Developing new towns the Chinese way

This post Courtesy of the RTPI International Blog

In China, new town development emerged as a key urban development strategy at the beginning of the 21st century, particularly in mega-cities such as Beijing and Shanghai. They are large in scale, comprehensively planned in land use profile and urban functions, and showed city governments’ great enthusiasm to create distinctive and attractive urban landscapes to enhance local competitiveness.

New Town In Shanghai 2

Urban Investment & Development Corporations

In China, local government-affiliated Urban Investment and Development Corporations (UIDCs) play an essential part in propelling the new town boom. The name of UIDCs remind people of the Urban Development Corporations (UDCs) in the UK, but key differences exist.

The British UDCs were rooted within the neoliberal trends between the late 1970s and early 1980s, acting as agents to facilitate market-led regeneration by utilizing private capital. In contrast, the Chinese UIDCs were embedded in the contexts of China’s fiscal recentralization and land commodification in the 1990s.

Different from the UK, the Chinese local governments establish UIDCs to undertake primary land development and land conveyance on their behalf, and/or act as local financing arms to provide local governments a corporate platform to borrow from the market, thus the word investment is incorporated in their names.

British UDCs were rooted within the neoliberal trends between the late 1970s and early 1980s,.. while Chinese UIDCs were embedded in the contexts of China’s fiscal recentralization and land commodification in the 1990s.

UIDCs in China can be seen as government-backed, place-specific and project-based intermediary agent between the state and the market. They not merely act as institutions delivering large-scale urban (re)development projects, but also as prominent actors to enact and promote urban policy and landscape change and enable loyal allies of the local government to participate and influence the market through directing investment into selected locations.

Financially, UIDCs do not rely on private funding but on state endorsement of funding, particularly in the forms of land and credit. They are entrusted with the power of land development and conveyance, and could borrow from state-owned bank with land use right as collateral for loans, backed by local government.

Land commodification and price appreciation are their major source of income, which would in turn be used to finance infrastructure development. Thus, they act as the financial arm of the local government, enhance the state’s control over local space production through land monetarization, and manipulate urban forms as a tool in achieving state objectives.

Politically, the local government retains dominant control over UIDCs through personnel arrangement. For example, leaders of a UIDC could be former government cadres and could have concurrent appointments within a UIDC and government.

The case of Songjiang, Shanghai

In Songjiang New Town, Shanghai, the president of Songjiang New Town Development Corporation (SNTDC) also took the position of the party secretary of a Street Office (the lowest level of government administrative unit), and the local state can thus coordinate efficiently and act effectively, taking advantage of market intelligences, experiences and administrative power and resources. SNTDC could also obtain land at low price, and manipulate the statutory planning mechanism for its own economic gains.

UIDCs also act as local government’s administrative arm, helping to channel state economic policies to a specific place for implementation.

For example, SNTDC in Shanghai took charge of implementing the mega-project Thames Town as “artistic town, creative town, romantic town”, to enhance Shanghai’s position in the global cultural map. It also helps shape local community’s social value through actively engaging in residents’ social and cultural life via urban design, facility provision and community activities.

Key differences between China and UK

As can be seen, the Chinese UIDCs are different from the British UDCs in several aspects. Chinese UIDCs are affiliated and answer to local government, while British UDCs are centrally appointed agencies run by boards that primarily composed of private-sector members.

Under post-1980s free market reforms in many parts of Europe, newly established development institutions are often independent private or semi-private entities responding to market needs as the role of the state dwindles.

In post-socialist China, market is created and harnessed by the state through UIDCs which in turn enable local governments to participate in the market, appropriate land price appreciation, finance infrastructure, reward state allies, and invest in social spending. As such, they represent the expansion of state power institutionally, socio-spatially and economically.

The article is based on the 2018 RTPI Research Awards entry “Urban investment and development corporations, new town development and China’s local state restructuring – the case of Songjiang new town, Shanghai”. 2019 Awards are calling for entries. 

Guest blogs do not necessarily represent the views of the RTPI.

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