Political Economy — February 17, 2011 4:38 pm

China’s Urbanization Dilemma

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During the recent protests in Egypt, the Chinese government was understandably nervous. Wary of inspiring similar outbreaks in Chinese cities, its state-run media opted to keep coverage of events in Cairo to a minimum. Moreover, the search term “Egypt” was blocked on major social media websites. Though massive protests erupting in China seem unlikely, the Chinese Communist Party (CCP) still has good reason to worry. While it’s no coincidence that popular uprisings in both Tunisia and Egypt centered in their capitals, the threat posed to an autocratic regime can be extended to include cities in general. Compared to Tunisia’s and Egypt’s urban populations (66% and 43% respectively), China’s is currently 46%, and is projected to swell to 70% by 2035. This is not to suggest that urban unrest will inevitably erupt, but that there is a strong relationship between urbanization and the longevity of an autocratic regime.

Why do cities in autocratic regimes foster popular unrest? Robert Bates has suggested that urban residents can more easily threaten autocratic regimes due to their proximity to seats of government. Moreover, a city’s higher population density makes popular mobilization easier. In a paper titled “Cities and Stabililty: Urbanization and Non-Democratic Regime Survival,” Jeremy Wallace argues that urbanization hinders autocratic regime survival. All this seems intuitive, but Wallace goes further to assert that in an attempt to quell urban unrest, most autocratic regimes reap short-term gains for long-term losses by giving “preferential treatment to cities, which induces further urbanization” over time. For example, these regimes usually placate urban populations by lavishing them with generous food and fuel subsidies – until very recently, Iran was a prime example. This only worsens urban unrest in the long run.

Having long displayed an urban bias in its development policy, the CCP now seems to have changed course and has, according to Wallace, started subsidizing rural areas instead. In 2010, the government subsidized rural purchases of 5.51m cars and motorcycles, providing subsidies worth more than US$1 billion to rural residents. This suggests that beyond the ostensible goal of promoting a “harmonious society”, the CCP also wishes to maintain regime stability by preventing urban populations from ballooning out of control.

Nevertheless, this decision has led to a different set of problems.  China’s 11th five-year plan recognizes that urbanization is necessary for stimulating and sustaining growth and a key contributor to alleviating rural poverty. As Matthew Yglesias has suggested, China’s spectacular growth has largely been achieved through “shifting people out of a low-productivity sector (like farming in China) into a higher productivity sector (in China, factory labor).” If that is indeed true, the implication is that a tradeoff between stability and economic growth is impossible to avoid. On the one hand, the CCP needs to maintain China’s growth rates in order to legitimize its rule; this has been achieved, in part, through the higher productivity of workers in urban areas. Yet, on the other hand, the CCP fears the instability that unfettered urbanization would lead to.

How then to solve this dilemma? As Yglesias notes. the government will have to do more to raise in-sector productivity by stimulating investment in physical and human capital. On the political front, the CCP could better address incendiary issues – urban and rural alike – like land eviction and corruption. Both are inconvenient, not to mention difficult to execute. Regardless, in the CCP’s dogged pursuit of breakneck growth and tranquil stability, one will have to yield.

Photo credit: Ville Makkonen

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