The Transition to producer services in China: opportunities and obstacles

Daniels, P W (2012) The transition to producer services in China: opportunities and obstacles, in Anthony G O Yeh and Fiona F Yang (eds.) Producer Services in China: Economic and Urban Development. London: Routledge, pp.  29-51.

While knowledge and innovation transfer via foreign producer services with a presence in China (attracted by the major inward invested manufacturing activities) will be important, a transition towards domestic supply of producer services attuned to the needs and expectations of domestic, and ultimately international, business clients will be important.  China is also investing in major domestic infrastructure projects, including schools, hospitals, roads and railways that also stimulate demand for an improved supply of high quality, innovative producer services (logistics, marketing, design, construction, financial, business and professional) that are suitably distributed across the Chinese city system.  But this is not without difficulties.

The location of most of the leading and economically diverse cities in the coastal regions has left many of the large cities in the inland provinces under-provided with producer services.  Quasi-marketization has created challenges in so far as local and provincial governments, together with the large state-owned enterprises (SOEs), exercise significant influence on the patterns and priorities for investment in cities and regions.  Apart from obvious exceptions such as Shanghai, the more rapid and visible returns from supporting the growth and development of manufacturing eclipse any enthusiasm for initiatives promoting the development of producer services are muted since they are less tangible, difficult in many cases to measure, and the benefits may only be evident over the medium or long term (say five or more years).  While the policy commitment to the development of producer services in progressive cities like Shanghai is commendable it is far from the norm and in any event tends to be couched in terms of physical development (such as dedicated zones for various types of services) rather than ‘softer’ regulatory or other instruments tailored to the needs of producer services.

There remain as many questions as there are answers about the most efficient and effective ways to ‘bring on’ the development of producer services in China in ways that enhance the national economy in general and cities economies in particular.  The agenda for some recently commenced research on urbanization, economic development and producer services as part of a four-year EU-China Collaborative Research Programme (URBACHINA) is outlined.

Sebastien Goulard

Ph.D. in political science (EHESS, Paris); M.A. in social sciences (EHESS, Paris); M.A. in international relations (IRIS, Paris), B.A. (Hons) in international political studies (ESE - Nottingham Trent University)

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