Globalisation, Infrastructure Development and Emerging ...



Globalisation, Infrastructure Development and Emerging Equity Issues in Cities of China: Comparing Beijing and Dongguan

Darshini Mahadevia

(Assistant Professor, School of Planning, Centre for Environmental Planning & Technology, Ahmedabad, India)

Abstract

This research investigates whether equity issues are emerging within cities of China, in the context of the country’s continuing high economic growth rates and global economic integration. In the process of the gradual opening up of China’s economy, its cities have attracted foreign and other investments than the rural areas. Chinese cities have made heavy investments in infrastructure to attract investments the cities. This study looks at China’s administrative system and infrastructure provision and financing at the overall level to understand which level of government fulfils what level of responsibility in highly decentralised financial and administrative systems. It then focuses on the two cities, Beijing (10.23 millions population) and Dongguan (5.90 millions population) in Guangdong province, with regards to the level of facilities, investments in infrastructure and changing pattern of priorities of the local government.

The findings are: (i) the system of public finance is created in such a way that a large city such as Beijing, which is also the national level city, had advantages over the relatively smaller city such as Dongguan. Beijing has better infrastructure and public utilities than Dongguan. (ii) The Chinese cities are going the same road of ‘exclusion and inclusion’ that cities in other countries have gone through and are going through in the process of globalisation. (iii) Chinese cities, more than other cities in the developing world, are treading the path of converting cities into enterprises, to attract investments. (iv) Cities such as Dongguan are diverting their investment funds and budgets to capital construction, at the negligence of social sectors. (v) Beijing is a special case, which is getting priority treatment from the national government, firstly because it is a national capital and national level city and also because it is going to host the Olympics.

(vi) The temporary migrants and unregistered migrants are excluded from the benefits of the institutional mechanisms of welfare provision. (vii) The system is so developed that not only large cities benefit but there is passing of the public amenities provisions and welfare provisions to lower levels of government that does not have taxation powers and depend on collection of charges for services from the beneficiaries. While the revenues collected through taxation at the city level are used for mega infrastructure projects, the people are asked to pay for public amenities and welfare services through privatisation and cost-recovery efforts.

Introduction

The literature on ‘Globalisation and Cities’ has thrown up discussion on impacts that cities have observed due to their and their national economy’s global linkages. Under the new economic ideology of globalisation, the city becomes what Hall and Hubbard (1998) calls an ‘Entrepreneurial city’. It appears that cities are competing with each other. Cities do not compete to maximise profits like the commercial enterprises do, but they compete for mobile investment, population, tourism, public funds and hallmark events such as the Olympic Games (Lever and Turok 1999). They compete by, for example, assembling a skilled and educated labour force, efficient modern infrastructure, a responsive system of local governance, a flexible land and property market, high environmental standards and a high quality of life (Porter 1996).

In this process, the local governments take up selective projects to improve urban environment that ends up either displacing or excluding segments of population or embark on privatisation which leads to fragmentation of housing, infrastructure and services as well as institutional structures (Mahadevia 2002 and 2003 for India). City plans give priority to business and the scarce city resources are diverted to cater to the needs of the business. The production activities are dispersed and displaced to locations of cheap and unskilled labour, away from the eyes of legal machinery and near the sources of raw materials. Existing manufacturing activities in these cities decline and service sector emerges. While a few do get employed in managerial and professional positions where they draw globally competitive salaries, the vast majority remain in low–wage, low-productive economic activities, referred to as the informal sector. Many local economies providing employment to the poor are de-legitimised and face eviction from productive locations sought after by elite groups (Benjamin 2001). Consequently, economic restructuring of the city takes place. The gap between the wealthy and the poor widens with respect to economic, social and spatial aspects in these cities. The social and spatial segmentation of these cities take place and ‘citadels’ and ‘ghettos’ (Berner 1997) emerge within the city geography.

Available literature also shows that the market forces that are exclusionary and displacing are exacerbated by government policies, which are mostly the mainstream neo-liberal policies, based on the blue prints of international development agencies like the World Bank and the Asian Development Bank (ADB). While ‘Alternative Development’, used even within the mainstream neo-liberal paradigm, the project of global integration of cities in the developing world is excluding large sections of the population (Scott 2001).

This research is in the specific context of People’s Republic of China (PRC), called China from henceforth. For the last two and a half decade, China’s economy has been growing at average 9 per cent and she has been receiving large volume of Foreign Direct Investments (FDI) among the developing countries. Cities are changing themselves by massive investments in infrastructure, to present themselves as global destination of investments. The economic reforms and the opening up the economy for private individuals and foreigners started in China in 1978. The opening up was gradual and managed by the central government. The other specific context is the existence of a highly decentralised administrative and financial system in China.

Scope

The research scope is limited to financing of infrastructure and public amenities in two cities, Beijing and Dongguan that have received significant amount of FDI. The former is a super-city and the latter is a mega-city. The analysis is limited to macro data.

Research Questions

Do we see inequity as an issue in China’s current liberalisation, which will continue in the period of her agreement to World Trade Organisation (WTO) regime? Do we see the same processes of exclusion in cities of China attempting to forge global links, given that her economy is officially called a ‘Socialist Market Economy’, where the term socialism suggests and inbuilt mechanism of equity principles in the policy? The study seeks to address the following specific research questions: (i) Who takes care of basic infrastructure provision such as water supply and sanitation in the urban areas and who takes care of the capital expenses and who the operation and maintenance expenditure? (ii) Is there a difference between the basic service delivery system in larger city vs smaller city? (iii) What changes have been introduced as a part of fiscal decentralisation process in the PRC with regards distribution of revenue collection and expenditure responsibilities, what does it mean for urban services such as water supply and sanitation? (iv) Have issues of equity emerged as a consequence of the fiscal reforms and if yes then in what aspects and if not then why?

China’s Global Economic Integration

China is the fastest growing economy in the world today and has maintained a very high annual growth rate, of about 9 per cent, for now more than two decades. During the two decades, 1978-1998, the per capita GDP growth rate has more than quadrupled and living standard of the ordinary Chinese improved greatly (Qian 2002: 1). This trend continues even in the new millennium. In spite of the Asian financial crises of 1997, the PRC maintained high economic growth rate (Table 1). During this period, China provided much needed stability to the regional and even the world economy. In the process of rapid economic growth, PRC has witnessed a very rapid decline in the number of the absolute poor. According to National Bureau of Statistics (NBS), 14.2 million, 5.8 per cent of the urban population was below the poverty line in 1991. In 2000, the number of poor decline to 10.5 per cent and poverty rate declines to 3.4 per cent (ADB 2004b: 89). Athar Hussain (2001 in ADB 2004b), an independent scholar, finds that there was reduction of urban poverty from 6.25 per cent in 1995 to 4.73 per cent in 1998.

The spectacular economic growth rates in China could be attributed to the very high growths observed in the manufacturing sector, as Table 1 shows. Even the per capita GDP growth rates have been high, above 6 per cent, for the years with data in Table 1. The agriculture sector, where still a large proportion of the population is, has observed very slow growth rates in the late 1990s.

Investments in manufacturing and fixed assets have been the main driver of the economy. For example, in 2003, the ADB’s Report on 2004 Outlook mentions that investment contributed 6.3 percentage points to growth, when consumption contributed 3.9 percentage points and net exports subtracted 1.1 percentage points from the total growth figure. In this year, fixed asset investment soared by 26.7 per cent in 2003, 9.8 percentage points higher than the previous year. The public sector investment, which accounted for 72.1 per cent of the total investment, surged by 28.2 per cent, driven largely by local government investment decisions. A rapid expansion of bank lending, continual FDI inflows, and a property market boom were major factors contributing to the investment surge (ADB 2004a: 41). The last few years’ data (Table 2) shows that the ratio of investments to total GDP has been very high.

Institutions Responsible for Infrastructure Provision

China’s system of infrastructure provision and financing is highly decentralised. The responsibility of raising finance for infrastructure provision is the responsibility of the local government, assisted by the provincial governments. Except for the national level cities and the cities qualifying for central assistance, all cities depend on their own and their respective provincial government’s financial resources for capital as well as maintenance expenditures on infrastructure and public utilities. In this section, we would discuss the system of infrastructure and public utility provision and their financing (Figure 1).

The municipal government of the city, for example, Beijing Municipal Government, Dongguan Municipal Government, and so on, are the responsible public authorities for infrastructure and public utilities provision and maintenance in the urban areas of their respective cities. They take the overall responsibility of planning of all the infrastructure and utilities and making capital investments in them. The counties and districts in rest of the city take care of these responsibilities through their own funding.

For city level public transport systems, special public sector companies are set up. Till now, most of the companies are public sector ones, receiving grants from the municipal government to run the services. In case of subway systems, which are there in most super-cities and mega-cities and are highly capital-intensive asset, a subway company is set up. It constructs and runs the subway. The company gets funds through transfers from the municipal government or takes loans from the Banks or gets the foreign investments. The loans come with municipal government guarantee and foreign funds come through efforts made by the municipal government. Though the company is independently registered, it is the municipal government’s agency. The bus system is run by bus companies, and tram by tram companies, once again set up by the city government. These are public companies, receiving grants from the city government, which in effect are the subsidies, to the bus company required to provide service to users at cheap fares.

While the main highways within the urban area of the city are constructed and maintained by the municipal government, the small roads, or the local roads are constructed and maintained by the District governments. If the district has areas or zones declared as development zones, such as Zhongguancun Sci-tech Park in Haidian District of Beijing or the Central Business District (CBD) in Beijing located in Chaoyang District, the local roads are taken care by the special authority set up; this authority being directly under the city Municipal government.

In super and mega cities, water and gas are supplied by municipal companies set up by the city municipal government. The main sewerage and trunk lines are constructed by the city government, but the local network of drainage and sewerage services are maintained by the district governments. The city municipal government can assist the districts in initial investments for sewerage and drainage networks within their districts. The sewerage treatment plants, which are generally for more than one district, are run by the city municipal government, once again by setting up a company. The system of setting up a company would make these utilities function independently. In future, these companies can get their own funds (loans or equity) with or without the city government guarantee. A World Bank study (World Bank 1994) reports that since 1988, the cities have abandoned the practice of covering their capital costs entirely through municipal grants and have been taking bank loans. The study also states that in spite of this, capital grants continue and the companies remit negotiated shares of their depreciation funds and operating profits to the city in exchange for access to municipal funds.

The solid waste collection is entirely the responsibility of the district government. The city government identifies the landfill sites or runs waste treatment facility if any. The district governments are responsible for carting the solid waste to designated sites or to the treatment facilities. In some cities, the Neighbourhood (Residents’) committees (RCs) organise the pickup of solid waste and transfer to district or city level transfer stations by charging the residents.

Since, the urban life was to a great extent organised around danwei (large employer, mainly the SOE) system, many of the danweis took care of providing these facilities to the residents. For example, a danwei would purchase water from the water company and provide it to the residents for free or at low cost. In cities such as Beijing that uses groundwater, some danweis also source their own water [i],[ii]. It would lay the internal sewerage and drainage networks and maintain them, organise collection of solid waste and lay gas pipelines and operate them. For all these services, the danwei may or may not charge all or some residents.

There are whole sets of social welfare activities, such as provision of social security to the old and infirm, to the SOE laid-off worker, and so on, maintenance of local public order, implementation of population policy, and many activities that directly concern the urban citizens. These are the responsibilities of the district government that are implemented through the Street Offices (SO) and the RCs. Neither the SO nor the RC are tiers of government and have taxation powers. The RCs are mass organisations, now overwhelmingly interested in organising income generating activities for SOE-laid off workers. According to Wu (2002: 1084), in Shanghai, the Street Offices undertook 150 daily management functions. The unregistered migrant population is not covered by these welfare activities.

Institutions for Financing Infrastructure

After the beginning of economic reforms, China started to devolve government authority from central to local levels - to the provinces, prefectures, counties, towns, and townships, beginning in 1979. This devolution of responsibilities was accompanied, in 1980, by fiscal decentralisation, in which the local governments were encouraged and rewarded for promoting economic development. Local governments were given the responsibility of raising revenues. For the formal budgetary revenue starting in 1980, the “fiscal contracting system” known by the nickname of “eating from separate kitchens” replaced the previous system of “unified revenue collection and unified spending”, known as “eating from one big pot”. Under the new fiscal system local governments entered into long-term (usually five-year) fiscal contracts with higher level governments with regards to sharing of revenue collected by the former. Usually, the participating provinces and municipalities were allowed a share of revenue they collected and the remaining share was handed over to the higher order of the government. These contracts were negotiated in absence of explicit sharing formula. The income collected in access of the negotiated amount was all retained by the municipalities and provinces. The local governments had full right to “extra-budgetary funds,” and they devised methods of getting “off-budget funds,” not even incorporated into the budgetary process (Qian 2000: 6). The extra-budgetary revenues are: water use surcharges, domestic loans, foreign capital, enterprise self-raised funds, proceeds from the lease of land, and other funds (Bahl 1999: 70). Local governments constantly devised and continue to devise means to divert resources from sharing pool to their own use.

The off-budget funds are collected through fiscal manipulation. The local governments retain earnings of the local SOEs owned by them as their earnings are not reported in the formal way to the central government. The local governments also impose taxes and charges on the local enterprises, some legal and some not (Bahl 1999: 84), which are retained by the department imposing them and used for specific purposes. The collected funds that are not legal do not get recorded in the fiscal statements and hence it is difficult to estimate the amount of these funds. The other form of this income source of the local governments is the retained earnings and depreciation funds of the SOEs. Since the SOEs share their profits with the local and central government through taxation, if the profits accrued are reported low then taxes that have to paid are less. In that way, the central government gets less funds. Since the local government officials are powerful, they are able to either get back this revenue by imposing special charges or influence the SOEs to make expenditures on public purposes such as for provision of social services, local infrastructure development, local economic development and so on.

Urban construction is financed through an earmarked tax called Urban Maintenance and Construction Tax (UCMT). This tax is collected and full proceed of which are retained by the municipal governments for local infrastructure development. Another direct source of funds for the local governments is public utility surcharge. The UCMT is collected as a surcharge on the consolidated industrial and commercial tax levied on the output of industrial and commercial enterprises and incomes of enterprises in transport, hotel, catering and other services. It fluctuates with the output levels of the enterprises. Further, it is not applied to the public institutions (Wu 1999). The UCMT rates are tied to the location (Bahl 1999).

There has also been a change in expenditure allocation responsibilities, with the responsibilities been shifted more and more towards the local levels, from centre to the provinces and from provinces to the city governments and so on. The responsibility of social welfare is getting pushed down to district government and administrative organs below that such as the SOs and RCs. This shifting of responsibilities to lower levels of governments and administrative structures is taking place when the danwei system that took care of social welfare is getting dismantled with the increasing privatisation of the economy. When the SOEs get dismantled to a large extent, the social welfare responsibility would get shifted to that tier of administrative structure that does not have revenue raising powers and would therefore have to depend greatly on the contributory mechanisms for providing welfare services. According to Bahl, in the first half of 1990s, cities, counties and townships were responsible for about 75 per cent of all the expenditures of the provinces and 55 per cent of all expenditures in China (Bahl 1999: 140). The situation is unlikely to have changed now, with increasing pushing down of the expenditure responsibilities, as discussed above.

Cook (2000: 1) argues that “the government in China has been transferring back to society and family many of the welfare functions for which it had previously taken responsibility.” China therefore is on one hand scaling down the existing welfare programs and on the other also attempting to extend some level of benefits to those previously excluded.

Infrastructure Investments and – Beijing & Dongguan

The urban infrastructure investments are through Urban Construction and Maintenance Fund (UCMF). The UCMF, had received revenue of RMB 27,589.33 million in 2002, which formed 15.57 per of the total fixed assets investment in Beijing in this year (Table 3). The revenue in this fund in Beijing amounted to 8.83 per cent of the city’s total GDP in the year. Beijing’s revenue in this fund was 16.5 times that of Dongguan in this year. The revenue in this fund came to just 8.73 per cent of the total fixed assets investment and 2.49 per cent of the city’s GDP in the year 2002, in Dongguan. Thus, not only the overall investments in fixed assets investments in Dongguan are less as a proportion to its GDP, but, revenue and therefore expenditures also in infrastructure investment fund are much less as a proportion of the total GDP in Dongguan than in Beijing.

Beijing is able to collect nearly 9 per cent of its revenue from UCMT whereas Dongguan is only able to collect 2.5 per cent. Dongguan gets no central financial allocation whereas Beijing gets a proportion that is higher than the national average of central assistance to cities. Beijing borrowed a lot in this year from different sources. Domestic loan as a proportion of total revenue was 40 per cent for Beijing whereas it was 28 per cent for all cities and none what so ever for Dongguan. However, Dongguan has been able to get foreign investment contribution to its revenue to the extent of 25 per cent in this year, whereas Beijing got only 1.2 per cent and all cities together got only 1.9 per cent. It is the investments coming from Taiwan, Hong Kong and Overseas Chinese in the city. For Dongguan, local financial allocation, that is allocations from Guangdong Provincial Government, is very important. In 2002, this source contributed 40 per cent of the total revenue of the city.

Self-raised funds by enterprises and institutions that have been important source of revenue for the cities, in the highly decentralised financial system of the country, has contributed 19 per cent of the total revenue to all cities in China. Its contribution in Beijing is 15 per cent and in Dongguan is just 13 per cent. Self raised funds refer to funds beyond the budget, which are raised by various regions, enterprises and institutions for the purpose of investment in fixed assets during the reporting period, including self-owned funds by departments of the central government, local governments, enterprises and institutions. It also includes funds that come through lease of lands. These funds are referred in literature as extra-budgetary resources. Though some figures are given here, it is likely that the figures could be higher than reported.

Land transfer fees are important source of revenue for all cities together, in China (about 9 per cent of the revenue), but, this is not the case with regards to the two cities studied here. Dongguan is getting higher share of its revenue from collection of fees for use of utilities as compared to Beijing. Dongguan is collecting quite some funds from the toll-tax on roads.

The expenditures incurred from the UCMF would reveal the priorities of each of the cities. Beijing is spending lesser proportion of its funds on new fixed asset investments as compared to Dongguan and is spending slightly higher than Dongguan on maintenance of the existing assets (Table 4) for the obvious reasons that Beijing is an old city and Dongguan is a new city. Beijing is just spending 1.23 per cent of its funds on payment of domestic and international loans in 2002. This seems to be quite low. May be, in the future, this figure will go up, as the city has a very high proportion of its revenues from loans (borrowings), which will have to be serviced in the future. Or, the city would pass on debt payment to other accounts. Investment in fixed assets is the main purpose for which the resources of UCMF amounts are utilised. Roads and bridges take up the largest proportion of resources of this fund. This head’s share for all cities is 35 per cent, for Dongguan it is 31 per cent and for Beijing it is 44 per cent. In Beijing, the next largest share is taken up by public traffic, that is, creation of infrastructure for public transport. This head’s share in Beijing is 16 per cent. This means that 60 per cent of the resources of the UCMF in 2002 were utilised for transportation infrastructure, including infrastructure for public transport. In Dongguan, public transport’s share was only 3 per cent and for all cities in China, the share of this head was 9 per cent.

Water supply attracts higher share in Dongguan than in Beijing. About 43 per cent of the resources are expended in Dongguan on other expenditures. It seems that these would be on the development of public plaza in the city on Dongcheng Dadao (Grand Avenue) and other city beautification projects. In Beijing, other expenditures attract only 6.6 per cent of the revenues in 2002. Much higher proportion of revenues is spent on environmental sanitation and sewerage in Beijing, in comparison to Dongguan. This could be possibly because of large size of the city and the need to internationally show case the city.

Budget Analysis

We are not presenting the tables here for the lack of space. But few observations regarding the city budgets[iii] are presented below:

i) In Beijing, about 74 per cent of the revenue in 2002 and 73 per cent in 2001 came from enterprise tax, operation tax and value-added tax. Dongguan was getting 88 per cent of its revenue from taxes and 84 per cent from enterprise taxes. While Beijing still has SOEs, the enterprises in Dongguan are largely private sector.

ii) Dongguan shared 67 per cent of its revenues with the higher levels of government.

iii) UCMT formed just 4-5 per cent of the total revenue of the Beijing municipal government. Hence, this tax, as seen earlier, did not form major part of the UCMF.

iv) In Dongguan, in 2002, half the local budget expenditures were on two heads, capital construction and departments of health, education, culture and sports.

v) Dongguan was spending less than 1 per cent of total expenditure on social security.

vi) In Beijing, health, education, sports, culture and broadcasting, together, reach 1995 proportion in 1997 and 1998. But after that, they remain at about 22 per cent, except the year 2001, when the percentage goes down to 20 per cent. From 1997 onwards, percentage expenditure on health has gone down steadily.

vii) Other expenses category formed the largest proportion of total expenditures. These include expenditures on other departments and debt servicing. The analysis remains incomplete without the data on debt servicing, given that the local governments in China have borrowed so heavily from the national commercial banks for expenditures.

viii) Dongguan has not taken much of loans for development activities as it has been able to attract foreign investments. Hence, the percentage of total expenditure made on other expenses category is less than that in Beijing.

ix) Lastly, in Dongguan, when expenditure on capital construction has increased in terms of percentage share, the share of all other expenditure heads, including on health, education, etc. has gone down. The share of health, education has gone down from 25 per cent in 2000 to 22 per cent in 2001 and 2002. Thus, one can argue that indeed the projects to enhance Dongguan’s image has led to decline in city’s expenditures on social sectors.

Equity Concerns

This research throws up many issues of concern from equity perspective. The findings are: (i) the system of public finance is created in such a way that a large city such as Beijing, which is also the national level city, had advantages over the relatively smaller city such as Dongguan. Beijing has better infrastructure and public utilities than Dongguan. (ii) The Chinese cities are going the same road of ‘exclusion and inclusion’ that cities in other countries have gone through and are going through in the process of globalisation. (iii) Chinese cities, more than other cities in the developing world, are treading the path of converting cities into enterprises, to attract investments. (iv) Cities such as Dongguan are diverting their investment funds and budgets to capital construction, at the negligence of social sectors. (v) Beijing is a special case, which is getting priority treatment from the national government, firstly because it is a national capital and national level city and also because it is going to host the Olympics.

(vi) The temporary migrants and unregistered migrants are excluded from the benefits of the institutional mechanisms of welfare provision. (vii) The system is so developed that not only large cities benefit but there is passing of the public amenities provisions and welfare provisions to lower levels of administration that does not have taxation powers and depend on collection of charges for services from the beneficiaries. While the revenues collected through taxation at the city level are used for mega infrastructure projects, the people are asked to pay for public amenities and welfare services through privatisation and cost-recovery efforts. Would the Chinese cities be able to bring balance between the competing demands of public expenditures to retain notion of equity, an integral part concept of a ‘Socialist Market economy’?

Table 1: Aggregate and Sectoral Annual Growth Rates (%)

|Item |1996* |1997* |1998* |1999* |2000* |2001* |

|FDI (US$ million) |45,463 |40,319 |40,715 |46,878 |52,743 |53,510 |

|Gross Domestic Investment (% of GDP) |37.7 |37.4 |36.3 |38.5 |40.4 |41.3 |

Source: Asian Development Bank (2004a: 283 & 292).

Table 3: Urban Maintenance and Construction Fund, Sources and Amount, 2002

|  | |Beijing |Dongguan |All Cities |

| |Total revenue of UCMF in (RMB million) |27,589.33 |1,673.36 |315,617.58 |

| |Total revenue as % of GDP |8.83 |2.49 |5.81 |

| |Total revenue as % of total fixed assets investments |15.57 |8.73 |13.68 |

|1 |Urban maintenance and construction tax |9.03 |2.46 |10.01 |

|2 |Additional fees imposed for use of public utilities |3.68 |0.36 |1.58 |

|3 |Central financial allocation |3.05 |0.00 |2.41 |

|4 |Local (provincial) financial allocation |5.66 |40.01 |12.44 |

|5 |Domestic loan |40.48 |0.00 |27.69 |

|a |- National debt financed with local budget |2.58 |0.00 |2.10 |

|6 |Foreign Investment |1.22 |24.70 |1.93 |

|a |- Foreign direct investment |0.20 |0.21 |0.26 |

|7 |Bonds |0.00 |0.00 |0.09 |

|8 |Stock financing |2.46 |0.00 |0.22 |

|9 |Water resource fee |1.95 |1.75 |0.39 |

|10 |Self-raised funds by enterprises and institutions |15.79 |13.73 |19.03 |

|11 |Fees for expansion of municipal utilities capacity |0.88 |2.30 |2.74 |

|12 |Fees for use of municipal utilities |2.56 |6.21 |2.83 |

|a |- Toll on roads and bridges |0.17 |4.58 |0.71 |

|b |- Wastewater treatment fees |1.93 |0.84 |1.13 |

|c |- Garbage treatment fees |0.02 |0.76 |0.17 |

|13 |Land transfer fee |3.64 |5.26 |8.97 |

|14 |Other revenue |9.59 |3.23 |9.65 |

| |Total revenue |100.00 |100.00 |100.00 |

Source: Data from Ministry of Construction (2003).

Table 4: Composition of Expenditure from Urban Maintenance and Construction Fund, 2002 (Million RMB)

|  | |Beijing |Dongguan |All China |

| |Total expenditure (RMB million) |27,331.05 |1,450.25 |317,802.53 |

| |Expenditure to income (%) |99.06 |86.67 |100.69 |

| |By Purpose – Total | 100.00 |100.00 |100.00 |

|1 |Expenditure on investments in fixed assets |79.72 |83.73 |77.01 |

|2 |Maintenance expenditure |11.96 |9.64 |10.02 |

|3 |Payment for domestic and international Loans |1.23 |0.00 |8.93 |

|4 |Tax |0.00 |1.10 |0.34 |

|5 |Other expenditures |7.09 |5.53 |3.69 |

| |By Industry (Activity) – Total | 100.00 |100.00 |100.00 |

|1 |Water supply |2.19 |8.25 |4.97 |

|2 |Gas supply |5.76 |1.08 |2.66 |

|3 |Central heating |0.55 |0.00 |3.58 |

|4 |Public traffic |16.36 |3.38 |8.54 |

|5 |Road and bridge |44.48 |30.74 |34.87 |

|6 |Sewerage |6.85 |2.16 |8.40 |

|7 |Flood control |3.34 |1.94 |2.89 |

|8 |Landscaping |4.56 |5.66 |8.27 |

|9 |Environmental sanitation |9.34 |3.71 |4.39 |

|10 |Other expenditures |6.57 |43.09 |21.43 |

Source: Data from Ministry of Construction (2003).

Figure 1: Responsibility Allocation

Major Highways in City City government

Roads

Local Roads District government

Subway City government Company

Public Transport

Buses/Trams City government Company

Main Trunks City government Company**/

Danwei

Water Supply*

Local Network City government Company**/

Danwei/Housing association

Main Trunk City government Company***

/District government

Sewerage

Local Network District government/Danwei/

Housing association

Wastewater treatment City government Company

Gas supply City government Company

To landfill sites City government/District

government

Solid Waste

Local collection District government/Danwei/

Neighbourhood Committee

Solid Waste Recycling City government Company

Social Security & District government through

Welfare, public order Street offices and

Population control Neighbourhood Committees

Notes:

* Non-drinking water.

** See the end note.

*** In Beijing, the sewerage system is also the responsibility of the water supply company.

Acknowledgements

The researcher was affiliated with the Centre for the Study of Contemporary China, Tsinghua University, Beijing during April-October 2004. The author is deeply grateful to the Centre for the Study of Contemporary China, Tsinghua University and Prof. Shen Yuan, Director of the Centre for hosting and providing all necessary logistical support during the fellowship.

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Qian, Y. The Institutional Foundations of Market Transition in the People’s Republic of China, ADB Institute Working Paper 9. Tokyo: ADB Institute. 2002.

Scott, A. (ed.) Global City-Regions: Trends, Theory, Policy. New York: Oxford University Press. 2001.

The World Bank. China Urban Environmental Service Management, Report No. 13073-CHA, December 31. from the website: East Asia and Pacific Regional Office of the World Bank. 1994.

Wu, F. 2002. “China’s Changing Urban Governance in the Transition Towards More Market-oriented Economy”: Urban Studies. 39 (7), pp. 1071-93.

Wu, W. 1999. “Reforming China’s Institutional Environment for Urban Infrastructure Provision”: Urban Studies. 36 (13), pp. 2263-82.

Notes

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[i] Information collected through discussion with the researchers in Beijing, namely, Dr. Meng Yanchun of School of Public Policy and Management, Tsinghua University and Dr. Huang Shunjiang of Institute of Urban Development and Environment of Chinese Academy of Social Science, Dr. Liang Wei of Urban Planning and Design Institute of Tsinghua University.

[ii] The World Bank (1994: 31) report states that in 1991, on the whole in cities in PRC, the enterprises (referring to the State-owned Enterprises or the SOEs) pumped 54 per cent of the total water supply.

[iii] The source of data is China Statistical Yearbooks for Beijing and Dongguan Statistical Yearbook, 2003 for Dongguan.

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