Understanding China, One Blog at a Time

An American in China

How the Chinese Economy Works

Posted by w_thames_the_d on February 7, 2011


Economic Warlords (Julie Cochran)

The essence of a free market is competition, and China’s version of federalism has induced ferocious rivalries between local economies. Zhao Jiancai, the enterprising mayor of Zhengzhou, is a good example of the economic warlords who disregard Beijing’s decrees in quest of political fame. Zhao plans to transform Zhengzhou from the dreary capital of Henan, one of China’s poorest provinces, into the “‘Chicago of the East’—a gateway between the booming coast and the vast interior—by more than tripling the city’s size.”63 A $100 million waterfront arts complex, complete with dancing fountains and laser beams, illustrates the type of hyper-investment for which local governments vigorously compete. In fact, despite the central government’s repeated mandates to curb spending, top planners have resorted to using satellites to “spot bulldozers working on illegal construction projects in far-flung provinces. Indeed, much like the ancient warlords who ruthlessly expanded their powerbases in the celebrated Three Kingdoms era, “[e]conomic growth has become the path to career glory for city mayors.” The swords and spears once wielded by local strongmen have been replaced by new weapons of choice— financial subsidies and tax incentives—yet the goals are ultimately the same: economic power and political prestige. A Hong Kong economist recently compared “modern Chinese cities to corporations, and their mayors to chief executive officers, all competing with each other to expand their business empires.” In fact, much to the chagrin of top-level planners, “[t]he majority of China’s 660 cities and 2,200 country-level towns have or are planning to build wide roads and lavish squares” in furtherance of local administrators’ legacies. Chinese scholars refer to such localism as chu-hou ching-chi, an economic system in which “thirty huge ‘fiefs’ (provinces, municipalities, and autonomous .
Professor Zheng has made a similar comparison: “Since the governments at different levels could benefit greatly from local economic growth, they acted like entrepreneurs: acquiring raw materials and energy for enterprises; providing the financial resources enterprises needed; and creating markets for enterprise products.”
Many of these projects amount to little more than novelty tourist destinations. For instance, officials in the province of Chongqing recently opened the doors to what they insist is the world’s largest bathroom. Associated Press, China Public Restroom Has 1,000 Stalls, July 6, 2007, . This fourstory “porcelain palace” boasts bizarre amenities including urinals shaped like crocodile mouths and busts resembling the Virgin Mary.

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