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Problems of urban development under the open policy

The open policy, particularly the introduction of foreign investment, a commercial economy, and private enterprises, has greatly influenced urban development in China since 1978. It has weakened the pre-1978 mechanisms of population control and state resource allocation that were effective in shaping urban development to a form desired by the government. The household registration system has been relaxed and there is increasing mobility of people. The development of a free market and the proliferation of individual enter prises outside the state system are rapidly eroding the household system, which was effective in controlling population growth in the cities. The state is less relied on to provide employment and services. People can earn more outside the state system in private enterprises and enterprises involving foreign investment. The Chinese government is no longer able effectively to control urban development. Kwok (1988) observed that large cities were developing more rapidly than the government policy, which aims to "control the growth of large cities, rational development of medium-sized cities, and active development of small cities." There have been rapid changes in the urban system owing to economic reform. As a result, the following pressing issues have to be faced in the rapidly growing cities and towns in the Eastern Coastal region (Yeh and Leung, 1991).

Temporary population

The most remarkable phenomenon in Chinese cities under economic reform is the growth of the temporary population in large and medium-sized cities. There are two types of temporary population. The first type is temporary residents (zanzhu renkou). Unlike permanent residents (changzhu renkou), whose households are registered in the city, temporary residents are mainly people who obtain permission to stay in a city for a fixed period of time. They are mainly contract workers working in factories or on construction sites. The other type is the transient or floating population (liudong renkou). They are people who enter and leave the city within a few days, weeks, or longer. They may be travellers, businessmen, or people looking for jobs. The transient population is normally not reported in city statistics but temporary residents are reported.

Temporary residents can constitute as much as 20-25 per cent of the total number of residents of some cities. In Guangzhou, the percentage of temporary residents is very large, being 38 per cent of the total number of residents (Zou, 1990). In Shenzhen SEZ, temporary residents outnumber permanent residents: in 1991, there were 432,000 permanent residents, but temporary residents numbered 766,000, accounting for 63.9 per cent of the official population in the SEZ (Editorial Board of Shenzhen Special Economic Zone Yearbook, 1992). Some of the temporary residents can become permanent residents after staying in a city for a period of time. The building industry engaged the largest proportion of the temporary population, followed by retailing, especially individual retailing enterprises on the street.

The Institute of Urban and Rural Economic Development in the Ministry of Construction has conducted a detailed study of the characteristics and problems of the transient population in large cities (Li and Hu, 1991). They found that there was a rapid increase in the transient population in large cities. The duration of stay of the transient population has increased. Most of them came to work in the cities, either self-employed or employed in the building and retailing sectors. Most of them came from villages and were mainly males with a low educational background. The existence of the transient population results from the household registration system not being effective in restricting non-registered people in a city under economic reform. Non-registered people can bypass household registration by getting their daily necessities from the free market. The presence of the transient population is alarming in some of the large cities. They have increased the crime rate and overloaded transport, infrastructure, and housing in the city. As social facilities are based mainly on permanent residents, the existence of a temporary population also creates great pressure on social facilities, transport, and housing.

Urban land use and development control

In the past, the internal structure of Chinese cities was strongly influenced by urban planning and state investment. However, these are of diminishing importance when more and more firms and factories are owned by individual enterprises and foreign investment.

The permission for foreign investors to use land and to participate in the property market has rapidly changed the internal structure of Chinese cities (Yeh and Wu, forthcoming). Foreign investors were allowed to use land for a leased period in the Special Economic Zones by paying annual land-use fees as early as 1981, soon after SEZs were established (Yeh, 1985). The adoption of the paid transfer of land-use rights (tudi youchang zhuanrang) in the First Session of the Seventh People's Congress in 1987, which is similar to leasing land to developers, has further opened up the urban property market to foreign investors. Their participation in land leasing and urban land transactions has given rise to new forms of foreign investment in China. Their investments have led to rapid urban renewal in the old urban districts of the cities.

Although a City Planning Act was enacted in December 1989, it was not effective in controlling land development. It mainly required the city government to prepare a master plan, but the provisions are too broad to control site-specific development, leaving too much discretionary decision-making to the building administration and local district governments. Disputes may occur between the applicant for land development and the authority that grants planning permissions. It is difficult to reject a building application on the basis of the existing land-use zones because they are too broad. The actual location, type, and intensity of development may not be what the planners intend to achieve in the master and detailed plans. For example, a site zoned for public building may be used to build tall office buildings, irrespective of whether or not it is a suitable site for office building and whether or not there is a need for cultural and recreational building in the neighbourhood. In the past, most offices, shops, and commercial activities were owned and operated by government departments. All non-residential and non-industrial land was considered to be public building land. This is different from the concept of public building land in the Western free market economy. Most of the land that is considered to be "public land" in China would be regarded as office and commercial land in other countries. Because of increasing private and foreign investment in the cities, land zoned for public buildings may no longer be under the control of the city government. Land zoned for public buildings may be developed into commercial offices and hotels for higher profits by government departments and state enterprises, which intend to make more money, leaving inadequate amounts of land for other public building to meet the demand of the community for sports, cultural, and recreational facilities.

The existing land-use zones are also too general. It is not possible to make sure that certain types of land will be available in the right locations or available at all. For example, land zoned for public building may be used to build offices and hotels, regardless of whether or not they are in the right location. This is why office buildings and hotels seem to be erected at random in the cities. If all public building land is developed into offices, there will not be any land left for public buildings for sports, culture, and recreation.

A new form of land development control is needed to cope with these developments. Shanghai and other cities are now experimenting with the introduction of zoning regulations to control the type and intensity of land use in the city. It is hoped that the objectives of the master and district plans can be better achieved and that there will be less dispute over the type and intensity of development in the planning permit application process. The building administration and local district governments will have less discretion over the type and development intensity of a site. It is hoped that orderly and efficient land development can be achieved, avoiding incompatible land use in wrong locations.

Urban transport

Another major urban problem that has surfaced under the open policy is urban transport. The problem manifests itself in a number of ways, notably inadequate infrastructural development, a rapid increase in motor vehicles, and conflicts over urban land use and between public and private transport.

Take the case of Guangzhou as an example (Yeh and Leung, 1991). Between 1949 and 1986, the city's road length increased from 228 km to 474 km, or by more than 200 per cent, whereas road space expanded from 1.85 million m² to 5.37 million m², or by nearly 300 per cent. However, between 1949 and 1988, Guangzhou's bicycles and motor vehicles increased over 80-fold to 1.9 million and 0.158 million, respectively, and passenger travel volume by 27 times to 1.1 billion trips per day. Moreover, whereas the growth rate in vehicles was around 10-12 per cent per annum in the 1970s, it increased to 22 per cent per annum in the 1980s. As the city expanded, and new areas of development such as the Tienhe and Huangpu districts were established, conflicts over land use and traffic arose between old and new city districts. To put it simply, the (old) central city is densely populated and developed, whereas the new districts are more spacious and are at some distance from the central city. This generates uneven cross-traffic, sharp peak hour demands, and increasing commuting or journey distances and time. All of these make the provision of efficient public transport in socialist China not an easy task.

The worsening situation of passenger transport can be attributed to the failure to resolve conflicts between public and private transport. In China, the bicycle may be regarded as a form of private transport, given its functions and characteristics. Yet it is a mode that has been nationally subsidized and heavily interwoven into the social fabric. In Guangzhou, passenger trips are classified as motorized (32.02 per cent), bicycle (29.95 per cent), and walking (38.03 per cent). Passenger trips made by bus and trolley bus account for only 21.63 per cent, or roughly two-thirds of motorized trips and 72 per cent of the bicycle trips daily. Thus the more efficient motorized modes are not being fully utilized or developed, and the significant role of the bicycle poses problems of efficiency, safety, transport planning, and traffic management. Increasingly, the modern private transport mode in the form of motor cycles and private cars is being introduced and further complicates the issue.

Traffic congestion is getting worse in the cities. There is an increase in commuting because of the wider spread of land use and people no longer live next to their workplaces. However, the transport system is not growing fast enough to cope with the increase in passengers and motor vehicles. There is inadequate provision of roads, together with a shortage of traffic control systems and facilities.

Environmental pollution

Environmental degradation is an increasingly serious problem in China. Although the Environmental Protection Act was initially adopted on a trial basis as early as 1979 and finally adopted in 1989, it was not effectively implemented, particularly in small cities and towns. Environmental pollution is better controlled in cities than in towns. Many rural enterprises discharge water without any treatment (Chang and Kwok, 1990). Air pollution is also increasingly severe.

In the Pearl River Delta, one of the fastest-growing regions in China since 1978, the threat to the environment comes not from the major cities in the region but from the rapidly growing small cities and towns (Yeh et al., 1989). Despite the increase in population in Guangzhou in the first five years of the 1980s, the water quality of the section of the Pearl River downstream of Guangzhou showed only a very minor deterioration trend (Huang et al., 1988) because the increase in domestic sewage was offset by a reduction, by as much as 23 per cent, in the discharge of industrial effluents during the same period as a result of tightening environmental control measures in Guangzhou. Industries in Guangzhou were growing at a rate of 12 per cent per annum in this period, but environmental control measures were able to reduce the amount of industrial effluent per industrial production unit by 16 per cent in these five years.

Environmental control is much more relaxed outside the major cities of the Pearl River Delta. The main threat comes from industrial development in small and medium-sized cities and towns and from rural industrialization (Ma and Qiang, 1988). In the eyes of industrialists, one of the attractions of the small and medium-sized cities and towns is their less stringent environmental control measures. Hong Kong and Macau are the major sources of foreign investment in the Pearl River Delta. Some of their polluting industries, such as tannery and dyeing, which are becoming increasingly costly to operate because of tightening environmental controls, have been moved to the Pearl River Delta. Some industrial enterprises in Guangzhou have also moved to the countryside for similar reasons. Rapid industrial development in the small cities and towns has produced a large amount of industrial waste, creating problems that are often beyond the capacity of the local authorities to handle. This has resulted in unabated pollution in many areas, rendering prime agricultural land less productive and causing oxygen depletion and eutrophication in receiving water bodies and subsequent contamination and reduced production of aquatic products (Shen, 1983).

Policy implications and future trends in urban development

The past decade of rapid development of the economy and the urban system is the result of interaction between economic reforms and the open policy. Because of the locational advantage of the Eastern Coastal region, the open policy has made it grow faster than the Central and Western regions. Urban growth and urbanization, especially rural urbanization, are also most rapid in the Eastern Coastal region. With continued economic development as a result of the open policy, more towns in the Eastern Coastal region will be upgraded to become cities in the future, reversing the pre-1978 trend of decentralizing cities to the Central and Western regions. Unless there is a major shift in the existing policy, there will be an upsurge of new cities in the Eastern Coastal region because the majority of the rapidly growing towns are located there, such as the towns in Guangdong and Jiangsu. Furthermore, some towns located in these provinces (such as Dongguan) have already been granted city status in order to have more autonomy and flexibility in attracting foreign investment. Apart from the addition of new cities, the open policy also favours the development of existing cities in the Eastern Coastal region that have better accessibility and an economic base for foreign investment. The recent designation of Pudong in Shanghai as a special development area is an example of this trend. If Pudong development is successful, it may become a model for development of other existing cities.

The open policy has opened the highly centrally controlled economy to a mixture of central and market economies. More and more people do not rely on the state for income and housing. The pre-1978 mechanisms of population control and state resource allocation are becoming less effective in controlling urban development. One of the main manifestations of the weakening of central government in shaping urban development is the marked increase in temporary population in the cities. This is a major problem. In general, the level of urbanization in China is related to the level of industrial development. Although there is some temporary population in the cities, pseudo-urbanization has not yet occurred in China. However, with further development of the free economy and if industrial development cannot catch up with urban population growth, pseudo-urbanization may occur in China. The massive rural-urban migration that has plagued many large cities in less developed countries may appear in China, repeating some of the urban problems experienced by large cities in Asia.

China is in the midst of economic reforms. It is uncertain how much more the free market mechanism will be allowed to operate in the future. The existing form of free market demonstrates that there is an urgent need to improve urban management. In the past, urban development could to a large extent be controlled by the state through the allocation of funding. Since the adoption of economic reform, the introduction of housing and land reform, and the opening up of China to foreign investment, the state and centrally planned economy have less role to play in influencing the development of cities. These new developments are affecting the internal structure of the cities and leading to the restructuring of their land use to reflect market forces rather than the previous state control of land-use allocation based on economic planning. As a result, foreign investment has led to the clustering of commercial housing to form new social areas, the restructuring of land use and urban development, and the designation of new economic and technical development zones for attracting foreign investments (Yeh and Wu, forthcoming).

City governments have less control over the location and timing of development. Without good urban management, the land-use pattern can be chaotic, leading to inefficient use of the land and traffic congestion. There is an urgent need to manage the fast-growing towns and cities in the Eastern Coastal region, otherwise their living environment and traffic conditions will deteriorate. Urban management is particularly needed in small towns which are growing rapidly but with little planning and control. Environmental degradation of towns will be a serious issue if it is left unattended. There is an urgent need to train professionals such as planners and public administrators to plan and manage these towns and cities.

There may be a need to review the appropriateness of the national urban policy - "control the growth of large cities, rational development of medium-sized cities, and active development of small cities" - for guiding city size development. However, there is a weak relationship between city size and economic efficiency. The economic efficiency of cities depends not on city size alone but more on the level of investment, industrial structure, and locational factors. There is also a great variation in economic efficiency among city sizes and regions (Zhou and Yang, 1990). The control of city size does not seem to be an appropriate policy because it may not fully utilize the economic efficiency and locational advantage of some cities. Because of the increasing influence of market forces under the open policy, urban development is moving away from the policy of controlling city size. Most foreign investment has occurred in extra-large and large cities in the Eastern Coastal region. Even the central government is not consistent in this policy. It has just announced a grandiose plan to develop Pudong in Shanghai, one of the largest cities in China. There may be a need to develop different urban development strategies for different regions and such strategies may need to be adjusted periodically to reflect the level of economic development. For example, large cities may be developed in the relatively underdeveloped areas in the Western and Central regions as focal points for developing these areas with the support of some medium-sized cities. Small cities and towns experiencing rapid economic development in the Eastern Coastal region should be allowed to be further developed into medium-sized and large cities to maximize their economic efficiencies and locational advantages.

Although the free market is playing an increasing role in urban development under the open policy, public policy still plays an important role. One of the main reasons for the rapid development of towns and cities in the Eastern Coastal region is that the central government allows them to have more autonomy in attracting foreign investment, which was one of the main factors influencing economic development in the past decade. The central government also designated four SEZs and 14 open coastal cities in the Eastern Coastal region as catalysts for economic development in the Eastern Coastal region. The central government has allocated funding for the development of the SEZs and coastal open cities. Without such policies and investments, towns and cities in the Eastern Coastal region would not have developed so rapidly.

Regional inequality between the Eastern Coastal region and the rest of the country is increasing. This is understandable at present because it is hoped that, once economic development has taken off in the Eastern Coastal region, it will diffuse to the interior provinces. However, there is a need to monitor whether diffusion is occurring in order to determine the need to give selected cities in the interior provinces, such as major river ports along the Yangtze River, similar treatment to that at present enjoyed by cities in the Eastern Coastal region in order to help develop the interior provinces. Accessibility in transportation and communications plays an important role in globalization. Coastal cities are developing more rapidly than non-coastal cities mainly because of their accessibility to the outside world. If China is to develop the interior provinces, its internal transportation and communication systems will have to be improved.

The impact of globalization on the urban system in China is different from that in other developing countries. In other developing countries, globalization is mainly concentrated in a few cities, particularly the primate cities. In China in contrast, although globalization is still concentrated in the coastal provinces, it is more dispersed than in other developing countries. None of the cities or provinces has more than 40 per cent of national total exports or foreign investment. Foreign investment is mainly from Asia, which is a big contrast to other developing countries.

There has been increasing competition among cities and towns for foreign investment. The competition is at all levels: among different districts of a city, among different cities and towns, and among different provinces. To be more competitive in attracting domestic and foreign investment, many preferential treatments are given and sometimes rules are flexibly applied. This has created problems in planning and managing cities and towns. However, more importantly, there is a rise of localism and a lack of cooperation in regional development. Localism is especially visible in regions that are developing very rapidly such as the Pearl River Delta. Four international airports are to be built in Zhuhai, Macau, Hong Kong, and Shenzhen, which are less than 50 km from each other. Unlike in the past, when the state allocated resources for major infrastructure projects, local government can raise funding for infrastructure projects. Because of the lack of coordination, it may be a waste of resources. There is a need to have better coordination of regional development and planning.

The boom in export industries and in foreign investment in the past decade owed much to China's cheap land and labour. With the increase in labour costs and land prices, there is an increase in competition with other countries in Asia, such as Viet Nam. There is a need for China to improve the quality of its labour and its products if it is to stay competitive in the world economy. Cities with better infrastructure and higher-quality labour may need to be developed as commercial centres for better integration with the world economy.

Notes

1. Eastern Coastal, Central, and Western are the regional definitions used in the Seventh Five Year Plan (1986-1990). These are different from the regional definitions commonly used by Chinese researchers in the early 1980s, which also divided China into three regions, i.e. coastal, interior, and frontier. Eastern Coastal region is the same as the coastal region with the inclusion of Jilin and Heilongjiang (i.e. Heilongjiang, Jilin, Liaoning, Beijing, Tianjin, Hebei, Shandong, Jiangsu, Shanghai, Zhejiang, Fujian, Guangdong, Hainan, and Guangxi). Western region excludes Nei Mongol of the frontier region and adds Shaanxi, Sichuan, Guizhou, and Yunnan (i.e. Shaanxi, Sichuan, Guizhou, Yunnan, Ningxia, Gansu, Qinghai, Xizang, and Xijiang). Central region includes Nei Mongol, Shanxi, Henan, Anhui, Hubei, Jiangxi, and Hunan.

2. Cities are classified into four categories based on the non-agricultural population in the city proper (shiqu) and suburban districts (jiaoqu) (State Council, 1984). Extra-large cities are those with a non-agricultural population of over 1 million; large cities are those between I million and 500,000; medium-sized cities are those between 500,000 and 200,000; and small cities are those with less than 200,000.

Acknowledgements

We would like to thank Huaying Hu, Xia Li, Wing Keung Tsang, and Fulong Wu for their assistance in data collection, processing, and mapping for this chapter. We are also grateful to the Urban and Environmental Studies Trust Fund of the University of Hong Kong for financial support for part of the study.

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Global influences on recent urbanization trends in the Philippines

Introduction
Recent urbanization trends
A simple model for examining global influences
Global influences on urbanization trends
Concluding remarks
Acknowledgement
References

Orville Solon

Introduction

It is often argued that urban primacy in a developing country is largely a product of its colonial past. The dominance of Metro Manila in the Philippine urban system today continues to feed upon the same forces initiated during the Spanish occupation: Manila still serves as the main link to the world economy and remains the seat of political authority. This colonial heritage may be one of the more formidable obstacles confronting efforts to promote broad-based and balanced regional development in the Philippines.

Although the momentum generated by old global factors continues to influence the landscape of the Philippine economy, new global influences have appeared and are becoming more dominant. The concern is that the strength of new global forces, which build upon a more pronounced international division of labour, greater reliance on international finance, and more emphasis on international trade as the main engine for growth, may only reinforce tendencies towards urban primacy. The argument is that new global forces backed by new communications and transport technology work on the world economy through a system of mega-cities and, in so doing, worsen the unevenness of growth within countries (see chap. 2). Evidence showing the tendency of foreign direct investment to locate in and around national capital regions lends some validity to the hypothesis (Fuchs and Pernia, 1989).

However, more recently in the Philippines, the limited success of regional centres like Cebu in Central Visayas, Cagayan de Oro in Northern Mindanao, and Davao in Southern Mindanao in attracting direct foreign investment and in promoting exports raises a number of questions. With global restructuring, can the regional comparative advantages represented by regional urban centres compete directly at the global level? Can the recent changes in transport and communications technology elevate regional centres above the limits imposed by the existing national hierarchy of cities? The argument being suggested concerns the possibility that global influences may be harnessed to promote balanced growth via intermediate regional centres.

A preliminary examination of the question of whether or not new global factors have an inherent influence towards urban primacy is the main purpose of this chapter. This is done by looking at elements of both global and local influences on recent trends in Philippine urbanization. In particular, this chapter will address three questions: (1) Do global and local factors have different effects on urbanization patterns? (2) How do global and local factors affect each other? and (3) Does the existing pattern of urbanization itself affect the way global and local influences are applied across regions?

In asking the first question, this chapter intends to determine the nature and relative influence of global factors. The second question is raised to qualify answers to the first by determining whether the two sets of influences crowd each other in or out. The third question considers the possibility that global factors may not have an inherent predilection for capital cities but are only observed to have such a tendency as they respond to an existing pattern of urbanization. An underlying interest here concerns the prospect of harnessing global forces to develop secondary or regional urban centres.

The analysis here focuses on recent urbanization trends in the Philippines covering the period between 1980 and 1990. An overview is presented in the next section. Subsequently, an attempt is made to determine how changes in the relative levels of urbanization of the 13 regions in the Philippines are affected by global factors, particularly foreign direct investment and exports, using a simple model developed on the basis of the hypotheses and results presented in previous studies of Philippine urbanization such as those by Pernia et al. (1982) and Herrin and Pernia (1987). The hypotheses underlying the model are tested using three-year, thirteen-region panel data. The empirical specification of the model as well as the results are discussed. Concluding remarks are made in the final section.

Table 8.1 Urbanzation trends in the Philippines, 1948-1990

Source: National Statistics and Census Bureau, Philippine Statistical Yearbook 1991.
a. Numbers in parentheses are percentage rates of change.

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