What China Can Teach Europe*

Daniel A. Bell
is a professor at Shanghai"s Jiaotong University and Beijing"s Tsinghua University, and co-author of "The Spirit of Cities."

* Publicado no jornal The New York Times, January 8, 2012

FROM the outside, China often appears to be a highly centralized monolith. Unlike Europe"s cities, which have been able to preserve a certain identity and cultural distinctiveness despite the homogenizing forces of globalization, most Chinese cities suffer from a drab uniformity.       

But China is more like Europe than it seems. Indeed, when it comes to economics, China is more a thin political union composed of semiautonomous cities - some with as many inhabitants as a European country - than an all-powerful centralized government that uniformly imposes its will on the whole country.       

And competition among these huge cities is an important reason for China"s economic dynamism. The similar look of China"s megacities masks a rivalry as fierce as that among European countries.       

China"s urban economic boom began in the late 1970s as an experiment with market reforms in China"s coastal cities. Shenzhen, the first "special economic zone," has grown from a small fishing village in 1979 into a booming metropolis of 10 million today. Many other cities, from Guangzhou to Tianjin, soon followed the path of market reforms.       

Today, cities vie ruthlessly for competitive advantage using tax breaks and other incentives that draw foreign and domestic investors. Smaller cities specialize in particular products, while larger ones flaunt their educational capacity and cultural appeal. It has led to the most rapid urban "economic miracle" in history.       

But the "miracle" has had an undesirable side effect: It led to a huge gap between rich and poor, primarily between urban and rural areas. The vast rural population - 54 percent of China"s 1.3 billion people - is equivalent to the whole population of Europe. And most are stuck in destitute conditions. The main reason is the hukou (household registration) system that limits migration into cities, as well as other policies that have long favored urban over rural development.       

More competition among cities is essential to eliminate the income gap. Over the past decade the central government has given leeway to different cities to experiment with alternative methods of addressing the urban-rural wealth gap.       

The most widely discussed experiment is the "Chongqing model," headed by Bo Xilai, a party secretary and rising political star. Chongqing, an enormous municipality with a population of 33 million and a land area the size of Austria, is often called China"s biggest city. But in fact 23 million of its inhabitants are registered as farmers. More than 8 million farmers have already migrated to the municipality"s more urban areas to work, with a million per year expected to migrate there over the next decade. Chongqing has responded by embarking on a huge subsidized housing project, designed to eventually house 30 to 40 percent of the city"s population.       

Chongqing has also improved the lot of farmers by loosening the hukou system. Today, farmers can choose to register as "urban" and receive equal rights to education, health care and pensions after three years, on the condition that they give up the rural registration and the right to use a small plot of land.       

While Chongqing"s model is the most influential, there is an alternative. Chengdu, Sichuan"s largest municipality, with a population of 14 million - half of them rural residents - is less heavy-handed. It is the only city in China to enjoy high economic growth while also reducing the income gap between urban and rural residents over the past decade.       

Chengdu has focused on improving the surrounding countryside, rather than encouraging large-scale migration to the city. The government has shifted 30 percent of its resources to its rural areas and encouraged development zones that allow rural residents to earn higher salaries and to reap the educational, cultural and medical benefits of urban life.

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