Rethinking China's urbanization: An institutional innovation perspective

During the past two decades, China has witnessed a rapid rate of urbanization and is faced with unique problems due to the country's natural resources, history, society, economy and culture. The role of institutions is examined as a fundamental ingredient for sustainable urbanization in a Chinese perspective. The context within which China's urbanization is proceeding is analysed and the urbanization progress is briefly reviewed. The contradictions exposed in the urbanization progress are identified and the institutional defects behind these problems are analysed: the over-reliance on gross domestic product (GDP) as an indicator, inappropriate assessment systems for local government, the urban-rural dual structure, the legal system, and building regulations. It is concluded that China's urbanization progress is too fast to be sustainable and that accomplishing sustainable urbanization in developing countries, particularly during their transformational period, cannot be best understood in terms of technical and monetary factors. Instead, the urbanization process can be formulated within a context of institutional innovation. Essential institutional innovations at both the central and local government levels are required: improving the performance appraisal system to regulate officials' behaviour; reforming the dual socio-economic system to cure 'town-country syndrome'; strengthening the legal system to bring it more in line with the requirements of a market-oriented economy; and revising building codes and standards to implement green plans and programmes. The 'scientific perspective of development' proposed by China's new national leadership indicates a break from an overwhelming emphasis on GDP growth, and is expected to provide a multifaceted approach giving impetus to a more sustainable approach to urbanization.