Wen, Guanzhong James and Jinwu Xiong. (2013) Which type of urbanization better matches China’s factor endowment : a comparison of population-intensive Old Puxi and Land-Capital-Intensive New Pudong. Frontiers of Economics in China, 8(4), pp. 516-534. URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-002-013-0026-2 (Retrieved 10 December 2014)
Based on a comparative study of New-Pudong (East Shanghai) and Old-Puxi (West Shanghai) in their respective ability to absorb rural migrants, the very essence of urbanization, this paper finds that, constrained by the current hukou (household registration) system and land tenure system, although New-Pudong has emerged as one of the most modernized urban areas in the world, it did so under an urbanization model that is government-dominant and characterized by high land-intensity and capital-intensity. This model represents a serious mismatch in terms of China’s factor endowment that is characterized with a large but relatively poor rural population. In sharp contrast, guided by the market mechanism under private land ownership and free migration, Old-Puxi emerged as an urbanization model that was very adaptable to China’s factor endowment and stage of development. Therefore, as a model of endogenous urbanization, Old-Puxi is more efficient and inclusive, at the same time more sustainable economically and environmentally, and for this reason more applicable to China at a time when China needs to urbanize most of its rural population urgently to avoid the further worsening of the rural/urban divide and income disparity.
Wen, Guangzhong James and Xiong, Jinwu (2014). The hukou and land tenure systems as two middle income traps : the case of modern China. Author’s post-print. Final version published in Frontiers of Economics in China 2014, 9(3): 438-459. DOI: 10.3868/s060-003-014-0021-1.
China’s prevailing hukou (household registration) system and land tenure system seem to be very different in their applications. In fact, they both function to deny the exit right of rural residents from a rural community. Under these systems, rural residents are not allowed to freely exit from collectives if they do not want to lose their entitlements, such as their rights to using collectively owned land and their land-based properties. Farmers are neither allowed to sell their houses to outsiders, nor allowed to sell to outsiders their rights to contracting a piece of land from the collective where their households are registered. For migrant workers from rural areas, it is extremely difficult for them to obtain an urban hukou with all its associated entitlements at an urban locality where they currently work and live. The combined effect of the two systems leads to serious distortions in labor and land markets, resulting in discrimination against migrant workers, sprawling yet exclusive urbanization, housing bubbles, and depressed domestic demand. These distortions further entrench the existing and much widened urban/rural divide. Unless these two systems are thoroughly reformed, the rural residents in Chinese mainland will be trapped in their comparatively much lower income and remain unable to share the gains from the agglomeration effects of urbanization.
Wen, Guangzhong James and Xiong, Jinwu (2013). Which type of urbanization better matches China’s factor endowment: a comparison of population-intensive Old Puxi and land-capital-intensive New Pudong. Frontiers of Economics in China, 2013, 8(4): 516-534.
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