang L.
and Simon X. B. Zhao, “Re-examining China’s ‘Urban’ Concept and the Level of Urbanization,” The
China Quarterly, No. 154 (1998), pp. 330-81; Zhang Li, “Conceptualizing China’s Urbanization under
Reforms,” Habitat International, Vol. 32, No. 4 (2008), pp. 452-70; Shen Jianfa, “Estimating Urbanization

Levels,” pp. 89-107; Chan Kam Wing, “Economic Growth Strategy and Urbanization Policies in China,”
International Journal of Urban and Regional Research, Vol. 16, No. 2 (1992), pp. 275-305.; Chan Kam
Wing and Hu Ying, “Urbanization in China in the 1990s: New Definition, Different Series, and Revised
Trends,” The China Review, Vol. 3, No. 2 (2003), pp. 49-71; Zhou Yixing and Laurence J. C. Ma,
“China’s Urbanization Levels: Reconstructing a Baseline from the Fifth Population Census,” The China
Quarterly, No. 173 (2003), pp. 176-96; Eric J. Heikkila, “Three Questions Regarding Urbanization in
China,” Journal of Planning Education and Research, Vol. 27, No. 1 (2007), pp. 65-81.
2
“Jianshebu buzhang henpi jianshe xitong bingzheng, nuche ‘zhengji gongcheng’” (“Minister of
Construction reproved the ills of the construction system and denounced ‘political achievement
projects’”), Chengshi guihua tongxun (City Planning News), No. 4 (2005), pp. 2.
3
Xie Jianchao and Gong Chengyu, “Weifa kaifashang he guanyuan weihe wusuo guji” (“Why unlawful
developers and officials are fearless”), Zhongguo jingji shibao (China Economic Daily), 11 April 2007,
pp. 016.
4
Sun Yongzheng, “Chengshi jingying de fengxian” (“The risks of running a city like a business”),
Shidachao (Trends of the Time), No.2 (2003), pp. 36-37; Lin Jiabin, “Dui ‘chengshi jingying’ re,” pp.
10-13.
Yew Chiew Ping
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Land Development and Urbanization
through bank loans, land leasing, or the collection of ad hoc fees from enterprises
and the society.
In explaining what drives land use conversion in China, therefore, part of the story is
that urbanization in the sense of a shift from agricultural to industrial activity is
accountable for the expansion of Chinese cities at the expense of rural land. This
chapter shall focus on telling the other part of the story. It argues that China’s
urbanization is also a spatial expansion that may proceed independent of urban

population growth or a sectoral shift. The engineers of this land-centred urban sprawl
are the local states. As an expert on China’s urbanization suggests,
Urbanization, if achieved by urban spatial expansion and infrastructure
upgrading, is regarded as a sign of modernization and a means to enhance
local competitiveness. In this context, urban transition . . . is effectively
facilitated by many untrammelled developments at the local level . . . from
extensive land use change to lure investment, redundant construction of
infrastructure and duplication of projects with less concern directed towards
the development plans of neighboring jurisdictions, and conversion of rural
areas into designated cities to widen the development space.
5
This urge to stimulate local competitiveness through urbanization is closely related to
the way officials are graded by their superiors under the Cadre Target Responsibility
System. In the process of spatial expansion, local governments have taken
agricultural land for construction with alacrity because it fulfils multiple objectives
critical to their career and other interests. Besides fiscal incentives and legitimate or
illegitimate monetary gains described in the previous chapters, land development
fuels GDP growth and conjures up highly visible political accomplishments – mega-
scale construction projects labelled aptly as “political achievement projects” (zhengji
gongcheng). Local officials may sell land use rights at high prices to increase coffers
or offer land at low prices to attract investments and promote industrialization; they
may also expand the urban built-up area (jianchengqu) under their territorial
5
Zhang L., “Conceptualizing China’s Urbanization,” pp. 466.
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jurisdiction and build infrastructure to expedite “urbanization." In short, land use
change effectively allows the government to “kill many birds with one stone.” The

following section outlines the way local cadres are appraised before elaborating on
the nature of urbanization and the business of city building in China.
The Cadre Target Responsibility System
The performance of China’s government officials at the county level and below is
measured and supervised through a system of quota (zhibiao), which is a legacy of
the planned economy era.
6
In 1995, the Central Organization Department
(zhongyang zuzhibu) issued tentative measures on the appraisal on county level
cadres and leaders, which consisted of over 20 quotas falling under three categories:
economic construction, social development and civil construction, and party
construction (see Table 4.1).
7
These include highly specific and measurable targets
such as local fiscal capacity, birth control as well as those under party construction
that generate less tangible results.
Through this political institution of performance appraisal, each level of government
signs responsibility contracts “objectives, evaluation procedures, and remuneration”
with its immediate subordinates one level down.
8
In this way, higher-level objectives
cascade to lower levels through the administrative hierarchy and the completion of
important tasks translates into direct incentives for individual cadres. For instance,
county leaders seek to include their priorities and responsibilities in the contracts of
6
Yang You-Ren Daniel and Wang Hung-Kai, “Dilemmas of Local Governance under the Development
Zone Fever in China: A Case Study of the Suzhou Region,” Urban Studies, Vol. 45, No. 5 & 6 (2008),
pp. 1048. For a brief history on China’s cadre evaluation system, see Lang Youxing, “Zhongguo ganbu
kaohe zhidu zai bianlian” (“The changing face of China’s cadre evaluation system”), Renmin luntan
(People’s Forum), No. 3 (2008), pp. 10-11.

7
Wang Jun, “Zhongzubu shixing xian(shi) dangzheng lingdao banzi gongzuo shiji kaohe biaozhun”
(“The Central Organization Department tests the evaluation standards for the actual work achievements
of county(city) party and government leaders”), Beijing tongji (Beijing Statistics), No. 1 (1996), pp. 7-8,
26.
8
Kevin J. O'Brien and Li Lianjiang, "Selective Policy Implementation in Rural China," Comparative
Politics Vol. 31, No. 2 (1999), pp. 172.
Yew Chiew Ping
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Chapter Four
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township leaders, who in turn convey these to village cadres.
9
The contracts quantify
and attach numeric values or weights to targets that subordinates are to attain within
a specific period of time.
10

While lower level governments have some room in defining their targets, economic
quotas still predominated.
11
As seen from Table 4.1, economic items have better-
defined quotas, in comparison to those of the other two categories. It is also more
difficult to verify the results of environmental protection, and other social
developmental goals. This accentuates the over-emphasis on GDP, revenue and
other growth indicators.
12
Tasks subsumed under economic and social development
are more heavily weighted and thus are naturally given more attention by the local

governments and cadres to be assessed.
13

Under certain circumstances, a cadre’s failure to meet an important target may
render all his other accomplishments futile and deny him of the opportunity to be
promoted. The types of targets that have veto power (yipiao foujue) over the rest had
increased gradually, extending to areas such as clean and honest governance, social
stability, birth control, and others.
14
The amount of revenue, in particular, is often a
9
Susan H. Whiting, Power and Wealth in Rural China: The Political Economy of Institutional Change
(Cambridge, U.K.: Cambridge University Press, 2001), pp. 103; Maria Edin, “Local State Corporatism
and Private Business,” Journal of Peasant Studies, Vol. 30, No. 3 (2003), pp. 281.
10
See Tsui Kai-yuen and Wang Youqiang, “Between Separate Stoves and a Single Menu: Fiscal
Decentralization in China,” China Quarterly, No. 177 (2004), pp. 78.
11
Yang and Wang, “Dilemmas of Local Governance,” pp. 1048.
12
See Wang Qiang, “Ruhe pingjia defang guanyuan de zhengji” (“How to evaluate local officials’ political
achievements”) Juece zixun (Policy Consultation), No. 12 (2003), pp. 34-35; Gu Jinglei and Yao Rong,
“Zhengfu lingdao ganbu kaohe zhidu yanjiu” (“A study on the evaluation system of government leaders
and cadres”), Jiaxing xueyuan xuebao (Journal of Jiaxing University), Vol. 17, No. 5 (2005), pp. 93-95;
Zhang Zhanbin, “'Difang zhengfu gongsihua' fansi” (“Reflections on the corporatization of local
governments”), Juece (Decision Making), No. 11 (2006), pp. 32; Zhu Jiangping, “Xiankai xin
zhengjiguan de honggaitou,” (“Unveiling a new concept of political achievement”) Nongcun gongzuo
tongxun (Village Work News), No. 7 (2006), pp. 33-34; Xu Wenjun, “Ganbu kaohe ‘shizhen’de beihou”
(“Behind the ‘sham’ of cadre evaluation”), Zhejiang renda (Zhejiang Deputies to the People’s Congress),
No. 10 (2007), pp. 26-27.

13
Tsui Kai-yuen and Wang Youqiang, “Between Separate Stoves,” pp. 75-79; Zhang Jiliang, “Jiyu quyu
lingdao ganbu kaohe tiaojian xia shuju zhiliang de xin zhidu jingjixue fenxi” (Data quality resulting from
the appraisal of regional leaders and cadres: an analysis using the new institutional economics
approach), Tongji yanjiu (Statistical Research), No. 10 (2004), pp. 25. For a detailed illustration of how a
county grades the performance of township subordinates, see Whiting, Power and Wealth, pp. 106.
14
Han Qiang, “Dui jianli de wanshan dangzheng lingdao ganbu kaohe pingjia zhibiao tixi de ruogan
sikao” (The appraisal of party political leaders and cadres: reflections on developing and improving the
criteria of the evaluation system), Zhengzhixue yanjiu (Studies in Political Science), No. 4 (2003), pp.
Yew Chiew Ping
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Chapter Four
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“hard target” for towns and townships and all other achievements may be discounted
upon the failure in meeting the quota set by the county government. Some counties
may even cut their subsidies to townships as a penalty. In desperation, some towns
and townships resort to tax-buying, or appropriating other financial sources to make
up for the deficiency.
15
The defects of the appraisal system have been widely covered in the Chinese
literature. The way it is structured and the focus on economic goals have given rise to
a warped perception of what constitute political accomplishments. Beneath the
façade of impressive growth and investment figures often lies a reality that is far less
rosy. Opportunistic local governments take advantage of information asymmetry and
seek the most beneficial outcome for themselves through high, if superficial,
economic growth targets. It has also been suggested that the handing down of
targets or quotas from upper levels (ya zhibiao) constituted a strong motivation for
lower ranks officials to seek investments through extensive land use conversion. The
violation of land use regulations is driven by the link between cadres’ promotion or

evaluation and the system of economic indicators at below the county level.
16

41.
15
Ba Zhipeng, "Woguo fenshuizhi gaige,” pp. 39. “Tax-buying” takes many forms. To attract or draw
businesses and tax-payers to pay tax in a locality, some townships may give a 20 to 50 percent rebate
on the tax contribution to local coffers. Others may reduce tax rates to attract tax-payers but still pay the
stipulated amount to local coffers. The shortfall is then accounted for as tax-collection costs. These
desperate measures are often a response to unrealistic quotas set by superiors whose aim is to boost
their own “political accomplishments.” Refer to Dawuxian Shenjiju, "Xiangzhen zhengfu 'yinshui' xingwei
de fenxi yu tantao" (“The ‘tax-drawing’ behaviour of town and township governments: an analysis and
exploration”), Shenji yuekan (Accounting Monthly), No. 8 (2006), pp. 28-9; Li Dezhi, "'Maishui jiaochai'
shui lai zhizhi" (“Who to put a stop to ‘tax-buying to fulfil duty’”), Jingji yanjiu cankao (Study and
Research of Economics), No. 87 (2006), pp. 27; Qing Shan, "'Maishui' wu zong zhui" (“The five
commandments of ‘tax-buying’”), Xin xibu (New West), No. 10 (2006), pp. 53-4.
16
Yang and Wang, “Dilemmas of Local Governance,” pp. 1049.
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Table 4.1 The Cadre Target Responsibility System
Evaluation Item Indicator Qualitative Requirement
1) Economic construction
i. Economic aggregates, growth
and per capita levels
GDP and growth; GDP per capita and growth In accordance with the State’s overall management and control targets, taking
into account the patterns of the socialist market economy as well as objective
circumstances, determine local development targets and shift the focus to

restructuring, improving the quality of economic growth and results.
ii. Tax revenues and local
governments’ fiscal capacity
Central tax revenue and growth; local financial
revenue and growth
To improve the tax sharing system, increase central and local financial revenues
and achieve a balance in expenditure and revenue.
iii. Urban and rural living standards Villagers’ gross income per capita; population
lifted from poverty; urban cost of living per capita,
income and growth; social retail price index; urban
consumer price index
Gradually increase urban and rural income; steadfastly control the price inflation
rate and ensure market supply
iv. Agricultural production and
village economic development
Cultivated land area preservation; output of food
and main agricultural production and growth;
cropland irrigation area
Increase agricultural investment; improve the conditions of agricultural
production; promote advanced technology; increase unit production and total
output; improve agricultural structure; increase supply of agricultural produce
v. Management of state-owned
assets
Appreciation of state-owned assets Build a sound responsibility system and a value-preservation/appreciation
evaluation system for the management of state-owned assets to prevent loss.
vi. Enterprise management and
development
State-owned enterprise profits; state-owned
enterprise tax turnover rate; TVE profits; TVE tax
turnover

Transform the management mechanism of state-owned enterprises and
enhance economic results; actively promote TVEs; reasonably introduce and
utilize foreign capital
vii. Traffic, energy,
telecommunication, urban
construction, cropland water
conservancy and the level of other
basic infrastructures
Level of investment in basic infrastructure Improve production and living standards, enhance security for industrial and
agricultural production
2) Social development and civilization construction
i. Population and birth control Planned birth rate Control high birth rate and improve population quality
ii Social stability and security Crime rate reduction; rate of solving major cases Strengthen the integrated management of social security, forbid pornography,
gambling drugs and backward, superstitious activity, ensure social stability and a
stable life for the people
Evaluation Item Indicator Qualitative Requirement
iii. Education, scientific technology,
culture, public health, and sports
Spread of the nine-year compulsory education;
reduction in youth illiteracy; technological
innovation and contribution; spread of village third-
level medical treatment and prevention safety net
Implement the development strategy of prioritizing education, increase
investment in education, promote the transformation of technological results,
improve the health of the people
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iv. Environmental and ecological

protection
Reducing and regulating the “three wastes” (waste
water, gas and residue); Forests and vegetation
coverage
The simultaneous planning, implementation and development of environmental
and economic construction, control and reduce environmental pollution
3) Party construction
i. Ideological and political
construction
Cadres of the organization and party members learning and understanding of
the Party’s fundamental theories, direction and knowledge, enhance ideological
and political calibre
ii. Building of leadership and cadre
teams
Attach importance to evaluating leaders’ improvement and structural
improvements
iii. Building of democratic
centralism
Attach importance to evaluating if major decisions and policies produced positive
results or led to serious lapses
iv. Building of party grassroots
organization
Attach importance to evaluating the construction of grassroots party
organizations, and the construction and enforcement of the responsibility system
v. Cultivation of party spirit and
non-corruption
Attach importance to evaluating leaders’ and cadres’ enforcement of relevant
regulations on non-corruption and self-discipline
Source: Wang Jun, “Zhongzubu shixing,” pp. 8.
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Urbanization: the Business of City Building
In countries where all urban land is owned by the public sector, land is by far
the most valuable asset on the municipal balance sheet . . . Urban land
values are created in part by public investment. They reflect the capitalized
value of access to road networks, water supply, schools and other services
made possible by municipal investment. It is economically appropriate
therefore for municipalities to capture part of the land-value increment they
create through their investment. There are various ways that increases in
urban land value can be captured, but the sale of land or land rights has the
advantage of producing revenue quickly and being easier to administer . . .
17
The above passage aptly sums up the attractiveness of urban land as an asset for
governments, as well as how public improvements boost land prices. Revenue from
land sales is used to finance urban infrastructure, which contributes to a further hike
in land prices. According to a World Bank report, many China cities have financed
half or more of their urban infrastructure investment through land sales while using
land as a collateral to finance the remainder.
18
Local governments capitalize on land
value increment through the construction and development of basic infrastructure.
First, they may lease land use rights to buyers after improving public infrastructure.
Land use rights are mortgaged to banks to obtain loans for financing capital
construction.
19
After investing in and improving public infrastructure, bringing about
an appreciation in land price, land use rights are then conveyed or transferred
through auction, tender and so on. Part of the economic gains are again invested on

enhancing urban facilities to further drive up land prices and so on. Alternatively,
local governments may lease land use rights before improving public infrastructure.
The projected appreciation in land price draws private sources of funds from
investors to participate in the development of public infrastructure.
20
17
Peterson, “Land Leasing and Land Sale,” pp. 3.
18
Ibid. More than 60 percent of China’s cities had borrowed form banks or had outstanding loan
applications to finance infrastructure construction by 2001. The total debt incurred by the government for
urban infrastructure amounted to 74.2 billion yuan in 2001. Refer to Su Ming and Zhao Quanhou, “The
Fiscal Framework.”
19
Capital construction refers to “new construction projects or extension projects and the related activities
of the enterprises, institutions or administrative units mainly for the purpose of expanding production
capacity (or improving project efficiency), covering only projects each with a total investment of 500,000
RMB yuan and over.” For the full definition, refer to the “Explanatory notes on Main Statistical
Indicators,” , accessed 24 January 2008.
20
Wang Jun, “Zengzhang quxiang de shiyingxing tiaozheng: dui defang zhengfu xingwei yanbian de
yizhong lilun jieshi” (“Adjusting growth inclinations to external changes: a theoretical explanation of the
change in local governments' behaviour”), Guanli shijie (Management World), No. 8 (2004), pp. 54;
Yew Chiew Ping
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This practice of infrastructure-financing to spur urban development is also observed
by other researchers. Lin, for one, suggests that land sales, or the leasing of land use
rights, which constitute 30 to 70 percent of local revenue in many cities, have
become a vital source of capital for urban development. “This new ‘land-centred

urban politics’,” he argues, “has been correctly identified by many urban researchers
as one of the most important driving-forces operating behind the spectacular
expansion of cities, particularly large cities, and the upsurge in city-forming
urbanization since the mid 1990s.”
21

China’s “spectacular” urban expansion is evident in the rapid growth of its fixed
assets investment. Investment in capital construction went up by 1433.8 billion yuan
or 167 percent from 1996 to 2003 whereas investment in real estate more than
trebled over same period, growing from 321.6 billion yuan to 1015.4 billion yuan (see
Table 4.2). The following statistics illustrate what the burgeoning investments had
materialized into: total floor space of buildings more than doubled from 1996 to 2003,
expanding from 6.1 billion square metres to 14 billion square metres; the length of
paved roads almost doubled from 1996 to 2005 while area of paved roads increased
from 1.4 billion square metres to 3.9 billion square metres (see Table 4.3).
Another indicator of China’s urban development is the urban built-up area, which
reflects the size of the urbanized area in China’s cities. Specifically, the urban built-
up area refers to the non-agricultural area in an urban district which is developed
through land requisition and construction, and is well-equipped with public
infrastructure and facilities. It is a more accurate indicator than city area since a city
in China is an administrative concept and may encompass large areas of villages and
agriculture, meaning that the area of a Chinese city is often larger than its urbanized
Zheng Meng and Miao Jie, “Chengshi tudi jingying,” pp. 32.
21
Lin, “Reproducing Spaces,” pp. 1832-33; See also Lin Jiabin, “Dui ‘chengshi jingying’ re,” pp.10-13;
Liu Shouying, “Jingti tudi jingying,” pp. 46-47; Zhang Meng and Miao Jie, “Chengshi tudi jingying,” pp.
32-33.
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Land Development and Urbanization
area.
22
Through improvements to public infrastructure in the manner described
above, a city’s urban built-up area is expanded, thus driving up land prices. From
1996 to 2006, China’s urban built-up area increased from 20,214 square kilometres
to 25,972 square kilometres. Land and real estate prices had increased more rapidly
after 2001. On average, prices of residential and non-residential properties had risen
by 3.7 to 9.7 percent annually from 2002 to 2005 while land prices grew by nearly 7
to 10 percent annually over the same period (see Table 4.4). At the same time,
significant areas of rural land were requisitioned in the process of city building. In a
decade from 1996 to 2005, the total expansion in urban built-up area amounted to
12,306 square kilometres, of which 12,014 square kilometres were land requisitioned
for state construction projects (see Table 4.3). An estimation claims that the
encroachment of urban space onto rural China has given rise to 1.5 million landless
farmers each year in the last decade.
23
Zhejiang urban development exemplifies the experience of China’s coastal
provinces. From 1996 to 2002, the urban built-up area in 33 percent of Zhejiang’s 61
county level units (cities and districts) had doubled in size. From 2002 to 2005,
among 59 county level units, 15 percent underwent a 100 percent expansion in their
urban built-up area while 2 of them saw a threefold enlargement. Comparing 1996
and 2005 statistics, the urban built-up area in 20 percent of 54 county level units had
expanded by more than threefold; that of 15 percent grew by twofold while that of 37
percent doubled.
24

Moreover, the expansion of a city maximizes the local government’s tax revenue. For
instance, one of Zhejiang’s counties had redrawn its boundaries three times since
22

Li Jianying, "Guangdong chengshihua de xianzhuang, wenti yu zhidu yuanyin fenxi (The urbanization
of Guangdong, its problems and systemic causes: an analysis"), Dongya lunwen (East Asia
Dissertation), No. 50 (2005), pp. 3.
23
Tan Minghong et al., “Urban Land Expansion,” pp. 188.
24
Dai Wenzhuo and Ding Han, “Zhejiangsheng xianji yishang chengzhen jianchengqu guimo kuozhan
yanjiu”, Guotu ziyuan (Land and Resources), No. 7 (2007), pp. 12.
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1998, expanding its urban built up area by 30 to 40 square kilometres. The income
from land taxes and indirect taxation (not including miscellaneous fees) brought
about by city expansion constituted 40 percent of the county government’s within
budget revenue while land sales income made up 60 percent of its extra-budgetary
revenue.
25

25
Wang Jun, “‘Tudi caizheng’,” pp. 27; Liu Shouying and Jiang Xingsan, “Tudi rongzi yu caizheng he
jinrong fengxian” (“The financial risks of using land to finance local coffers”), Zhongguo tudi kexue
(China Land Science), Vol. 19, No. 5 (2005), pp. 4.
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Table 4.2 Total Investment in Fixed Assets in China (100 million yuan)
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Total Investment 22913.55 24941.11 28406.17 29854.71 32917.73 37213.49 43499.91 55566.61 70477.4 88773.6

By
Capital Construction 8570.79 9917.02 11916.42 12455.28 13427.27 14820.10 17666.62 22908.60 - -
Real Estate 3216.44 3178.37 3614.23 4103.20 4984.05 6344.11 7790.92 10153.80 - -
Innovation 3615.00 3921.94 4516.75 4485.08 5107.60 5923.76 6750.55 8624.86 - -
Others 7511.32 7923.78 8358.76 8811.15 9398.81 10125.52 8128.22 9834.94 - -
By Source of Fund
State Budget 625.88 696.74 1197.39 1852.14 2109.45 2546.42 3160.96 2687.82 3254.9 4154.3
Domestic Loans 4573.69 4782.55 5542.89 5725.93 6727.27 7239.79 8859.07 12044.36 13788.0 16319.0
Foreign Investment 2746.59 2683.89 2617.03 2006.78 1696.24 1730.73 2084.98 2599.35 3285.7 3978.8
Self-Raised Funds 12414.50 13879.65 14864.19 15885.26 17270.28 19903.12 22813.69 31449.82 41272.6 55105.8
Others 2997.90 3216.84 4495.42 4285.54 5306.86 6566.92 8128.22 9834.94 12963.7 15033.0
By Area
Urban Area 17567.2 19194.2 22491.4 23732.0 26221.8 30001.2 35488.8 45811.7 59028.2 75095.1
Rural Area 5346.3 5746.9 5914.8 6122.7 6695.9 7212.3 8011.1 9754.9 11449.3 13678.5
Sources: Zhongguo tongji nianjian 1998, pp. 185; Zhongguo tongji nianjian 2000, pp. 167; Zhongguo tongji nianjian 2002, pp. 175; Zhongguo tongji nianjian 2004, pp. 187;
Zhongguo tongji nianjian 2006, pp. 187-88.
Yew Chiew Ping
85
Table 4.3 City Building in China
Developed
Area (km
2
)
Land
Requistioned
for State
Construction
Projects (km
2
)

Urban
Population
(10,000)
Non-
Agricultural
Population
(10,000)
Population
Density in
Urban Districts
(persons per
km
2
)
Total Floor
Space of
Buildings
(100 million m
2
)
Length of
Paved Roads
(10,000 km)
Area of Paved
Roads
(100 million m
2
)
1990 12856 - - - 279 39.8 9.5 8.9
1995 19264 - - - 322 57.3 13.0 13.6

1996 20214.18 1018.05 36234.5 18882.9 367 61.1 13.3 14.3
1997 20791.3 519.38 36699.4 19444 440 65.5 13.9 15.3
1998 21379.56 515.54 37338.6 19824.1 459 70.9 14.5 16.4
1999 21524.54 340.47 37590.0 20161.6 462 73.5 15.2 17.7
2000 22439.28 447.25 38820.45 20952.19 442 76.6 16.0 19.0
2001 24026.63 1812.19 35747.31 21543.5 588 110.1 17.6 24.9
2002 25972.55 2879.86 35343.78 22060.02 754 131.8 19.1 27.2
2003 28308.0 1605.6 33805 - 847 140.9 20.8 31.6
2004 30406.2 1612.6 34088 - 865 149.1 22.3 35.3
2005 32520.7 1263.5 35894 - 870 164.5 24.7 39.2
Sources: Zhongguo tongji nianjian 1995, pp. 315; Zhongguo tongji nianjian 1996, pp. 335; Zhongguo tongji nianjian 1997, pp. 346-47; Zhongguo tongji nianjian 1998, pp. 369;
Zhongguo tongji nianjian 1999, pp. 361; Zhongguo tongji nianjian 2000, pp. 353; Zhongguo tongji nianjian 2001, pp. 345; Zhongguo tongji nianjian 2002, pp. 352, 364, 395;
Zhongguo tongji nianjian 2003, pp. 395; Zhongguo tongji nianjian 2004, pp. 381, 407-408; Zhongguo tongji nianjian 2006, pp. 395; “Chengshi jianshe tongji gongbao” (“Urban
construction statistical bulletin”), 1996-2002.
Yew Chiew Ping
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Table 4.4 Price Indices of Real Estate and Land (preceding year = 100)
1998 1999 2000 2001 2002 2003 2004 2005
Selling Price Indices of Real Estate 101.4 100.0 101.1 102.2 103.7 104.8 109.7 107.6
Residential Buildings 99.9 100.4 101.4 101.9 104.0 105.7 109.4 108.4
Non-Residential Buildings 99.7 99.9 98.7 101.2 101.3 102.7 107.1 105.6
Transaction Price Indices of Land 102.0 100.0 100.2 101.7 106.9 108.3 110.1 109.1
Residential Use 100.6 99.9 101.0 102.2 107.7 112.4 111.6 110.3
Industrial Use 101.2 100.0 98.6 100.8 100.4 101.3 104.3 103.6
Commercial, Tourism and
Entertainment
104.0 100.0 100.4 101.2 107.0 104.9 110.4 107.9
Others 103.6 100.2 99.8 101.7 106.9 104.4 105.5 106.7

Rental Price Indices of Real Estate 102.4 98.5 102.4 102.8 100.8 101.9 101.4 101.9
Residential Buildings 109.4 102.4 114.2 108.1 102.0 107.5 102.2 100.5
Office Buildings 97.9 95.2 96.2 100.6 99.5 99.9 100.2 102.9
Commercial Buildings 100.1 99.0 99.0 100.2 100.2 99.6 102.0 101.7
Factories and Warehouses 100.7 99.0 99.6 99.2 100.7 100.5 100.9 99.9
Sources: Zhongguo tongji nianjian 2002, pp. 314; Zhongguo tongji nianjian 2006, pp. 336.
Table 4.5 Composition of GDP and Employed Persons by Industry (Total = 100)
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
GDP
Primary Industry 19.5 18.1 17.3 16.2 14.8 14.1 13.5 12.6 13.1 12.6
Secondary Industry 47.5 47.5 46.2 45.8 45.9 45.2 44.8 46.0 46.2 47.5
Tertiary Industry 33.0 34.4 36.5 38.0 39.3 40.7 41.7 41.4 40.7 39.9
Employed Persons
Primary Industry 50.5 49.9 49.8 50.1 50.0 50.0 50.0 49.1 46.9 44.8
Secondary Industry 23.5 23.7 23.5 23.0 22.5 22.3 21.4 21.6 22.5 23.8
Tertiary Industry 26.0 26.4 26.7 26.9 27.5 27.7 28.6 29.3 30.6 31.4
Source: Zhongguo tongji nianjian 2006, pp. 58, 126.
Yew Chiew Ping
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The Nature of “Urbanization”
Using Beijing, Tianjin and Hebei region as case studies, Tan et al. conclude that
“high economic growth rate (the GDP growth rate touched 11.2%) was one of the
main forces that led to urban land expansion and the increase of urban land per
capita in the 1990s, especially in large cities.”
26
Although the observation of high
growth rate and urban sprawl can hardly be faulted, the relationship between the two
variables is debatable. While economic progress and affluence lead to growing

demand for living space per capita and others, it may be argued that in China’s
urbanization, which is predominantly government-led, urban land expansion is a
means to drive up GDP. In other words, the causal relationship may not be one-
directional as some scholars propose. The following elaborates on this argument.
Government-led urbanization, driven by the pursuit of revenue-maximization and
GDP growth, has led to a distorted form of “urbanization” characterized by physical
expansion and infrastructure construction. In certain instances, the pace of urban
sprawl has even overtaken that of urbanization understood as the “shift from rural-
agricultural activity into urban industrial activity.”
27
The urban built-up area in China,
for example, had increased 28.5 percent from 1996 to 2006 whereas the composition
of employed persons by industry had not changed significantly over the decade. The
percentage of employed persons in the agricultural industry had decreased by less
than 6 percent over the period; the percentage employed in secondary industry in
2005 was about the same as that in 1996 while that in tertiary industry had gone up
by 5.4 percent. Moreover, the GDP composition of primary industry in 2005 was
about 7 percent lower than that in 1996 while that of tertiary industry grew by the 7
percent (see Table 4.5). In short, there is a discrepancy between China’s
26
Tan Minghong et al., “Urban Land Expansion,” pp. 194.
27
See James C. Davis and J. Vernon Henderson, “Evidence on the Political Economy of the
Urbanization Process, ” Journal of Urban Economics, No. 53 (2003), pp. 99. See also Dai Junliang,
“Zhongguo xiandaihua de jingxian zhi 'yue'” (“An alarming 'leap' in the modernization of China”),
Liaowang xinwen zhoukan (News Watch Weekly), No. 41 (2006), pp. 28.
Yew Chiew Ping
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urbanization in physical/spatial terms and that in terms of a sectoral shift. As the
following sections explain, this is a result of the government’s urbanization strategies
of infrastructure construction and administrative adjustments.
Infrastructure Construction
A 1996 nationwide survey authorized by the central government found widespread
duplicate construction of basic infrastructure and industries, taking up vast areas of
cultivated land. Under the nationwide land use plan, the land use quotas of railways,
airports, industrial and mining sites should not exceed 7.05 million mu, 0.38 million
mu and 30.4 million mu respectively by 2000. However, these constructions had
already exceeded their quotas by 1995.
28
Along Yangtze river, there were 31 bridges
in 2000, which nearly quadrupled that in 1995. Yet by 2010, the number will further
increase to 60, with 23 bridges in Chongqing, 18 in Hubei and eight in Jiangsu. This
means that there will be one bridge every 50 kilometres along the river, a record that
is unprecedented in the world.
29
Another survey reveals that coastal provinces had
exceeded the quota for non-agricultural land use, with some cities using up their
2010 quota by the year 2001.
30

The maximization of political achievements and self-interests during one’s tenure has
contributed to over-zealous urban development at the expense of excessive land use
conversion. Within their short tenure – between three to five years per term for
government leaders at the county-level and below – local officials rack their brains to
produce “visible” political achievements, which take the shape of extravagant,
ostentatious and often unproductive projects.
31
Such large-scale infrastructural

projects are perceived as symbols of “modernization” by different levels of
28
Baohu gengdi wenti zhuanti diaoyanzu, “Woguo gengdi baohu,” pp. 2-11.
29
Li Bin and Wu Jingjing, “Da le zheme duo daqiao, yao ba Changjiang ‘kunsi’ le” (“Too many bridges
‘binds down’ River Yangtze”), Xinhua meiri dianxun (Xinhua Daily News), 5 October 2005, pp. 2.
30
Deng Dacai, “Zhidu shiling,” pp. 36.
31
Visible achievements or xianji is contrary to qianji, i.e. latent achievements that are less tangible and
measurable, and take longer to produce results.
Yew Chiew Ping
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government, and are not exclusive to affluent localities and capitals.
32
The
prevalence of zhengji gongcheng is such that underutilized “landmarks” of all sorts –
luxurious village bungalows, wide roads, oversized shopping malls, massive squares,
stadiums, and palatial government buildings– can also be seen in obscure villages,
small towns, and less developed counties.
33

In some regions, governments resort to bank loans, levies and compulsory
fundraising to finance wasteful constructions, leading to growing debts and burdens
on residents and villagers.
34
In a Henan county, for instance, the county government
undertook infrastructure building on a grand scale in every village, incurring a debt of

more than 40 million yuan. Not only did the sparse population resulted in
underutilization of the facilities, every village was burdened with debts as high as 15
million yuan.
35
Some villages in areas such as Sichuan, Fujian and Zhejiang were
revamped by local governments and touted as “model villages” while in reality, the
cost of building luxurious villas were passed on to villagers.
36
In Anhui Buyang, the
320 million yuan invested to construct an airport, which ultimately did not
materialized, were raised by collecting a few hundred yuan each from villagers and
residents.
37
As seen in Table 5.1, the bulk of fixed assets investment in China was
funded by domestic loans and self-raised funds, which together constituted 75.5
percent of total sum of investment in 2005.
32
Mo Yongbo, “Lun difang zhengfu 'xingxiang gongcheng' de tuibian ji qi zhili” (“On the evolution and
control of local governments’ ‘image projects’”), Lilun daokan (Introduction to Theory), No. 12 (2006),
pp. 15-7.
33
Huang Ran, Zhou Mingjiang, Ruan Yisheng, Xia Shiying, Li Yan, and Wang Xing, "Jiyu gonggong
caizheng shijiao de tudi churangjin yanjiu” (“A study of the land conveyance fee from the perspective of
public finance”), Jingji yanjiu cankao (Reference for Economic Studies), No. 94 (2006), pp. 29; Sima
Long, “Toushi zhengji gongcheng,” pp. 52; Zhou Wenshui, "‘Zhengji gongcheng’,” pp. 34-35; Qu Jingyao
and Qi Haishan, "Bierang ‘xingxiang gongcheng’,” pp. 46-47; Renmin luntan diaoyanzu, "Zhengji
gongcheng,” pp. 12-13.
34
O’Brien and Li Lianjiang, “Selective Policy Implementation,” pp. 175; Zhou Wenshui, "‘Zhengji
gongcheng’,” pp. 34-35; Liang Peng and Gu Lilin, "Lushi xian de zhengji gongcheng yihuo" (The

troubles left behind by political achievement projects in Lushi county), Xiangzhen luntan (Forum of
Towns and Townships), No. 6 (2004), pp. 26-27.
35
Liang Peng and Gu Lilin, “Lushixian,” pp. 26.
36
Renmin luntan diaoyanzu, “Zhengji gongcheng,” pp. 12-13.
37
Zhou Wenshui, “‘Zhengji gongcheng’,” pp. 35.
Yew Chiew Ping
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True to a popular saying that “one party secretary builds a street, one term of
government builds a city,” government officials responsible for these white elephants
are often promoted and transferred to other offices once their term ends, or even
before that. In a Henan, for instance, the average tenure of the county party
committee secretary was less than two and a half years when the official tenure
should be five years. One county even saw a change of four party secretaries within
five years.
38
The lack of accountability further enforces the practice of “roving
banditry” whereby debts and losses incurred through lavish projects are passed
down to unfortunate successors.
39

Administrative Adjustments
“Urbanization” – via the reclassification of counties into cities, or townships into
towns and the encroachment of the city into the suburbs – is a convenient way for
local governments to enlarge the land area under its jurisdiction.
40

Apart from
improving city infrastructure to expand the urban built-up area, many local
governments used administrative adjustments such as merging townships into towns,
removing counties to set up districts, merging counties and cities to seek “instant”
urbanization.
41
38
Jiang Jie, “Ganbu duiwu jianshe: ‘gan man renqi’ fang ‘zhengji gongcheng’,” (“Building cadres’ teams:
completing the tenure to prevent projects of political achievements”), Renmin ribao (People’s Daily), 12
October 2004.
39
Mancur Olson, “Dictatorship, Democracy, and Development,” American Political Science Review, Vol.
87, No. 3 (1993), pp. 568; Cheng Huairu, “Xiao chengzhen jianshe yao zouchu ‘zhengji gongcheng’
wuqu” (“Avoiding the mistake of ‘political achievement projects’ in the building of small towns and
cities”), Nongcun jingji (Village Economy), No. 8 (2002), pp. 49; You Bengen, “Buneng gei xiaren liu
‘kulong’”(“Do not leave ‘holes’ for successors”), Lingdao kexue (Leadership Science), No. 17 (2006), pp.
47.
40
China’s urban population comprises the population in cities as well as designated towns, jianzhi zhen.
Unlike the western notion of a city or a town as a place where a population engaging in non-agricultural
activities congregate, a designated city or town in China is but an administrative concept. This is to say
that the latter does not preclude an agricultural population, and that the distinction between the function
of towns and villages can be rather obscure. For instance, there may well be numerous villages and up
to 50 percent agricultural activity within the boundaries of a designated city in China. Therefore an
increase in the number of such cities does not necessarily reflect a rise in the level of urbanization. For
the official definition of urban population in China, please refer to Shen Jianfa, “Estimating Urbanization
Levels,” pp. 89-107. See also Wang Hongxia, "Zhongguo jiujing xuyao shenmeyang de chengshihua?
(What kind of urbanization does China need?"), Shehui guancha (Society Watch), No. 12 (2005), pp. 13;
Li Jianying, "Guangdong chengshihua,” pp. 3.
41

Bu gengdi baohu yu jingji fazhan guanxi diaoyan zu, “Tudi liyong zongti guihua shishi ji youguan
zhengce zhixing qingkuang de diaoyan baogao” (“A survey report on the implementation of the land use
master plan and related policies”), Guotu ziyuan tongxun (Land and Resources News), No. 12 (2002),
pp. 32.
Yew Chiew Ping
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These types of administrative adjustment have contributed significantly to China’s
urbanization in the past 20 years.
42
The rise in the number of cities, for example, is
mainly the outcome of administrative reclassification. Among existing cities, 54
percent were former counties whereas 83 percent of existing towns were converted
from former townships. Furthermore, within the last two decades of the 20
th
century,
China’s urban population grew by 200 million, 50 million of which were due to natural
increase, 60 to 70 million due to the conversion of peasants into urbanites, and 80
million a result of the reorganization of administrative divisions. This means that
administrative adjustments alone accounted for 40 percent of urban growth in the
same period.
43
In addition, most existing cities had developed by expanding its
boundaries into the suburbs, either by erecting new cities or districts on its
periphery.
44
1. Township Level and Below
In 2001, the MCA and other relevant government departments drew up and released
a set of instructions on the dissolution and merger of towns and townships. As with

other public undertakings in China, the large-scale dissolution and merger of towns
and townships was carried out by local governments under the advocacy of the
central government.
45
Speeding up urbanization and relieving peasants’ financial
42
Wang Yang, "Shiwu" chengzhenhua fazhan guihua yanjiu (The Tenth Five-Year Plan: a study of
urbanization and planning) (Beijing: Zhongguo jihua chubanshe 2001), pp. 29; Hu Shunyan, Zhou
Mingzu and Shui Yankai, Zhongguo chengzhenhua fazhan zhanlüe (Developmental strategies in the
urbanization of towns in China) (Beijing: Zhonggong zhongyang dangxiao chubanshe, 2002), pp. 29;
Dai Junliang, "Zhongguo xiandaihua,” pp. 28.
43
Wang Yang, "Shiwu" chengzhenhua, pp. 29-30.
44
Liu Shouying, “Zhengfu longduan tudi yiji shichang zhende yibenwanli ma” (“Is the government’s
monopoly of the primary land market highly profitable”), Zhongguo Gaige (China Reform), No. 7 (2005),
pp. 23.
45
The central government, for instance, prescribes the development of towns or xiao chengzhen, as the
path to modernizing China’s agricultural industry and raising the earnings of peasants. See Zhongfa
document no. 11 (2000), “Zhonggong zhongyang, Guowuyuan guanyu cujin xiaochengzhen jiankang
fazhan de ruogan yijian” (“Some suggestions from the Chinese Communist Party, central government
and State Council regarding the promotion of the healthy development of towns”). Downsizing town and
township organizations is also repeatedly mentioned in various other documents over the years. In
2004, the Central Government’s document no. 1 further urges “the continued streamlining of town and
township organs, reduction in the number of staff on the payroll, active and sound adjustment of town
and township divisions, merger of villages and encouraging cadres to hold multi-posts where conditions
are favorable.” Refer to Zhongfa document no. 1 (2004), “Zhonggong zhongyang, Guowuyuan guanyu
cujin nongmin zengjia shouru ruogan zhengce de yijian” (“Suggestions from the Chinese Communist
Party, central government and State Council on certain policies to raise peasants’ earnings”).

Yew Chiew Ping
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burdens are the main impetus for re-drawing the boundaries of towns and
townships.
46

Under the active promotion of the central government, the total number of towns and
townships dropped from 44,741 in 1999 to 36,952 in 2004. This fall of around 17
percent comprises mainly of a reduction in the number of townships from 25,557 to
17,781 in the same period; the number of towns, on the other hand, had not
decreased significantly.
47
Till 2006, the provinces in China had merged and dissolved
10 to 30 percent of their towns and townships.
48
In tandem with this were the
upgrading of towns into streets (jiedao) and the turning of villages into urban
neighbourhoods (shequ). These adjustments benefited the local governments in
expanding the land area available for development and turning rural land into state-
owned land.
According to Dai Junliang, Director of the MCA’s Administrative Division and Naming
Department, some governments took advantage of administrative restructuring to
46
The 1984 standards of setting up towns had led to their proliferation. Under-populated towns and
townships had overstaffed government bodies, resulting in high management costs that were passed on
to the peasants. Furthermore, the size of some towns and townships were incompatible with their level
of economic development. These shortfalls, coupled with advancement in communication and transport
facilities, had led to the Chinese government’s decision to expand towns and townships through

dissolution and merger. See Dai Junliang, “Chebing xiangzhen liang'du' er xing” (“Working within
capacity in the dissolution and merger of towns and townships”), Liaowang xinwen zhoukan (News
Watch Weekly, No. 14 (2001), pp. 6-7; Zhan Chengfu, “Guanyu shenhua xiangzhen tizhi gaige de yanjiu
baogao” (“Deepening the reform of town and township administration: a study and report”), Kaifang
shidai (Liberal Age), No. 2 (2004), pp. 5-15.
47
See Dang Guoying, “Xiangzhen chebing jiben wancheng, shiji xiaoguo haixu jianyan” (“Dissolution
and merger of towns and villages basically complete; effects remain to be examined”), Renmin luntan
(People's Forum), No. 2 (2006), pp. 15-16. Despite a reduction in the number of towns and townships,
China had not been very successful in her reform and streamlining of town and township organs. MCA
estimated that although the number of towns and townships in 2002 was 9,000 less than that of 1992,
the number of staff working in town and township organs was 1.2 million more than that of 1991, prior to
the reform. See Zhan Chengfu, “Guanyu shenhua xiangzhen tizhi,” pp. 7.
48
Wei Aiyun, “Jiceng xingzheng quhua tizhi gaige de shiyantian” (“Reform of the system of
administrative division at the grassroots level: a testing ground”), Renmin luntan (People's Forum), No. 2
(2006), pp. 23-25. The basic guideline is to dissolve towns and townships with a population of under
10,000; towns and townships in flat, hilly and outlying regions are scaled at a population exceeding
50,000, 30,000 and 10,000 respectively. Towns, townships, and villages that are impoverished are
merged with more affluent counterparts; resources such as land, labour, water and other public
resources that are unevenly distributed or scattered in various towns, townships and villages are pooled
together in mergers in order to take advantage of the economies of scale. See also Zhu Baojiang,
“Xiangzhen xingzheng quhua tiaozheng nanti de shizheng yanjiu” (“The difficulties of adjusting the
administrative divisions of towns and townships: a study with evidence”), Beifang jingji (Northern
Economy), No. 3 (2005), pp. 67-69.
Yew Chiew Ping
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Chapter Four
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convert villagers into urban residents and VCs into Residents’ Committees on a large

scale, thereby taking over agricultural land that formerly belonged to the villagers.
49
As all streets are classified as urban areas, counties and cities can expand their
urban districts instantly by converting towns into streets.
50

2. County Level and Above
As there has been a freeze on county seeking city status since 1997, administrative
reclassification in the past decade had taken the form of county-level cities being
upgraded to prefecture-level cities, and the latter annexing county-level units within
its territory.
County-level cities that meet a few criteria may seek the State Council’s approval to
upgrade to prefecture-level city, which endows the government with expanded power
and authorities.
51
From 1996 to 2004, number of county level cities fell from 445 to
374 while the number of prefecture level cities increased by 66 (see Table 4.6).
Under China’s system of city-leading-county (shi guan xian), prefecture-level cities
are endowed with greater power as all urban districts, counties and county-level
cities fall under their jurisdiction.
52
Not only is the city’s size expanded, it also has
access to more resources, such as land. In the words of Chung, “The expansion of
urban scale allows prefecture-level cities to directly intervene in their counties’
spheres of planning, production, circulation, and cooperation. Counties have become
the city’s backyard of raw materials, suppliers of cheap labor, and markets for their
49
Dai Junliang, “Zhongguo xiandaihua,” pp. 28.
50
Shen Jianfa, “Estimating Urbanization Levels,” pp. 92; Yi Fei, “‘Zhengaijie’ yu xinnongcun jianzhe

lüchun budui mazui” (“Converting towns into subdistricts and the building of new villages: incongruities”),
Zhonghua jianshe (Nation Building), No. 8 (2006), pp. 61.
51
Non-agricultural population of 250,000 in urban district, of which 80 percent are in the city-government
seat; GDP of at least 2.5 billion yuan, of which 35 percent or more from tertiary industry etc. See Chung
Him, “The Change in China’s State Governance and its Effects upon Urban Scale,” Environment and
Planning A, Vol. 39 (2007), pp. 796.
52
Wang Yingjing, “Shiguanxian tizhi de libi fenxi ji gaige silu” (“An analysis of the strengths and
weaknesses of the city-leading-county system and its reform”), Lilun xuekan (Theory Journal), No. 2
(2005), pp. 84-87.
Yew Chiew Ping
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old equipment . . . Under this new relationship, subordinate counties have lost their
autonomy over certain administrative and budgetary issues.”
53
Table 4.6 Number of Cities at Various Administrative Levels in China
TOTAL Municipalities Sub Provincial-
Level Cities
Prefecture-Level
Cities
County-Level
Cities
1996 666 3 16 202 445
1998 668 4 15 212 437
2000 663 4 15 244 400
2002 660 4 15 260 381
2004 661 4 15 268 374

Sources: Zhongguo chengshi tongji nianjian 1997, pp. 13; Zhongguo chengshi tongji nianjian 1999, pp.
3; Zhongguo chengshi tongji nianjian 2001, pp. 3; Zhongguo chengshi tongji nianjian 2003, pp. 3;
Zhongguo chengshi tongji nianjian 2005, pp. 3.
Furthermore, prefectures may annex county level units as “districts.”
54
From 1989 to
2002, there were 91 prefecture-level cities that underwent administrative
adjustments, among which 40 annexed cities to set up districts, 17 set up new
districts, four expanded the area of districts.
55
When prefecture-level cities annex
county-level cities or counties, the authorities formerly enjoyed by the county-level
government are rescinded and passed on to the prefecture-level government.
56
The
benefits of “administrative annexation” for the latter include enlarged space for
development, greater economic strength, rise in property prices, rise in the price of
urban land, leading to higher revenues for the government.
57

For instance, after county-level Wujin city was annexed by the higher level
Changzhou city in 2002, the price of commercial housing in Wujin district grew by
53
Chung, “The Change in China’s State Governance,” pp. 802.
54
For details on the extent of annexation in recent years, refer to Zhongguo chengshi tongji nianjian
2003, (Zhongguo tongji chubanshe, 2004), pp. 4-7; Zhongguo chengshi tongji nianjian 2005, Wang
Youjuan and Chen Xiaojie et al. (eds.), (Zhongguo tongji chubanshe, 2006), pp. 4-6.
55
Zhang Hao, “Chengshi xingzheng quhua biangeng yu tudi de guanxi yanjiu” (“A study on the

adjustment of urban administrative divisions and its relation to land”), Shangye jingji (Business
Economics), No. 3 (2007), pp. 7-8.
56
Li Kaining, Wei Qingquan, Zhang Xiaoming, “Cong qu de shijiao dui ‘cheshi shequ’ de jixiao yanjiu – yi
Guangzhou shi Panyu qu wei li” (“A study of the results of converting city into district in Guangzhou
Panyu from the district’s perspective”), Renwen dili (Human Geography), No. 2 (2007), pp. 113.
57
See Fang Shengjing and Chen Duozhang, “Xingzheng quhua tiaozheng dui fangdichan shichang
yingxiang” (“The effects of adjusting administrative divisions on the rela estate market”), Zhejiang wanli
xueyuan xuebao (Journal of Zhejiang Wanli University), Vol. 20, No. 6 (2007), pp. 117-120; Zhang
Jingxiang and Wu Fulong, “China’s Changing Economic Governance: Administrative Annexation and
the Reorganization of Local Governments in the Yangtze River Delta,” Regional Studies, Vol. 40, No.1
(2006), pp. 14-15.
Yew Chiew Ping
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500 yuan per square metre.
58
In 2003, Foshan became the third largest city in
Guangdong after it annexed a few county-level units, including Nanhai, Shunde,
Sanshui, Gaoming. County-level Panyu city and Huadou city were annexed by
Guangzhou city in 2000, after which large areas of farmland in Panyu were
expropriated by Guangzhou.
59
The Guangzhou government also demarcated and
froze the use of large areas of land in Panyu for its development, such as 43 square
kilometres for a university town, 200 square kilometres for a new town and so on.
60
In

Nanjing, with the annexation of Jiangning, Liuhe, Jiangpu counties in recent years,
the city area grew from 1,026 square kilometres to 4,728 square kilometres from
2000 to 2002. At the same time, large areas of farmland on the city fringe were
expropriated – cultivate land decreased by 3.3 square kilometres in 2002 alone.
61
Industrialization: The Proliferation of Development Zones
Kaifaqu or development zones are often championed by local cadres as the answer
to industrialization.
62
Yet the proliferation of development zones has resulted in large
areas of idle land, which are expropriated from rural peasants and left in a desolate
state due to a lack of investors, funds or other reasons.
63
The indiscriminate
conversion of land to industrial use has persisted despite the central government’s
repeated attempts to douse three rounds of “zone fever” in 1992, 1997 and 2003.
64
58
Zhang and Wu, “China’s Changing Economic Governance,” pp. 13-14.
59
“Foshan chexian shequ dazao zhongxin chengshi da geju” (“Foshan converts county into district to
create the structure of a core city”), Lingdao juece xinxi (Information on Leaders’ Policy), No. 3 (2003),
pp. 13; Zhang Wen and Xing Shuzhi, “Guangdong dazao di san cheng” (“Guangdong builds the third
largest city”), Xinwen zhoukan (News Weekly), (2003), pp. 28-30.
60
Li Kaining et al., “Cong qu de shijiao,” pp. 111-14.
61
Lü Xianjun and Wang Mei, “Xingzheng quhua tiaozheng yu chengshi kuozhang yanjiu – yi Nanjing shi
wei li” (“A study of the adjustment of administrative divisions and city expansion using the example of
Nanjing city”), Xiandai chengshi yanjiu (Study of Modern Cities), No. 1 (2006), pp. 67-72.

62
Compared to other countries, the percentage of land for industrial use in China is much higher at over
20 percent. See Cao Jianhai, “Lun woguo tudi guanli zhidu yu chongfu jianshe zhi guanlian” (“On the
relationship between China’s land management system and duplicate construction”), Zhongguo tudi
(China Land), No. 11 (2004), pp. 12-13.
63
He Shujin and Su Guangquan, “Kaifaqu xianzhi tudi chengyin jizhi jileixing huafen” (“The casual
mechanism and types of idle land in development zones”), Ziyuan kexue (Resources Science), Vol. 23,
No. 5 (2001), pp. 17-19; Wang Jun, “Zengzhang quxiang,” pp. 57.
64
Hua Chen and Duan Li, “‘Kaifaqu qingli zhengdun’ beihou de tudi ziyuan shikong wenti” (“The loss of
control over land resources behind the ‘cleaning up of development zones’”), Tequ jingji (Special
Economic Zones’ Economy), No. 9 (2004), pp. 94.
Yew Chiew Ping
96
Chapter Four
Land Development and Urbanization
According to the MLR’s legal enforcement and supervisory body, there were 1,951
development zones all over China at the end of 1992, with a total planned area of
15,300 square kilometres. The actual area under construction was only 307 square
kilometres, a far cry from the total planned area. Moreover, most of the zones were
set up illegally.
65
A nationwide survey of over 70 county level units in 1992 finds that
the average planned area of development zones was more than 10,000 mu, with the
average area generally higher in the east than in the central and western parts of
China. However, the actual land area under construction fell short of the initial
planned area by an average of 80 percent, signalling that local planning was likely to
be over ambitious and unrealistic. Furthermore, on average, a development zone in
the east occupied 9,956 mu of arable land whereas those in the central and the west

took up 5,129 mu and 5,797 mu respectively. More than 50 percent of the counties
occupied 50 to 100 percent of arable land for their development zones.
66

To curb the proliferation of development zones, the State Council issued a notice to
cut down on the number of zones.
67
It also established a system of dual-level
approval by the provincial governments and the State Council for the setting up of
development zones.
68
Yet China saw a revival of the zone fever in 1997. By then,
there were 4,210 development zones in China with a planned area of 12,400 square
kilometres, while occupying only 2,322 square kilometres of land. As with the
previous round of zone fever, most zones were illegally set up by governments below
the provincial level. A moratorium on the approval of non-agricultural use of land,
together with a freeze on the approval for counties seeking city status, were imposed
in 1997.
69
65
Zhang Pu and Li Xiaowen, “Fangzhi kaifaqu,” pp. 15.
66
Quanguo nongye quhua weiyuanhui, “Kaifaqu zhandi baixian qingkuang diaocha” (“Development
zones’occupation of land: a survey of 100 counties”), Zhongguo nongcun jingji (China Village Economy),
No. 3 (1993), pp. 62-63.
67
Guofa document no. 33 (1993),“Guanyu yange shenpi he renzhen qingli gelei kaifaqu de tongzhi” (“A
notice on the tightening of approval and conscientious reduction of all types of development zones”).
68
Zhang Pu and Li Xiaowen, “Fangzhi kaifaqu,” pp. 15.

69
Ibid.
Yew Chiew Ping
97
Chapter Four
Land Development and Urbanization
In 2003, the zone fever recurred a third time and on a larger scale than before. There
were nearly 7,000 zones nationwide, with a total planned area that more than
doubled that of 1992 and 1997 (see Table 4.7). In July 2003, the State Council
issued a notice to suspend the approval of all development zones and began to
earnestly manage, eradicate and restructure development zones. The State Council
ascertained the land use master plans and master urban plans submitted to it.
Table 4.7 China’s Development Zones (square kilometres)
1992 1997 2003 2004 2005 2006
No. of Development Zones 1951 4210 6866 2053 2037 1568
Planned Area 15300 12400 38600 13700 11700 9949
Average Area Per Zone 7.84 2.95 5.62 6.67 5.74 6.51
Land Used for Settlement,
Industrial and Mining Sites
- - 253542 257284 260151 263545
Sources: Zhang Pu and Li Xiaowen, “Fangzhi kaifaqu,” pp. 15; “Guojia fazhan gaigewei,” pp. 20;
“Zhongguo guotu ziyuan gongbao,” 2003-2006.
At the end of 2004, the MLR with other departments implemented verification
standards for development zones. To prevent the inordinate spatial expansion of
zones, all zones were to report their boundaries in four directions – north, south, east
and west (sizhi fanwei).
70
The verification and approval principles and standards in
the restructuring of development zones were promulgated in 2005. These
countermeasures appeared to be effective, if momentarily, as the number of zones

plummeted by 77.2 percent and area cut down by 74 percent from 2003 to 2006.
71
Table 4.8 lists the numbers and areas of development zones at the national and
provincial levels that were already verified and approved by the authorities.
Beyond these approved zones, however, there were numerous variedly named
industrial zones at sub-provincial level cities and towns. In Lishui city of Zhejiang, for
instance, there were 13 other industrial zones with a total area of 28.8 square
70
Ibid; “Guojia fazhan gaigewei,” pp. 19-20.
71
Fagaiwaizi document no. 1521 (2005), “Qingli zhengdun kaifaqu de shenhe yuanze he biaozhun”
(“Verification principles and standards in the reduction and restructuring of development zones”). At the
same time, however, the arable land used for construction soared over 70 percent from 2.2 million mu in
2004 to 3.9 million mu in 2006. Refer to Figure 1.2 in Chapter One.
Yew Chiew Ping
98