Tuesday, October 14, 2003

One of my colleagues pointed out this very interesting article, and my response was:

This is very interesting development indeed. One implication of this move is to deny provincial government the revenue generated in these big cities. The end result might be even less transfer payment from the big cities to the poor rural areas of these provinces. I am sure the central government will partially compensate through subsidies, but only partially. So, the central government and the city government are both proponents, while the provincial government is the opponent. Sichuan fought Chongqing’s elevation every step of the way, but nomenklatura power won out in the end. The brilliance of this move is that the elevation would give every official in that city an automatic one grade promotion, which no doubt generates a strong support coalition ex ante. One interesting thing about the list is the exclusion of Guangzhou. When I was in China, I heard about the possible elevation of Guangzhou. I guess the Guangdong government would rather lose Shenzhen than Guangzhou.

The article:

This seems like it could be a very important development. Can anyone comment on the views of this from Beijing, the cities that want to apply, or the provinces that might lose them? And what about the consequences -- has Chongqing really done better because it's free from Sichuan, and has Sichuan suffered?


China ponders raising status of large cities
By James Kynge in Beijing
Published: October 13 2003 20:06 | Last Updated: October 13 2003 20:06

China has begun to consider raising the administrative status of several large cities by putting them under the direct control of Beijing - a scheme that would aim to reverse the ebb of state power away from the central government, officials said.

The proposal, if adopted, would have the potential to boost the economies of the cities selected to become zhixiashi, or province-level cities, and reveal one aspect of an emerging t op-level plan to reform China's administrative system, officials said.

Approval for new zhixiashi would be unlikely before a meeting of the National People's Congress next March at the earliest. "There are plenty of cities that have requested to be turn ed into zhixiashi but the government has not yet made its decision on this idea yet," said an official at the ministry of civil affairs.

The list of cities that have either put forward their candidacy or been considered by the central government is long. Nanjing, the capital of the central province of Jiangsu; Shenzhe n, a "special economic zone" bordering Hong Kong; Shenyang, capital of the north-eastern province of Liaoning; Dalian, the second city in Liaoning; Qingdao, the most prosperous city in the eastern province of Shandong; and Wuhan, capital of the central province of Hu bei, have all been mentioned.

If the government decides to go ahead with the proposal to elevate the status of some cities, only one or two of the candidates may be chosen in the initial stages, officials said.

Beijing's consideration of the plan and the lobbying by individual cities is being conducted in strict secrecy. Officials in each of the candidate cities denied all knowledge of the proposal but none said that their city would not be interested in becoming a zhixiashi.

The main reason for elevating cities to the status of zhixiashi was to streamline an increasingly clogged chain of command between the central government and the provinces. In s everal cases provincial governments follow an agenda that is either separate from that of Beijing, or inimical to Beijing's interests.

"Some of these provincial governments are corrupt from the top to the bottom," said the policy adviser. "They are more like mafias than anything else."

The last of China's four existing zhixiashi - Beijing, Shanghai, Tianjin and Chongqing - was Chong- qing, a city area of more than 30m people in western China.

In the six years since it was approved, the extra freedom bequeathed it has helped Chongqing's economy expand sevenfold, its tax revenue rise 2.9 times, and its fixed asset investment grow three times.

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