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Challenges of Peri-urbanizationin the Lower Yangtze Region:The Case of the Hangzhou-Ningbo Corridor

Douglas Webster

Larissa Muller

May 2002

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The Asia/Pacific Research Center (A/PARC) is an important Stanford venue where facultyand students, visiting scholars, and distinguished business and government leaders meet andexchange views on contemporary Asia and U.S. involvement in the region. A/PARC researchresults in seminars and conferences, published studies, occasional and discussion papers,special reports, and books. A/PARC maintains an active industrial affiliates and trainingprogram, involving more than twenty-five U.S. and Asian companies and public agencies.Members of A/PARC’s faculty have held high-level posts in government and business.Their interdisciplinary expertise generates research of lasting significance on economic,political, technological, strategic, and social issues.

Asia/Pacific Research CenterEncina Hall, Room E301

Stanford UniversityStanford, CA 94306-6055

http://APARC.stanford.edu

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About the Authors

Dr. Douglas Webster, a consulting professor at the Asia/Pacific Research Center, has workedwith the center’s Urban Dynamics of East Asia Project since 1998. Webster has worked onurban and regional development issues in East Asia for twenty-five years, as an advisor tointernational organizations, East Asian governments, and the private sector. He was profes-sor of planning at the University of British Columbia, Asian Institute of Technology, and theUniversity of Calgary, where he directed the planning program. His current interests arecomparative urban dynamics, peri-urbanization, and urban management in East Asia. Pro-fessor Webster is currently senior urban advisor to the Thai Government (NESDB) and is afrequent advisor to the East Asian Urban and Infrastructure Division of the World Bank.Recent publications focus on urbanization dynamics in the context of globalization, local-ization, and decentralization, particularly in Thailand, China, and the Philippines. At Stanford,Webster has taught courses related to comparative East Asian urban dynamics and manag-ing the urban environment in East Asia. His current research focus at A/PARC is compara-tive peri-urbanization in East Asia, particularly China, funded by the Ford Foundation.

Ms. Larissa Muller is a Ph.D. candidate in the Department of City and Regional Planning atthe University of California, Berkeley. Over the last eight years she has consulted to govern-ments, international organizations, and NGOs on urban economic and environmental policyissues in Southeast Asia. Ms. Muller teaches a course on urbanization in developing coun-tries at UC Berkeley. Her research interests include the spatial, economic, environmental,and social implications of urbanization processes in extended metropolitan regions, and thedevelopment dynamics of business service industries in major Southeast Asian cities, thetopic of her dissertation research. Ms. Muller is currently collaborating with the Asia/PacificResearch Center on comparative peri-urbanization research in Thailand, the Philippines,and China.

Acknowledgments

The authors wish to acknowledge a Research Preparation Grant from DECG, the researcharm of the World Bank, which made this work possible. The strong support of ThomasZearley of the World Bank’s East Asian Urban and Infrastructure Division (EASUR) in con-ducting this research is very much appreciated. Comments on an earlier draft by Stanfordcolleagues Thomas Rohlen and James Raphael were most helpful. Particular thanks is ex-tended to research colleagues in the Beijing Geography Institute, in particular Cai Jianming,without whose assistance this monograph would not be possible. Officials of the ZhejiangProvincial Government and the Municipal Governments of Hangzhou and Ningbo providedconsiderable assistance, which is gratefully acknowledged.

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Challenges of Peri-urbanization in the Lower Yangtze Region:The Case of the Hangzhou-Ningbo Corridor

Douglas Webster

Larissa Muller

Introduction

This discussion paper is based on analysis of peri-urbanization dynamics in the Hangzhou-Ningbo Corridor of the Lower Yangtze Region of China. The case-study area is of particularinterest, both because of the scale of the phenomenon in the area and the fact that thecorridor typifies the long-running and dynamic peri-urbanization process occurring in theLower Yangtze Region as a whole, arguably the world’s largest extended urban region (EUR).Analysis focuses on adaptation, successful and otherwise, to the severe stresses, demographic,social, and environmental, accompanying peri-urbanization. Policy implications are thendrawn; anticipated future stresses in the case-study area, and by implication the larger ex-tended urban region, are used to trigger recommendations.

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What Is Peri-Urbanization?

Characteristics of Peri-Urbanization1

The term peri-urbanization refers to a process, often a highly dynamic one, in which ruralareas located on the outskirts of established cities become more urban in character, in physi-cal, economic, and social terms, often in piecemeal fashion. Peri-urban development almostalways involves wrenching social and environmental adjustment, as small agricultural com-munities are forced into an industrial way of life in a very short time. Typically, it is stimu-lated by an infusion of new investment, frequently foreign investment, in industrial develop-ments seeking land that is accessible to efficient export-oriented transportation systems andhigh-level producer and government services but relatively undeveloped. The peri-urban zonebegins beyond the contiguous built-up urban area and can extend as far as 300 kilometers inthe Chinese coastal case. What frequently results is a constantly changing mosaic of bothtraditional and modern land uses.

Key characteristics of the peri-urbanization process in China include:

(i) Changing economic structure, encompassing a shift from an agricultural-based to amanufacturing-dominated economy (often manufacturing accounts for 60–70 percent ofgross regional domestic product (GRDP), or even more, in Chinese peri-urban areas2).

(ii) Changing employment structure, shifting from agriculture to manufacturing, with ag-ricultural employment usually falling in absolute terms, although it may remain a signifi-cant source of employment, accounting for 20 percent or more of the local labor force; atthe same time the value of agricultural output often increases through switches to higher-value crops justified by improved access to affluent nearby markets.

(iii) Rapid population growth (5–8 percent annually, or even higher in key investmentlocalities) and urbanization, a phenomenon often not captured in official data because thepopulations of peri-urban regions tend to be significantly undercounted (in-migrants fre-quently do not, or cannot, officially register their presence). Furthermore, much of theperi-urban area in China is still officially defined as rural, contributing significantly to anundercount of the urban population.

(iv) Changing spatial development patterns and rising land (leasing) costs. Land conver-sion is rampant, with agricultural land and formerly marginal lands, e.g., wetlands, valuedfor industrial and residential use.

Magnitude

Peri-urbanization is a powerful phenomenon. The United Nations estimates (conservatively)that 477 million people will be added to East Asian cities by 2025, of which approximately350 million will be in China (United Nations 2000). Up to 40 percent, or 200 million, of thisincremental growth will occur in transitional zones that can be termed peri-urban. If thisratio holds true for China, approximately 140 million people will be added to Chinese peri-urban areas over the next twenty-five years. The numbers are likely to be even higher if theTenth Five-Year Plan of China (2001–2006) policy to accelerate productive urbanization issuccessfully implemented.3 The policy objective is to raise annual urban population growth

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rates approximately 1 percent over pre-plan (no intervention) forecasts. This could result inannual growth rates in the urban population of close to 4 percent, a rapid rate of long-termurban growth by contemporary East Asian standards. If this rapid rate of urbanization issustained, it will require rapid growth in the manufacturing sector and absorption of unprec-edented numbers of migrants in peri-urban areas, reflected in a substantial building-up ofthe peri-urban interface around virtually all Chinese metropolitan regions. (There are cur-rently at least fifty-six metropolitan areas in China with more than 1 million inhabitants.)Under these conditions, it is possible that China will need to absorb close to 200 millionpeople in peri-urban areas over the next twenty-five years.

What’s at Stake?

How peri-urbanization is managed is of critical importance in terms of national economicdevelopment and the quality of life for hundreds of millions of people in China. DevelopingChinese peri-urban regions in aggregate constitute the emerging manufacturing center of theworld, replacing industrial ancestors such as the Midlands of Britain, the Ruhr region ofGermany, the Great Lakes region of North America, and the Tokyo-Osaka corridor in Ja-pan. As such, Chinese peri-urban regions will be the location for job creation numberingwell in excess of 70 million. They are an integral and critical component of larger metropoli-tan systems, which account for the majority of national domestic product (GDP) in China,as in virtually every East Asian country.

Chinese Peri-Urbanization: The Case of Hangzhou-Ningbo Corridor

Background

The analysis which follows is derived primarily from research in the Hangzhou-Ningbo peri-urbanization corridor, although observations (field analysis) on peri-urbanization in otherextended urban areas including Chengdu, Beijing, the Pearl River Delta region, Shanghai,and Kunming provided context. The Hangzhou-Ningbo Corridor consists of the municipali-ties of Hangzhou, Shaoxing, and Ningbo in Zhejiang Province.4 (See Map 1.) The totalpopulation of the corridor in 1999 was 15.9 million, of which 3.3 million or 21 percent wasurban (cities proper), 7.2 or 45 percent peri-urban (including smaller cities and towns withinperi-urban belts), and 5.4 million or 34 percent rural (China Statistics Press 2000).

Inter-Regional Variation

Just as there is variation in the peri-urbanization process across countries, there is also varia-tion within countries. The fact that a variety of political-economic models of developmentwere overlaid by the national government at different times in different regions is one of thekey factors contributing to significant variation in peri-urbanization processes within Chinaitself.5 For example, the creation of four special economic zones (SEZs) in southern China in

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Map 1. The Study Area: Hangzhou-Ningbo Corridor, Zheijang Province, PRCSource of base map: The Information Office of Zhejiang Provincial People’s Government (2000)

1979–19806 has contributed to a longer history of intensive peri-urbanization in those areas.By 1984 this “open door” model had spread to include fourteen open coastal cities, includ-ing Ningbo, in Zhejiang Province, part of our exploratory case study.

Another factor contributing to inter-regional differentiation in peri-urbanization in Chinais the significant level of decentralization, particularly fiscal but also administrative, whichincreasingly allows for the development of local development styles. China is the most fis-cally decentralized country in East Asia, with over 80 percent of public expenditures beingcontrolled by agencies operating below the national level. The fact that national administra-tive edicts are more guidelines to be interpreted locally than rigid laws accounts for furthervariation in peri-urban processes and outcomes.7

Differences in outcomes are also accounted for by the relative importance of differentdrivers and how these drivers are processed by local institutions. For example, state-ownedenterprises (SOEs) are of relatively limited importance in peri-urbanizing areas of coastal

Hangzhou Economic and Technical

Development Zone

Ningbo Economic and Technical Development Zone

The Location of Zhejiang Province in China

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China but are much more important actors in EURs in the Central, West, and Northeastregions. Local governments in coastal areas seem to have a better understanding of, and aremore supportive of, peri-urbanization; furthermore, local governments in coastal areas seemmore aware of the strategic importance of peri-urbanization than in most other areas ofChina. Accordingly, learning from the coastal areas, both successes and failures, needs to betransferred to peri-urbanizing regions in other parts of China.

Last, but obviously important, geographic factors play an important role in explaining thevariety of peri-urban processes and outcomes. There is considerable variation in the regionaldistribution of factors of production and place endowments across China’s large land mass,e.g., variation in accessibility (particularly between landlocked and coastal provinces), natu-ral resources, topography, geostrategic position, etc. Normally, peri-urban development, es-pecially when it is FDI-driven, tends to be found in the vicinity of large coastal cities, sincethese have access to deep-sea container ports needed by contemporary manufacturers. How-ever, the development of significant manufacturing capacity in interior Chinese EURs, suchas in the Chengdu and Chongquing regions, represents an exception by international stan-dards. The large domestic market in interior China, as well as historical factors, explains thedifference.

The result is the existence of several identifiable variants of the peri-urban process. Forexample, the Pearl River Delta region is closest to the Southeast Asian model of peri-urban-ization,8 with its high dependence on foreign investment.9 The Pearl River Delta model hasbeen driven by Taiwan and Hong Kong investment, interacting with a very flexible approachto industrialization and urbanization on the part of local officials. However, this regioncontinues to lose share in China (especially to the Lower Yangtze Region) in manufacturing,FDI, and exports. A resumption of direct transportation and communication contacts be-tween mainland China and Taiwan would accelerate this relative decline. The Lower YangtzeRegion, of which the Hangzhou-Ningbo Corridor is an important part, is driven by a blendof domestic and foreign direct investment, and as noted above was somewhat of a develop-mental latecomer with (selected) urban areas in the region only being accorded “open door”status after 1984. The Beijing EUR is showing distinct signs of residential and service-sector-led peri-urbanization (suburbanization and “edge city” dynamics). This is surprising to ana-lysts, both in China and elsewhere, because such dynamics are associated with Westernurban regions, not East Asian ones. However, the Beijing extended urban region is gainingdominance as the services and innovation focus of China (relative to the Lower YangtzeRegion)—so it is not overly surprising that service-sector drivers are important even in theperi-urban area. Interior urban regions such as Chengdu, Wuhan, and Chongqing, whichhave exhibited less dynamic peri-urbanization processes to date, are more dependent ondomestic investment and subnational regional markets to drive employment creation in peri-urban areas. Peri-urbanization in the Northeast remains problematic. Of particular concernis whether there will be enough investment to generate healthy peri-urbanization that mightspatially leapfrog over “rust belt” cores that have emerged in some EURs in that region,generating a “doughnut” type urban form (the Detroit model: stronger on the edge, weak inthe center).

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Dynamics of Chinese Peri-Urbanization

Peripheral urban development in China is employment-led unlike peripheral urban develop-ment in Western countries which was mostly led (especially before 1980) by residentialdevelopment; that is, suburbanization (suburbs populated by households seeking more space—and less pollution and more “natural” amenity—for less money, who commuted to the citycore daily). With the exception of the Pearl River Delta region, which has attracted vastnumbers of migrants to new factories since the early 1980s, most jobs created in peri-urbanareas in China are filled by local people; that is, by in situ labor. However, as qualified laborbecomes scarcer, especially in the study area and other coastal regions, inter-provincial mi-gration is becoming more important in filling peri-urban jobs.10 “Push” factors are alsoobviously at play, as rural-urban income disparities continue to rise and the “floating popu-lation” numbering 80 million or more continues to grow. In this sense, Chinese peri-urban-ization labor dynamics are becoming more similar to those in Southeast Asia. There, largenumbers of workers migrate to peri-urban areas from poor regions such as from Thailand’sNortheast region to the Eastern Seaboard industrial region or from east Java to the extendedJakarta region (JABOTABEK). As Chinese peri-urbanization demographics more closely re-semble those of Southeast Asia, the question is whether manifestations of these dynamicsseen in Southeast Asia, such as large slum communities, will arise in China.

To the extent that there is a bottom line in terms of spatial dynamics within peri-urbanareas in China, it is that inward (centripetal) forces appear stronger than outward (centrifu-gal) ones. This dynamic, which has been noticeable (and generally officially supported) sincethe early 1990s, appears to be gaining momentum. Peri-urban localities characterized byhigh investment and population growth, and the highest levels of land-use conversions, aremoving closer to urban cores than was previously the case. In effect, “the action” appears tobe geographically moving inwards, closer to core cities. This is in contrast to peri-urbaniza-tion processes in most other parts of East Asia.

The explanation for this unexpected dynamic lies in past industrial location behavior andpolicies, particularly prior to 1980, that encouraged rural industrialization. The result wasthe formation of peri-urban belts over very wide areas, sometimes stretching 300 kilometersor more out of, and between, major urban cores. In certain regions, particularly in the CoastalRegion, sometimes referred to as the Gold Coast (stretching from Shanghai to Guangdong),these peri-urban belts joined and overlapped, creating multi-province region-scale peri-ur-banization. However, present policies, which are more market-based and efficiency-oriented,are unleashing forces that will increasingly result in the most dynamic peri-urban zonesbeing more concentrated and closer to urban cores. Essentially, what were relatively homog-enous peri-urban belts that started almost immediately at the edge of the built-up core areas(in most cases cities proper approximate city cores) are becoming much more differentiated.Figure 1 graphically outlines key forces in play. These forces are described below.

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Figure 1. Peri-urban Employment Drivers in China

Relocation of Urban Factories and Public Institutions

One such driver is the relocation of manufacturing enterprises as well as many public insti-tutions such as universities, hospitals, high schools, and local government administrativebuildings (city halls) to peripheral areas. This is a one-off effect; there are only so manyunwanted activities in urban cores that can be relocated to the periphery. Importantly, suchrelocations are usually not to distant peri-urban locations, but within ten to twenty kilome-ters of the edge of the built-up area. Sometimes such relocated facilities are geographicallyclustered to foster economic development through agglomeration effects; e.g., universitiesare often relocated within economic and technological development zones (ETDZs). How-ever, the objective of the authorities seems to be more to achieve physical agglomerationthan to create innovative clusters/networks; e.g., linking an industrial design function in arelocated art college to multinational firms producing consumer products requiring gooddesign.

Former TVE Restructuring: Winnowing and Clustering

At the same time, some former township and village enterprises (TVEs), now restructured asprivate corporations, equity-based enterprises, etc., are moving closer to cities. (Often mis-understood, TVEs at their peak in the 1980s were to a large extent a peri-urban phenom-enon, albeit in outer peri-urban areas, more than a manifestation of remote, rural industrial-ization.) In part this is a Darwinian process whereby existing and former TVEs closer to

CORE CITY

Agriculture

Dynamic

Port

IndustrialRelocation

? Services? High end

resources EmergingRust Belts

50 km

Flagship Hi-Tech(National & Provincial)

Flagship Industrial Estates(National & Provincial)

CountyIndustrial Estate

TownshipIndustrial Estate

StagnantStranded?

clusters FormerTVE-dominatedLandscape

INNERPERIURBAN

OUTER PERIURBAN

CORRIDOR

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cities have been more likely to survive, and frequently have grown faster, than more remoteTVEs. Current trends also reflect a physical movement of such enterprises into county andtownship industrial estates, particularly to those within 50 kilometers of the edges of citiesproper. Generally speaking, small and medium-sized enterprises (SMEs) are not forced tomove by local government officials from freestanding sites into industrial estates, despiteenvironmental and transportation problems associated with the legacy of geographicallyscattered industrialization in peri-urban areas. (It is rare that local people will force theshutdown of a TVE. To them it represents an important source of local employment.) Oftenthe shift into a county or township estate occurs when an SME finds it necessary to shiftlocation for other reasons, for example to access more labor or because of a threatenedshutdown for environmental violations by provincial or national authorities.

Creation of Flagship Industrial Estates

A third spatial dynamic is the creation of national or provincial level “flagship” ETDZsoutside large cities. Because municipalities are usually the developers of such entities, thesezones are normally located quite close to the city proper, usually less than 30 kilometersaway from the edge of the city core. Often these flagship developments are not locatedwithin the contiguous city proper, although land in surrounding counties may have beenannexed to include them. In some cases although officially within the city proper they arelocated on land noncontiguous to the core city proper, as in Ningbo where the port-anchoredBeilun ETDZ is over 30 kilometers from the city core. In effect, the geographical jurisdictionof the city proper leapfrogs. In Zhejiang Province there are eight national-level developmentzones.

Spontaneous Residential Development

A fourth key factor influencing coastal peri-urbanization, very pronounced in the study re-gion, is that existing rural populations are increasingly building up peri-urban areas withhousing units (“villas”) to take advantage of economic opportunities and to protect theirrights (exercised through the village collective) to peri-urban (legally rural) land. Often thesevillas are three to five stories tall and involve significant private capital investment. Thisresidential buildup appears to be occurring more rapidly and extensively in inner peri-urbanareas than in outer areas, despite high population densities in many outer peri-urban areas.This difference in the extent (and affluence of individual units) of new residential construc-tion between inner and outer peri-urban areas may be the result of greater accumulatedprivate capital close to cities. Or, it may in part reflect greater opportunities to lease, rent outproperties, etc., taking advantage of multiplier effects set off by the previously discussedpropulsive inner peri-urban economic development.

Given these dynamics, certain policy-related questions surface:

(i) To what extent will outer peri-urban areas in China stagnate, or even become “stranded”?

(ii) Will population soon (within the decade) peak in these outer peri-urban areas, as itcertainly will in most true rural areas in China?

(iii) To what extent will suburbanization, i.e., residential-led peripheral development, be-come a prime shaper of peri-urban development in China over the next two decades?11

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(iv) Will service activity become a prime driver of peri-urbanization around Chinese cities,creating “edge cities” led by service employment, as in the United States? As noted, to asignificant extent this is already occurring in peri-urban Beijing, where service activity isalready more important than manufacturing in driving development. This dynamic is alsoemerging to a lesser extent in peri-urban Shanghai.

(v) Will inner peri-urban areas be able to cope with the dynamic growth that is occurringand expected to accelerate over the decade? Of special concern are social services, such ashousing and local services (particularly for the poor and migrants), environmental stresses,and the challenges associated with shaping physical form/transportation.

Key Peri-urban Elements/Drivers

Bottom-Up Development

Bottom-up development processes, rooted in China’s many dispersed TVEs and agriculturalservice settlements, drove peri-urban development over extensive areas outside large Chi-nese cities, before flagship developments and relocation of industry from urban cores addedinside-out drivers to the peri-urban mix beginning in the early 1980s. Intensive agriculture(usually rice) and rural enterprises (primarily TVEs, the latter employing over 80 millionpeople at their peak around 1990) supported essentially urban population densities (densi-ties considerably higher than North American suburbia) over very large geographic areasaround major cities. The rise of TVEs that were dominantly located in peri-urban areas (notrural) was essentially spontaneous, rather than planned by the central government. How-ever, many, if not most, of these scattered rural enterprises that drove peri-urban economiesproved to be financially viable only under conditions prevailing in a scarcity economy. Thusthe last decade, during which the scarcity economy disappeared in China, has not been kindto many if not most former TVEs.12

The legacy of the bottom-up, highly dispersed peri-urban landscape that resulted from thedynamics described above is reflected in the contemporary economic landscape. For ex-ample, in the three municipalities that constitute the study area, the structure of rural andperi-urban economies is similar whereas the urban economies (cities proper) in these juris-dictions are distinct (compared with the peri-urban and rural areas). The cities proper dis-play significantly higher levels of tertiary activity and lower levels of secondary activity. 13

What is particularly surprising is the high level of secondary activity in rural areas, approxi-mately equal to (or even exceeding, in the case of Ningbo) the level of secondary activity inperi-urban areas (as a percentage of GRP in the settlement class in question). (See Table 1.)For example, 55.2 percent of GRP in rural Hangzhou Municipality is accounted for bysecondary activity, compared with a very similar figure of 57.3 percent in peri-urbanHangzhou. A similar pattern is observed in Ningbo Municipality, where the correspondingfigures are 61 percent and 60.3 percent, and in Shaoxing Municipality, where the respectivefigures are 63.7 percent and 63.2 percent. In other words, what is termed rural in Table 1 isto a significant extent peri-urban if measured in terms of population density and level ofindustrialization. If the contributions of primary and tertiary activity to GRP are compared,however, there is a noticeable distinction between peri-urban and rural areas. For example,in Hangzhou’s peri-urban areas, tertiary activity accounts for 31.2 percent of output com-pared with 11.6 percent in primary activity, while tertiary activity in rural areas of Hangzhouaccounts for only 28 percent of output with primary activity accounting for a significantly

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higher 16.8 percent. As indicated by Table 1, this pattern is even more pronounced in Ningboand Shaoxing municipalities. In other words, it is the level of tertiary and primary activitiesthat differentiates rural from peri-urban areas in coastal China, not the level of secondaryactivity.

Table 1. Economic Structure in Hangzhou-Ningbo Corridor (1999)

Based on data from Zhejiang Statistical Yearbook 2000

Urban areas (cities proper) are more distinct; that is, a more easily identified settlementcategory, being more specialized in tertiary activity. For example, in Hangzhou and Shaoxingcities, tertiary activity accounts for 51 percent of output; the figure for Ningbo city is 48.3percent. However, as Webster (2000) has argued previously, Chinese core cities are function-ally less differentiated from their peri-urban areas than in Southeast Asia or North America—secondary activity still accounts for 48.4 percent of output in Ningbo city, 14 46.3 percent inHangzhou city, and 45.3 percent in Shaoxing city.

What does this mean? China, at least its coastal areas, has rather dense core cities, some-what specialized in tertiary activity. These urban cores are surrounded by extensive peri-urban areas, starting at the edge of the core city, exhibiting urban-level population densitiesbut clearly different from the core cities in terms of physical form and function. However,distinguishing these extensive peri-urban areas from rural areas is much more difficult. Inpart this is because rural areas are less rural, in economic terms, in China than in most placesin the world, because of the legacy of rural industrialization. In part this pattern is also thelegacy of the hukou system,15 which has contributed to the distinctiveness of core cities whileat the same time encouraging industrialization in, and migration to, peri-urban areas.

In some places, former TVEs have been closed for environmental reasons;16 many othersare succumbing to market pressures. As noted, some of the more successful restructuredTVEs are moving to industrial estates, often nearer large cities. Because land-lease prices arehigher closer to the city, such moves require a certain economic adroitness to survive. (Thecost of such a move is exacerbated by the fact that the land on which a former TVE is locatedwould almost always have been obtained free, given that the local government was the initial

Primary Secondary TertiaryMunicipality (%) (%) (%)

HangzhouUrban 2.4 46.3 51.3Peri-Urban 11.6 57.3 31.2Rural 16.8 55.2 28.0ShaoxingUrban 3.6 45.3 51.1Peri-Urban 10.8 63.2 26.5Rural 14.4 63.7 21.9NingboUrban 3.3 48.4 48.3Peri-Urban 11.2 60.3 28.5Rural 15.3 61.0 23.7

Share of Total GRDP

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promoter of the enterprise.) On the other hand, urban SOEs moving to peri-urban areasexperience the opposite effect. They receive a windfall in that land leases in inner peri-urbanareas are still considerably less there than in the core city (although land-value gradients arenot as steep as in most Western EURs).

However, there is another side to the coin. Many former TVEs, restructured as private orcorporately owned SMEs, are very successful, even in more remote peri-urban areas. (In thecase-study area, former TVEs that now employ three thousand or more employees and suc-cessfully compete in the Chinese and international markets are not unusual, for example theYoungor group based in Ningbo Municipality, the largest shirt and suit maker in China.)Thus to a considerable extent it is too early to judge the economic future of outer peri-urbanareas in coastal China. Although many former TVEs cannot compete, the real question iswhat will the net effect be in terms of employment (quantity and quality) and value added?Will the winners at least compensate for the losers who cannot compete in a surplus economyand/or who generated too many negative externalities through environmental pollution tobe tolerated?

Table 2 describes output relative to population in the study area by settlement type. Whatit implies is that although rural areas are highly industrialized, their output per capita ismuch lower than that of core cities, and somewhat lower than peri-urban areas. For ex-ample, in Hangzhou Municipality output per head is about 2.8 times higher in urban areasthan in rural areas and 2.1 times higher in urban areas than in peri-urban areas. Comparabledata for Ningbo Municipality indicates that output is 2.1 times higher in urban areas than inperi-urban areas, and 2.4 times higher than in rural areas. This implies that peri-urban areas,especially outer peri-urban areas where the boundary with rural settlement is difficult todefine, are much less productive than the urban cores.17 This does not bode well for thefuture of outer peri-urban areas. If the Hangzhou-Ningbo case study is any indication, itappears that the vaunted dynamism of China’s peri-urban areas may increasingly refer to arelatively thin belt around the built-up areas.

Share of Total Output (ratio)

Share of Population

Output: Population

Municipality (%) (%)

HangzhouUrban 49.4 28.5 1.7Peri-Urban 33.0 41.3 0.8Rural 17.6 30.2 0.6ShaoxingUrban 31.1 32.3 1.0Peri-Urban 48.3 40.5 1.2Rural 20.6 27.1 0.8NingboUrban 39.0 22.7 1.7Peri-Urban 28.8 34.2 0.8Rural 32.2 43.1 0.7

Source: Based on data from Zhejiang Statistical Yearbook 2000

Table 2. Output to Population by Settlement Type (1999)

Based on data from Zhejiang Statistical Yearbook 2000

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Clusters

Of particular interest to both international and Chinese analysts is the emergence of eco-nomic clusters in peri-urban areas. These clusters often account for a high percentage ofChinese, and sometimes global, output of the product in question. In the study area, suchclusters are numerous, and many are located in outer peri-urban areas. Important clustersproduce ballpoint pens, optic cables, eiderdown quilts, shirts, ties, men’s suits, etc. In thecase of the eiderdown cluster in Xiaoshan (Hangzhou Municipality), it accounts for 85percent of global production. If higher-value production can be achieved, through develop-ment of supportive institutions such as technical schools, research institutes, and standardsinstitutions, and these clusters access improved technologies, they could be very importantin providing more remote peri-urban locations with a stronger economic base. Often activityundertaken in clusters is more labor intensive than activity in high-level ETDZs (see below).Furthermore, clusters, because of the number of firms involved (often several hundred ormore), are not as geographically mobile (at least over long distances) as freestanding enter-prises; i.e., they are more embedded. As such, they could serve as anchors and propellants ofperi-urban economies, especially in more remote areas, if such clusters can move to higher-value activity. Although clusters usually developed spontaneously through market forces,they are increasingly moving to industrial estates, usually developed by low-level govern-ments; e.g., townships. Often these township-level industrial estates are “theme” or clusteroriented, i.e., they support only one type of activity, e.g., the eiderdown industrial estate inXiaoshan.

Flagship Developments

As noted above, high-profile flagship developments (ETDZs) are a key driver of inside-outperi-urbanization in China. Usually the developer is the municipality itself. In the study area,the Ningbo ETDZ at Beilun port is a key example of this type of development, while theHangzhou ETDZ to the east of core Hangzhou is another. These zones can account for overa hundred thousand jobs (or more) at each location, as is the case at Beilun. Generallyspeaking, the types of industries locating in these high-level zones tend to repeat from onezone to the next. For example in the Hangzhou ETDZ major industrial groups include chemi-cals, pharmaceuticals, textiles, electronics, consumer appliances, industrial machinery, andfood and beverages, a familiar mix throughout China. The set of activities found in hi-tech-oriented zones also tends to replicate; e.g., electronics and computers, biotechnology, com-munications, and new materials. Multinational firms dominate, although leading Chinesefirms are also present in both the industrial and hi-tech-oriented zones. A major exception,but noticeably outside the Lower Yangtze Region, is the software-Internet cluster that isspontaneously evolving in northwest Beijing, around the two leading universities locatedthere.

Based on interviews with officials at several such industrial and hi-tech zones, develop-mental success is measured more in terms of contribution to GRP, the value of investment,and the technological sophistication of the firms in question rather than in terms of employ-ment creation and supply-chain development.18 This is somewhat surprising given that de-velopment of supply chains creates opportunities for technology transfer, development oflocal entrepreneurship, and employment generation. Furthermore, it is surprising that em-ployment generation is not pursued and monitored more directly given the need to absorbclose to 350–400 million people in China’s EURs over the next twenty-five years.19

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Emerging Outcomes: Impacts and Adaptation

Environment and Transportation

The leading environmental issue in Ningbo Municipality’s peri-urban area, and true of thestudy area as a whole, is untreated wastewater, generated by enterprises within the peri-urban area itself.20,21 As indicated by Table 3, although peri-urban areas account for 46 per-cent of industrial wastewater discharge in the Ningbo EUR (city proper plus peri-urban),only 36 percent of this wastewater is treated up to standard in the peri-urban area comparedwith 57 percent in the city proper. The solid-waste issue is different in that 83 percent ofsolid waste generated in the Ningbo EUR is from the city proper. However, solid wastebecomes a peri-urban problem in that much of the solid waste being generated in citiesproper is being improperly disposed of in the peri-urban areas. The third-priority environ-mental problem, and the one of highest concern to officials, is the loss of agricultural land tourban and industrial land uses. Although estimates of land loss vary widely, it is clearly ofmajor proportions.22,23 The land-loss issue focuses not just on the quantity of land being lost,but the spatial pattern of land loss—the ribbon pattern, discussed earlier, breaks up farmfields. Furthermore, much of the land loss occurs in the most fertile areas; farmers build onthis land for reasons explained earlier. In quantitative terms, land loss is relatively low whenrelated to urban demographic growth. In the study region, land in urban use grows by 1.45percent for every 1 percent increase in the urban and peri-urban population of the corridor(a ratio of 1.45 : 1).24 This is relatively low by international standards, especially when com-pared with many Western countries; however, China’s context, especially in the coastal areas(the population : high capability agricultural land ratio), makes land loss to peri-urbaniza-tion a serious issue.25

(10,000 tons)

Industrial Wastewater City Proper Peri-Urban

Discharge 5868 4943as share of total municipal discharge (%) 54% 46%

Up to Standard 3341 1757as share of discharge (%) 57% 36%

Source of data: Ningbo Statistical Yearbook 1999

Table 3. Industrial Wastewater Discharge and Treatment in Ningbo Extended Urban Region(1998)

Source of data: Ningbo Statistical Yearbook 1999

Transportation congestion is not yet a problem in most peri-urban areas in China and isnot a problem in the case-study area. However, it is difficult for most individuals to easilymove within peri-urban areas and to core cities from peri-urban areas, generating inefficien-cies and human costs. This situation is the result of underdeveloped public bus systems (only10–15 percent of person trips in cities proper in China are made by public bus, and thepercentage is much lower in peri-urban areas), scarcity of private vehicles, and relativelyunderdeveloped informal transportation systems.

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Adding to the inefficiencies is the poor fit between housing and retail and personal-servicefacilities. Retail and personal services are significantly underrepresented in peri-urban areasof China compared with analogous areas in Southeast Asia. Relatively low incomes and highhousehold savings rates (about 30 percent nationally) partially account for this situation.However, many trips are made to the core cities by peri-urban residents for relatively low-level shopping services. This is particularly true in and around the very large scale flagshipdevelopments. Until recently, official China has not regarded urban consumer services as ahigh priority (in contrast with physical production), which may partially account for thissituation. Even more important, it appears that local government officials are wary of prolif-eration of informal retailing/service areas, and the slums that might accompany the develop-ment of service activities, particularly informal, in peri-urban areas.26

The foregoing factors, when combined with land-use patterns that make bicycling andwalking difficult, result in peri-urban populations being relatively isolated on a day-to-daybasis. Of note is the fact that excellent freeway systems emanating from most large cities inChina have very much affected peri-urban accessibility contours over the last ten years,making some areas much more accessible in absolute terms and others much less accessiblein relative terms. (Prior to 1990, most peri-urban areas were connected to urban cores bypoor two-lane roads, but accessibility was roughly equal in most directions, and more or lessrelated to distance from the urban core. Now, the principal factor affecting accessibility tothe core city [and regional-scale travel] is distance to the nearest freeway entrance.) Thisfactor will continue to increasingly affect peri-urban settlement patterns, concentrating growthalong corridors and contributing to sub-area stagnation effects discussed earlier.

The impact of the doubling in the number of private vehicles in China over the next fiveyears on peri-urban areas is unclear. One outcome may be that most vehicles will be ownedin the cities proper and inner peri-urban areas, essentially stranding more remote peri-urbanareas. An alternative scenario is that motorization will increase connectivity between outerperi-urban areas and city cores, reducing the threat of stagnation in these areas.

Adaptation

In most peri-urban areas in developing East Asia, e.g., Thailand, Indonesia, and the Philip-pines, the capability of local governments to cope with the peri-urbanization process is lim-ited, making adaptation by households, the private sector, and voluntary organizations veryimportant in maintaining the viability of these areas. In China, the situation is different.First, government agencies, particularly local governments such as municipalities, as noted,are generally the developers of ETDZs, trunk infrastructure, social facilities, etc. Thus thepotential for conflict between local governments and project proponents is essentially elimi-nated—they are one and the same. Second, voluntary organizations are not well developedin China and have a limited presence in peri-urban areas. However, of considerable interestof late has been the rise of voluntary organizations in EURs, including peri-urban areas,offering social services, particularly elementary education to children whose parents wouldnot be able to afford it otherwise because of hukou restrictions. However, as the hukousystem is dismantled the motivation underlying formation and activities of such voluntaryservice-delivery groups may diminish.

As in the Thai and Philippines cases, major businesses, particularly multinational corpora-tions (MNCs), adapt to deliver certain public services, especially in cases where there isperceived to be a gap caused by shortcomings of local government. This is less so in Chinabecause of the greater role of government, but still occurs. For example, major firms in

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industrial estates near Hangzhou and Ningbo run shuttle buses to and from the city core tocompensate for inadequate public transportation. And, companies may donate certain ser-vices; for example, recreational facilities are donated by multinational computer manufac-turers in the case of the Hangzhou ETDZ.

Perhaps the most interesting private-sector adaptation has been the rise of private employ-ment agencies that match workers to firms for a small fee—to both the job seeker and thefirm.27 If the individual does not successfully obtain a job through the service, s/he paysnothing. As migrants from outside the province constitute a larger percentage of the laborforce in peri-urban areas of Zhejiang (and elsewhere in dynamic areas of China), such ser-vices are likely to become even more widespread.

The greatest adaptation is demonstrated by local residents (longtime residents of localvillages or collectives) who have land rights in dynamic peri-urban areas. They frequentlybuild houses (villas), then lease them out or rent rooms to boarders. In some cases, they startup commercial activities (or rent space to entrepreneurs who do so) in their residences, e.g.,small grocery stores or beauty parlors, to serve nearby industrial workers.

Less adaptation is shown in terms of hawkers and informal transportation, e.g., motor-ized tricycles, than in Southeast Asia. However, some locals and in-migrants are engaged inthese pursuits. Such activity is constrained by the fact that within official development zones,the informal economy is controlled and market spaces are limited.

Peri-urban Governance

The governance structure guiding peri-urbanization in China is, in principle, much moreappropriate than in most areas of the world where peri-urbanization is significantly underway, especially when compared with Southeast Asia. First, municipalities in China are largeenough in size to incorporate extensive hinterlands of cities; i.e., they incorporate peri-urbanand rural areas as well as the city core (city proper). Thus municipalities have the potentialto plan and manage urbanization on a regional scale.

Second, annexation (of surrounding territory by cities proper) is actually occurring inChina—a process that is politically impossible in most parts of the world—resulting in cityjurisdictions that align with, or even overbound, the built-up area. For example, Hangzhourecently (March 2001) annexed neighboring Xiaoshan and Yuhang (city-level) counties. Othercities such as Beijing and Ningbo have also accomplished significant annexations to create“unicities.” Such annexation does have a potential downside. If the most economically dy-namic areas are annexed by a city, the downsized surrounding county, assuming the wholecounty is not annexed, may lose much of its revenue resource base and thus be in a worseposition to tackle its problems.

The fact that political jurisdictions are nested hierarchically creates significant advan-tages, at least in principle, in managing peri-urbanization. Smaller units (townships) reportto the county, which in turn reports to the municipality, which is under the province. This isunlike places such as Thailand where rural jurisdictions (tambons) in peri-urban zones re-port directly to the provincial and national governments, giving the core urban area nolevers to coordinate and integrate peri-urban–core city development. Last, the trend towardreduced power of townships is probably positive, making regional-scale coordination ofdevelopment more possible by reducing the number of strong local government players.28

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But in practice there are problems. First, vertical allocation of functions among levels ofgovernment is informal at best. Significant overlap in official functions means that power isoften grabbed by the level of government with the most fiscal and/or economic power, basedon economic dynamism, size of population, or the charisma of local leaders. Often inter-local government rivalries exist, for example between counties, to attract and retain majordevelopment projects in their jurisdiction. The fact that the relatively low-level counties havesignificant revenue generation capabilities, resulting in strong fiscal positions, further com-plicates coordination. Often, because of their relative autonomy, counties act aggressively torealize local advantage that may not be consistent with overall regional welfare. The out-come of insufficient inter-jurisdictional coordination among local governments (includingprovinces) frequently is duplication of economic functions as described earlier, e.g., severalhi-tech zones within one province trying to attract the same set of activities, rather thandevelopment of specialized technological clusters in different EURs. Such duplication dilutesresources and reduces cluster dynamism, effectively weakening regional and national econo-mies.

Policy Implications

More applied research and policy assessment on peri-urbanization in China is needed; prior-ity areas for future policy attention include:

Land Rights

Land rights need to be better codified. If expropriation occurs, equitable and consistentcompensation processes need to be in place for the former farmers. At present, there isconsiderable variance, even within a given peri-urban region, in treatment of rural landrights based on location, and the level and status of the project proponent. For example, itappears that farmers are better compensated when their land is needed for national-scaleindustrial developments (ETDZs) than township-scale. Also, farmers near large cities tendto have acquired (or taken) more land rights.

Land readjustment approaches, a technique used widely in Japan, could prove useful indealing with this challenge. Former farmers (the policy objective is that less than 20 percentof the labor force should be engaged in agriculture in peri-urban areas in the Hangzhou-Ningbo corridor29) could be given land/housing (or compensation money to build or buy ahousing unit) in nearby settlements. This would be a fair solution that would minimize lossof agricultural land, improve agricultural productivity, support a more efficient land use/transportation pattern, and contribute to household security of those affected. One risk isthat it is easy for displaced farmers to lose (through reckless spending or bad investments)compensation money received through a land readjustment process, even when commensu-rate with market value; thus direct provision of comparable housing may be preferable.

Displaced farmers are often the most vulnerable in society because of their education andage, and accordingly the most insecure in terms of future employment opportunities. Thus itis important that they retain the security formerly associated with guaranteed land tenure,even if in a different form. Furthermore, such a process might reduce resentment toward in-migrants to peri-urban areas (who often are better educated than the displaced farmers),

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who constitute an increasing percentage of the nonagricultural labor force in most peri-urban areas. If not handled well, resentful local former farmers could be a major source ofconflict. Such conflicts are becoming more common in China and have been widespread inperi-urban areas in developing East Asia and elsewhere.

Land Use

Land-use conversion in peri-urban areas needs to be monitored by regional authorities (atthe provincial level) much more closely utilizing up-to-date techniques, including remotesensing imagery, e.g., LANDSAT, GIS systems, cadastral surveys, etc. Measurement of landconversion needs to be based on a consistent national system, appropriate to peri-urbaniza-tion dynamics.30

Regional Development Planning

Regional development planning is currently not undertaken in China at the EUR scale. Peri-urban areas constitute the majority of territory within EURs; however, there is no overalldevelopmental planning process in place that links the functions of peri-urban areas to corecities and rural areas. The regional development planning function should be undertaken atthe provincial and supra-provincial levels. Large-scale regional urbanization, such as in theLower Yangtze Region, with a population of approximately 80 million people, requires suchcoordination to ensure efficiency and positive environmental outcomes and to avoid un-healthy competition among lower-level local governments. Higher-order planning guidanceat the provincial and supra-provincial level is needed to coordinate and arrange financingand management of major regional infrastructure, e.g., transportation systems, solid- andtoxic-waste facilities. Also, at the regional level, there is a need for a planning body to playreferee and mediation functions to improve, and create incentives for, inter-jurisdictionalcoordination among lower-level governments, hopefully reducing wasteful competition andresulting duplication. Regional development planning, through regional-scale structural plan-ning, could provide macro spatial frameworks for local governments to more effectivelyguide land use.

Industrial Estates

The present policy of strongly encouraging firms to locate in industrial estates should bereinforced for environmental and regional settlement form/transportation reasons. Environ-mental performance of firms located in industrial estates is much higher than that of free-standing firms; this is particularly the case in terms of higher level, i.e., national, provincial,and municipal level, estates.31 Furthermore, the clustering of firms contributes to a moreefficient peri-urban built form, reducing energy costs and travel time.

Urban Form

As indicated by Figure 2a, peri-urban development drivers, particularly the inside-out forcesdescribed in this paper, may generate concentric patterns of land use around city cores. Thiscould result in future suburbanites having to travel long distances through industrial land-scapes to access the core city. Furthermore, it is not an efficient pattern from the point ofview of transportation efficiency. Figure 2b indicates that sectorally oriented development

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would be more effective, enabling development of transit corridors, amenity/residential sec-tors, industrial corridors leading to ports, green wedges (as opposed to belts), etc. Figure 3indicates the effectiveness of corridor-necklace type development in terms of achieving ob-jectives related to public transit, environmental sustainability (particularly minimizing agri-cultural land loss), and energy efficiency, a form of development consistent with the sectorallyoriented pattern suggested in Figure 2b.

In shaping land use, the use of growth boundaries needs to be carefully considered. En-forcing planned distinctions between built-up and non-built-up land through use of growthboundaries is key to effectively shaping peri-urban areas. Growth boundaries have workedin many parts of the world, using a variety of approaches to implementation and enforce-ment. China, like the Philippines, Canada (British Columbia province), and many othercountries, has already designated agricultural reserves. These could serve as the basis of agrowth boundaries policy. It is important that only high-capability agricultural land be pre-served, otherwise shortages of urban land will push up housing prices, hurting the poor. Inother words, environmental and social objectives have to be carefully balanced.

A major issue in China today, especially from the perspective of national, provincial, andmunicipal authorities, is that past “bottom up” non-agricultural enterprise, preexisting highpopulation densities, and the increased levels of economic well-being that these enterpriseshelped to support have created unwanted outcomes in peri-urban areas. As has been noted,these unwanted outcomes extend over large areas, 300 kilometers or more in many casesfrom major centers. These unwanted outcomes include ribbon development along roads andcanals (clearly visible utilizing aerial photographs and satellite imagery), excessive fragmen-tation and loss of farmland, inefficient settlement patterns from transportation and energyperspectives, and loss of traditional townscapes and landscapes.

The scattered pattern of employment has made it difficult to develop public transporta-tion systems to serve peri-urban areas—meaning that China’s peri-urban areas could berelatively high-energy-consuming environments as motorization accelerates. (It also meansthat SMEs can relatively quickly outgrow local labor markets, forcing them to move toindustrial estates closer to core cities as described.) The fact that most of these former TVEswere not in industrial estates means that they largely escaped environmental regulation en-forcement. Environmental degradation resulting from scattered SMEs in Chinese peri-urbanareas has been well documented; the case-study area is no exception.

The peri-urban landscape that has evolved around major cities is almost the opposite ofthe traditional clustered village settlement pattern that previously was the norm in the studyarea. Rural enterprises are scattered while individuals have built villas virtually continuouslylinearly along roads and canals so that few extensive greenfields exist. For example, in trav-eling from Hangzhou to Shanghai by road or rail it is readily observable that there are veryfew sizeable land plots not broken by housing or enterprises.

Current land-use patterns in Chinese peri-urban areas are not conducive to efficient move-ment of people and goods and are likely to impose increasing costs in terms of congestion,environmental quality, human time, and economic efficiency in the future. To the extent thatsettlement (both residential and employment-led) can be clustered along transportation cor-ridors (so-called necklace urban form; see Figure 3) that offer highway, rail, and telecommu-nications options, the efficiency of peri-urban areas can be significantly increased.

Service activity, e.g., retailing and personal services, as well as lower-level business servicesshould be encouraged in peri-urban areas. This means that more space needs to be allocatedfor such uses, especially because of the large potential for employment creation. Also, creat-

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ServiceCore

Manufacturing

Hi-Tech, High Value

Suburbia

Scattered “Villas”

EmploymentClusters

EconomicallyStagnant but

High PopulationDensity:

STRANDED?

Manufacturing(TraditionalClusters)

Greenbelt

Hi-TechResidential

Manufacturing(FDI)

Residential

High-ValueAgriculture

Port

ServiceCore

Transit Corridor

Amenity

A) Emerging Pattern? To Be Avoided

B) Corridor Pattern: Preferred

Figure 2. Extended Urban Spatial Patterns

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Figure 3. Necklace Development: Transit and Environment FriendlySource: Newman, Peter, Jeff Kenworthy, and Peter Vintila, in “Housing, Transport and Urban Form,” Institutefor Science and Technology Policy, Murdoch University, Australia, 1992

ing a better geographic fit between residences and services could substantially reduce thenumber of trips from peri-urban areas to the core cities for basic shopping and personalservices, thereby reducing pressures on transportation systems.

Infrastructure

Decisions regarding the types of infrastructure to be deployed in peri-urban areas are oftenmore difficult than in core urban areas, largely because densities are lower in peri-urbanareas, making the unit costs of much urban civil infrastructure, e.g., sewer systems, uneco-nomic in many cases. At the same time, population densities are high enough to requiresystemic approaches. Thus innovative approaches based on careful technology assessmentare needed. For example, transportation/utility corridors should be developed that can beexpanded and upgraded to meet growth either within the area or further out from the corecity. Busways that can be upgraded to a light rail transit system, such as are being imple-mented in the Cavite-Laguna peri-urban area in the Philippines, are an example of upgradeableinfrastructure, a concept often useful in peri-urban areas.

If land use is shaped as advocated above, it will be possible to offer alternatives to privatevehicles for movement within peri-urban corridors.

Land Leasing

The fact that the state owns all land in China could be an asset in peri-urban areas if landleases were allocated to proactively shape urban form as in Hong Kong (Yeh 1994). That is,land could be released in specific amounts, for specific uses, in specific places, at specifictimes, depending on market conditions, the need for catalytic types of development, localdevelopment priorities, etc.

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Employment Monitoring/Poverty Prevention

Employment monitoring systems need to be put in place in peri-urban areas. How many jobsare being located in specific industrial estates, SME clusters, etc., is an important questiongiven the number of people who will be seeking employment in China’s peri-urban areas.This monitoring should extend to supply chains (linkage effects) and multiplier effects in-duced through consumer spending. Such monitoring would facilitate better understandingof the dynamics of employment systems in peri-urban areas. And, as has been argued, peri-urban areas will be at the front line in terms of employment absorption as China’s extendedurban regions absorb 350–400 million more people over the next twenty-five years.

Peri-urban areas are very important as poverty prevention mechanisms, more than anyother settlement type in China. This is so because manufacturing employment is more acces-sible to those with moderate levels of education, as opposed to the high-level tertiary activitythat will increasingly be found in, and dominate, the economies of core areas in Chinesecities, as elsewhere. Therefore, employment monitoring is particularly important from anequity perspective. To the extent that information can be collected on types of employmentcreated, educational/experience credentials needed to access it, and salaries paid, much use-ful analysis can be done in support of more effective policy formulation to enhance the roleof peri-urban areas as poverty prevention mechanisms.

It is clear that flagship developments will be increasingly important in contributing to theeconomic dynamism of inner peri-urban areas. However, their role in absorbing urban popu-lation growth through employment creation is likely to be more limited, and less than itcould be if supply chain and multiplier dynamics were more extensive. Based on “back of theenvelope” calculations, if each of the fifty-four national-level industrial estates were to di-rectly create, on average, 50,000 jobs over the next twenty-five years, taking into accountmultiplier effects and household dependents, they might support (directly and indirectly)about one-fourteenth of national incremental urban population growth. In the study area,such flagship developments are much more important than in China as a whole. As noted,there are eight national-level developments; as such, they will play a greater but quantita-tively still a relatively minor role in absorbing incremental urban population growth.

Conclusions

More people will be added to peri-urban areas than any other settlement type in China. Yetonly recently has the concept of peri-urbanization become part of the lexicon of Chinesepolicymakers. In the past, extended urban regions were seen not as regional urbanizationsystems but as sets of large, small, and medium-sized cities, interspersed on a rural land-scape. The result was that peri-urban areas in particular were often overlooked, given theirambiguous status and interstitial location. A city of one million was expected to have theproblems of a city of that size and cope with these problems with resources and functionsaccorded such a sized city, not worrying about the problems outside its boundaries. Yet, inreality, such a city was really a component of an urban system of twenty or even eightymillion people, and very different in terms of function than a similarly sized freestanding citysuch as Kunming. Such thinking needs to be, and is being, changed in China. Increasingly

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policymakers see the need for regional coordination in guiding the development of EURs.Such a change in perception and approach is likely to pay substantial dividends in terms ofthe quality of development in peri-urban areas.

Many functions can be handled locally, but many issues facing peri-urban areas need to behandled from a wider spatial perspective. The national government and, more important,local governments in peri-urban areas and other local key stakeholders (in private and civilsociety) have to recognize that they are dealing with a new form of settlement, one whichdoes not resemble conventional definitions of urban, suburban, or rural. Peri-urban systemsneed to be better understood if policy frameworks, planning processes, and managementsystems are to be more effective in promoting sustainable, competitive, life-enhancing devel-opment. This requires more analysis of peri-urbanization in different areas of China be-cause, as has been argued, processes vary considerably across the nation. And, to a signifi-cant degree, understanding of peri-urban processes can be enhanced through comparativeanalysis of peri-urbanization throughout East Asia. Different nations (ranging from devel-oped countries such as South Korea to developing nations such as Thailand and the Philip-pines) and subnational regions are at different points on the peri-urban development trajec-tory, enabling future challenges to be anticipated and relationships between policy and out-comes to be identified.

Notes

1 Additional detail on the characteristics and drivers of peri-urbanization is found in a com-panion A/PARC Discussion Paper. See Webster (2002).2 In terms of economic structure, East Asian peri-urban landscapes, including those in China,are the most industrially (manufacturing) dominated landscapes on earth.3 Chapter II, Section 7 of the Plan is on urbanization (SDPC 2001).4 A Chinese municipality typically comprises a city proper and approximately eight to twelvecounties, several of which contain a sizeable city of their own and are referred to as city-levelcounties. The city proper is a legal entity, composed of all urban districts constituting a city.However, not all urban districts are completely built up; many are effectively peri-urbaniz-ing. For example, the boundaries of Hangzhou and Ningbo cities proper overbound thebuilt-up area considerably. In this paper, we use the term core city, to distinguish the contigu-ous set of built-up urban districts from the peri-urbanizing ones.5 A chronology of benchmark events affecting peri-urbanization in China has been identifiedby the A/PARC research team currently studying peri-urbanization in China, funded by theFord Foundation (Grob 2002).6 Three of the initial four SEZs were in Guangdong Province: Shenzen immediately north ofHong Kong; Zhuhai, next to then Portuguese Macao; and Shantou, home to the Chaozhouemigrants who left in large numbers for Southeast Asia, North America, and Europe. Thefourth initial SEZ was in Fujian Province at Xiamen, opposite Taiwan. Of these, Shenzenwas by far the most successful, and Xiamen the least, during the 1980s.7 I am grateful to Douglas Grob, based in the Faculty of Law, Peking University, for prepar-ing notes on this topic in support of this paper. These notes were based on his work inprogress entitled The Interpretation of Public Law in China: How Legal Reform Is Chang-ing Policy Implementation in the People’s Republic.

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8 For a discussion of the Southeast Asian model of peri-urbanization, see Webster (2002) andMuller (2000).9 Dongguan, just north of Shenzhen, epitomizes high-profile peri-urbanization in the PearlRiver delta. See Economist Intelligence Unit (1998); Yeh and Li (2000); Rohlen (2000).10 Best estimates indicate that interprovincial migrants now account for approximately 35percent of new job takers in the study region, up from approximately 15 percent fifteenyears ago.11 Suburbanization is closely associated with motorization, and the number of vehicles isexpected to double in Chinese EURs within five years. (Shanghai will be an exception be-cause of strong local policies to control vehicle numbers.) There are signs that large-scalesuburbanization is not far off, e.g., billboards advertising housing estates and mortgageswith images of detached suburban housing in major EURs in the Coastal Region and inBeijing.12 For detailed analysis and discussion of SMEs/TVEs in the study area, see Liu and Hu(2000).13 The categorization (urban, peri-urban, rural) used in Tables 1, 2, and 3 is an initial classi-fication, based on statistical data and field research. Because of data limitations, the urbanarea is defined as the city proper and counties are classified either as wholly peri-urban orrural. The peri-urban areas were distinguished from rural areas based on discussion with ourresearch partner, the Beijing Geography Institute, utilizing the following criteria: locationadjacent to cities proper, location relative to the freeway that defines the Hangzhou-NingboCorridor, field judgments, and key informant interviews with government officials in regardto ongoing development and linkages with cities proper.

The problem with the current classification is that the scale of data is too coarse. Asmentioned earlier, many urban districts are not completely built up; that is, they containperi-urbanizing areas. In the case of Hangzhou, this situation has been exacerbated, from astatistical point of view, by the incorporation (amalgamation) of Xiaoshan and Yuhang city-level counties into Hangzhou urban district in early 2001. In Tables 1 and 2 (1999 data) theyare treated as peri-urban entities, although they do contain vital city centers of their own,especially in the case of Xiaoshan. In the case of Shaoxing Municipality the opposite prob-lem exists. The core urban district contains only 335,200 people, yet it is completely sur-rounded (doughnut-style) by Zhuji County (recently upgraded to a city-level county), whichcontains 1.06 million people. Shaoxing’s built-up area spreads contiguously into Zhuji County.Nevertheless, with 13 percent of its economy (GRP) in primary activity (agriculture), ZhujiCounty has been designated as peri-urban. As the research proceeds, these three types ofareas will be better defined based on more complete knowledge of the urbanization processand use of finer-grain spatial data.14 Ningbo is not a representative Chinese city in that it is more highly specialized in manufac-turing than the vast majority of large Chinese cities.15 The hukou system limits access to cities proper. Only hukou holders are official residentsof the city and thus entitled to public social services. However, the system is becoming moreflexible, although enforcement varies among cities in China. Currently, hukou restrictionsare being abolished in small cities; the government plans to dismantle the system entirelywithin five years.

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16 In 1997 the national government ordered the closure of tens of thousands of TVEs en-gaged in high-polluting activities such as tanning, paper making, and dyeing textiles. TheInstitute of Rural Development of the Chinese Academy of Social Sciences estimated lossesattributable to pollution by TVEs at 3.27 percent of China’s GDP. Most environmentalspecialists view this as an underestimate.17 Of course, some or much of the difference in productivity noted may be explained by“share” effects. That is, peri-urban and especially rural areas have higher percentages oftheir labor forces in agriculture, a low productivity activity. Thus industrial enterprise pro-ductivity may not vary as much as the data implies.18 Large foreign-owned firms are required to report employment levels, but area-based (in-dustrial estates, clusters) employment monitoring that includes domestic firms (which ac-count for much more employment) is not occurring systematically.19 The lack of emphasis on employment monitoring is partly a legacy of the past commandand control system that focused on physical production rather than counting workers.20 The authors are grateful for research on this topic by Ph.D. student Cheng Chang (2001).21 Contributions to global environmental issues, e.g., global warming, associated with activ-ity in Coastal China, including the study area, are not discussed, but are a major issue. Forexample, acid rain is a major issue in the area. See Chang (2001).22 International analysis based on remote-sensed imagery shows more land being lost tourbanization than official Chinese data. On the other hand, such international data showthat China has more land suitable for agriculture than official data indicate; thus the fractionbeing lost is lower. See Seto et al. (2000).23 The State Land Administration Bureau has calculated that China is losing 0.5 percent of itscultivated land each year and that if China’s per capita arable land currently stands at 0.25of an acre, there will be only 0.17 of an acre per capita left when China’s population levelsoff at 1.6 billion. See Tang (1997).24 Data provided by Zhejiang Provincial Planning Commission.25 The worst case globally is probably the I-85 corridor (the Atlanta-anchored peri-urbanregion) in the United States, where the ratio is about 8:1.26 We may be overstating the services shortfall in peri-urban areas. For example, in theXiaogang area, the original export-processing zone of Beilun, where development dates from1984, considerable consumer retailing and service activity is now apparent.27 Our research indicates that these services are very important, effectively sorting out thelabor supply for local firms. As such, they play an important role in determining whereindividuals fit in the employment pecking order. Interestingly, these agencies may engage inrelated “fitting” activities; e.g., matchmaking for marriage.28 Exceptions to the general trend of diminishing local power are townships led by charis-matic leaders or of strategic economic importance.29 This objective appears reasonable, based on comparative analysis of East Asian extendedurban areas further along the peri-urban development trajectory.30 The peri-urban research group at A/PARC has developed a peri-urban land conversionmonitoring framework which may be applied (in partnership with the Beijing GeographyInstitute) in the Chinese peri-urban context.31 The level of an ETDZ should not be confused with the developer/proponent. For example,municipalities can, and often do, develop a particularly important EDTZ that then earnsnational-level designation. There are fifty-four national-level ETDZs in China.

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References

Chang, Cheng. 2001. Environmental Management under Periurban Areas: The Case of Ningboin Zhejiang Development Corridor, Paper prepared for Urban Studies 184, Stanford Uni-versity.

China Statistics Press, 2000. Zhejiang Statistical Yearbook 2000. Beijing: China StatisticsPress.

Economist Intelligence Unit. 1998. Safety in Numbers: Dongguan and Its Temptations, inBusiness China, August 2, 1998.

Grob, Douglas. 2002. The National Context of Peri-Urbanization in China: 1978–2002,Internal Working Paper, A/PARC. Stanford: Stanford University. (To be published as Ap-pendix in future A/PARC, Stanford University, monograph on peri-urbanization in China.)

Liu, W., and Hu, X. 2000. Development of TVEs and Small Towns in Shaoxing City, ZhejiangProvince (Chapter 9), in China’s Urbanization Policy. Washington: World Bank.

Muller, Larissa. 2000. Automobiles from Pineapple Fields: Adaptation to Rapid Industrial-ization in Peri-Urban Thailand and the Philippines. Paper read at the 42nd Annual Confer-ence of the Association of Collegiate Schools of Planning, November 2–5, 2000, at At-lanta.

Ningbo Municipal Statistics Bureau. 1999 Statistical Yearbook of Ningbo. Beijing: ChinaStatistics Press. (n.d.)

Rohlen, Thomas. 2000. Hong Kong and the Pearl River Delta: “One Country, Two Sys-tems” in the Emerging Metropolitan Context, Discussion Paper, Asia Pacific ResearchCenter. Stanford: Stanford University.

Seto, K.C., Kaufmann, R.K., and Woodcock, C.E. 2000. Landsat Reveals China’s FarmlandReserves, But They’re Vanishing Fast (Correspondence). Nature, Volume 406, July.

State Development Planning Committee (SDPC). 2001. Implementing Urbanization Strat-egy and Promoting Common Progress of Urban and Rural Areas, in The Tenth Five-YearPlan of China. Beijing: New Star Publishers. (English-Language Version)

Tang, I. 1997. City Growth Eats Into Farmland, South China Morning Post, March 30,1997.

United Nations Department of Economic and Social Affairs, Population Division. 2000.World Population Prospects: The 1999 Revision. New York: United Nations.

Webster, D. 2000. Patterns of Urban Growth (Chapter 3), in China’s Urbanization Policy.Washington: World Bank.

Webster, D. 2002. On the Edge: Shaping the Future of Peri-Urban Asia, Discussion Paper,Asia/Pacific Research Center. Stanford: Stanford University.

Yeh, Anthony Gar-on. 1994. Land Leasing and Urban Planning: Lessons from Hong Kong,Regional Development Dialogue, Volume 15, No. 2.

Yeh, Anthony Gar-on, and Li, Xia. 2000. The Need for Compact Development in the Fast-Growing Areas of China, in Jenks, M., and Burgess, R. (eds.), Compact Cities: SustainableUrban Forms for Developing Countries. New York: Spon Press.

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Selected Recent Publications of the Asia/Pacific Research Center

Research efforts at the Asia/Pacific Research Center (A/PARC) produce a variety of publications,including occasional papers, working and discussion papers, conference proceedings, special reports,and books. Occasional papers currently in print may be ordered at $10.00 per copy (excluding postageand handling) and working and discussion papers at $7.50 per copy (excluding postage and handling)through A/PARC. For further information, call (650) 723-9741 or fax (650) 723-6530.

A complete publications list and the full texts of many papers are available on the A/PARC website athttp://APARC.stanford.edu.

BooksTo the Brink of Peace: New Challenges in Inter-Korean Integration and Cooperation. Foreword by Henry

S. Rowen, Introduction by Sangmok Suh, and Keynote by William J. Perry. November 2001.

Occasional PapersJeffrey Broadbent. “The Japanese Network State in U.S. Comparison: Does Embeddedness Yield

Resources and Influence?” July 2000.Rafiq Dossani. “Accessing Venture Capital in India.” Report of a Conference Held June 1, 1999.

October 1999.Henry S. Rowen. “Catch Up: Why Poor Countries Are Becoming Richer, Democratic, Increasingly

Peaceable, and Sometimes More Dangerous.” August 1999.Report of a Conference Held May 3, 1999. “Crisis and Aftermath: The Prospects for Institutional

Change in Japan.” August 1999.K.C. Fung and Lawrence J. Lau. “New Estimates of the United States–China Trade Balances.” April

1999.

Working PapersRafiq Dossani, “Chinese and Indian Engineers and Their Networks in Silicon Valley.” March 2002.Andrew G. Walder, “The Cultural Revolution in the Countryside: Scope, Timing, and Human

Impact.” January 2002.Andrew G. Walder. “Beijing Red Guard Factionalism: Social Interpretations Reconsidered.” January

2002.Rafiq Dossani and Robert Thomas Crow. “Restructuring the Electric Power Sector in India: Alterna-

tive Institutional Structures and Mechanisms.” July 2001.Henry S. Rowen. “The Growth of Freedoms in China.” May 2001.Rafiq Dossani and Martin Kenney. “Creating an Environment: Developing Venture Capital in India.”

May 2001. This paper also appears in the working paper series of the Berkeley Roundtable on theInternational Economy (BRIE), #143.

Robert Thomas Crow. “Foreign Direct Investment in New Electricity Generating Capacity in Devel-oping Asia: Stakeholders, Risks, and the Search for a New Paradigm.” January 2001.

Sean Eric Smith. “Opening Up to the World: India’s Pharmaceutical Companies Prepare for 2005.”May 2000.

ReprintsRafiq Dossani and Lawrence Sáez. “Venture Capital in India.” Reprint from International Journal of

Finance 12, no. 4 (2000). July 2001.Kai-Sun Kwong, Lawrence J. Lau, Tzong-Biau Lin. “The Impact of Relocation on the Total Factor

Productivity of Hong Kong Manufacturing.” Reprint from Pacific Economic Review 5, no. 2(June 2000). October 2000.

Lawrence J. Lau, Yingyi Qian, Gérard Roland. “Reform without Losers: An Interpretation of China’sDual-Track Approach to Change.” Reprint from Journal of Political Economy 108, no. 1 (2000).October 2000.

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Michel Oksenberg. “China: A Tortuous Path onto the World’s Stage.” Reprint from Robert A. Pastor,ed., A Century’s Journey: How the Great Powers Shaped the World (Basic Books, 1999).December 1999.

America’s Alliances with Japan and Korea in a Changing Northeast Asia Project

Chin Kin Wah and Pang Eng Fong. “Relating the U.S.–Korea and U.S.–Japan Alliances to EmergingAsia Pacific Multilateral Processes: An ASEAN Perspective.” March 2000.

Steven M. Goldstein. “The United States and the Republic of China, 1949–1978: Suspicious Allies.”February 2000.

Akihiko Tanaka. “The Domestic Context of the Alliances.” January 2000.William T. Tow. “Assessing Bilateral Security Alliances in the Asia Pacific’s ‘Southern Rim’: Why the

San Francisco System Endures.” October 1999.Yu Bin. “Containment by Stealth: Chinese Views of and Policies toward America’s Alliances with

Japan and Korea after the Cold War.” September 1999.Andrew C. Kuchins and Alexei V. Zagorsky. “When Realism and Liberalism Coincide: Russian Views

of U.S. Alliances in Asia.” July 1999.Takashi Inoguchi. “Adjusting America’s Two Alliances in East Asia: A Japanese View.” July 1999.Jinwook Choi. “Changing Relations between Party, Military, and Government in North Korea and

Their Impact on Policy Direction.” July 1999.Douglas Paal. “Nesting the Alliances in the Emerging Context of Asia-Pacific Multilateral Processes:

A U.S. Perspective.” July 1999.Chu Shulong. “China and the U.S.–Japan and U.S.–Korea Alliances in a Changing Northeast Asia.”

June 1999.Michael J. Green. “Japan–ROK Security Relations: An American Perspective.” March 1999.B.C. Koh. “Seoul Domestic Policy and the Korean-American Alliance.” March 1999.Michael H. Armacost. “Asian Alliances and American Politics.” February 1999.Jae Ho Chung. “The Korean-American Alliance and the ‘Rise of China’: A Preliminary Assessment of

Perceptual Changes and Strategic Choices.” February 1999.Andrew Scobell. “Show of Force: The PLA and the 1995–1996 Taiwan Strait Crisis.” January 1999.

Proceedings of the Walter H. Shorenstein Forum“Political Change in Taiwan: Implications for American Policy: An Address by Richard Bush,” and

“Roundtable Discussion on Taiwan’s Historic 2000 Elections.” October 2000.

The Stanford Project on Regions of Innovation and Entrepreneurship (SPRIE)Chong-Moon Lee, William F. Miller, Marguerite Gong Hancock, and Henry S. Rowen. “The Silicon

Valley Habitat.” August 2000.William F. Miller. “The ‘Habitat’ for Entrepreneurship.” July 2000.Katsuhiro Nakagawa. “Japanese Entrepreneurship: Can the Silicon Valley Model be Applied to

Japan?” December 1999.

The Urban Dynamics of East Asia ProjectDouglas Webster. “On the Edge: Shaping the Future of Peri-urban East Asia.” May 2002.Thomas P. Rohlen, “Cosmopolitan Cities and Nation States: Open Economics, Urban Dynamics, and

Government in East Asia.” February 2002.Mike Douglass. “Turning Points in the Korean Space-Economy: From the Developmental State to

Intercity Competition 1953–2000.” October 2000.Thomas P. Rohlen. “Hong Kong and the Pearl River Delta: ‘One Country, Two Systems’ in the

Emerging Metropolitan Context.” July 2000.Douglas Webster. “Financing City-Building: The Bangkok Case.” April 2000.

The Comparative Health Care Policy Project“Health Care 2000: Do Health Care Markets Require a New Model?” Proceedings of a Conference

Held May 4–5, 2000 at Stanford University. May 2001.

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