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Urban-Rural Disparity in China

The Urban vs Rural Disparity in China

The development of China’s territory is defined by a strong imbalance East/West or Urban/Rural. This phenomenon is explained by a strong internal migration of the Chinese population (looking for work) to the Eastern regions. Today there are more than 170 million migrant workers against 2 million in the 80’s, which are creating urbanization level of 50% in the country. In 2025, China’s urban population will be around 800 million against a little more than 600 million today.

This concentration is also reflected by the FDI’s attraction for the west provinces (the most important are Guangdong, Hong Kong, Shanghai, Tianjin, and Beijing) for Chinese industry notably for sectors with a high export orientation as the High Technology sector. To illustrate this phenomenon, 80% of exports in High Technology have been made in these areas between 2007 and 2008.

Despite various attempts to reduce the disparity between cities-country (“Go West” action in 1999), the Chinese authorities continue to launch some policies in order to re-balance the country’s territory (XII Plan in 2011-2015).

Potential Actions Undertaken

China is the last major country to have kept a centralized system. Cohesion between local jurisdictions and the State itself is a central issue to improve the balance of its territory. Today, China begins creating a strong domestic market. For this, the government accentuates on the development of the western provinces, becoming one of the priorities of the XII Plan (mentioned earlier). Indeed the plan’s priorities are urbanization and social cohesion through the reduction of urban-rural disparities.

However, the rural exodus is difficult to manage but not impossible. For example, Shenzhen was very rural in the 70’s. It was one of the first testing cities opened to the foreign investment policy. Today the city is becoming one of the richest cities in China, with a very domestically diverse.

Put into Practice

Today, China no longer wants be considered out as the “workshop of the world”. So the country focuses on technology and innovation with the creation of a multitude of industrial and technological parks. To give an overview of this phenomenon, the number of industrial parks is estimated at more than 12,000 across the country. Some, such as the Zhongguancun Park nicknamed the “Silicon Valley of Beijing” has an area of over 335 km², more than 22,000 companies and 3000 of them have a foreign capital with an estimated of $15 billion production in 2008. Despite this emergence, we have not noticed a fast increase of the performance of the local system of innovation, which is a key for the territorial development.

Thus, now China focuses on other provinces which seem to be important for the country and as a real factor of competitiveness. In fact these provinces have a big freedom in the legal, financial and fiscal domains which can be a real springboard for companies.

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