The Politics of China’s Urbanization

Large-scale urbanization is an economic necessity for China, but a political risk for the Chinese Communist Party.

By Zachary Keck

March 27, 2014

Earlier this month, China released what Xinhua hailed as a “landmark” urbanization plan for the years between 2014 and 2020.

The plan comes as no surprise as China’s top leadership—particularly Premier Li Keqiang—has spent its entire tenure touting greater urbanization as the key to solving China’s economic woes. In line with previous comments, the urbanization plan focuses on the supposed economic benefits of greater urbanization. “Domestic demand is the fundamental impetus for China’s development, and the greatest potential for expanding domestic demand lies in urbanization,” the new document reads, according to Xinhua. 

Whatever the economic benefits it might bring to China, urbanization carries a number of potent political risks for the Chinese Communist Party (CCP), which might explain why some of its central features, such as hukou reforms, haven’t been tried before.

The first political risk of urbanization is that it will strain central-local relations. As I’ve argued before, the importance of central and local government relations in China is vastly understated by foreign analysts. It will also be central to many of the challenges inherent in China’s economic rebalance.

Nowhere is this truer than with urbanization. If the CCP is to successfully implement its urbanization plan, it will have to fundamentally reorient central-local relations. In particular, it will have to allocate larger budgets to China’s local governments—or empower them to raise greater revenues on their own—to allow them to fund the expansion of social services to current and future rural migrant workers.

But larger budgets will mean greater power for local governments. And greater power carries the risk of creating local strongmen that challenge the “emperor[s]” that reside in Beijing. How the top leadership in the CCP can give local governments larger budgets without giving them enough power to challenge Beijing is a dilemma that Xi Jinping and the other members of the Politburo Standing Committee (PBSC) are certainly currently trying to figure out.

This challenge is further compounded by the envisioned design of urbanization. Instead of further enlarging already immense cities like Beijing, Chinese leaders have said they want to concentrate on building up second and third-tier cities, which are predominately located along the Yangtze River. This makes sound economic sense as it allows China to create regional economic belts that exploit comparative advantages and have local economies that are complementary. In some ways, it is not unlike the American system that U.S. politicians like Henry Clay promoted in the 19th Century.

Still, focusing on second and third-tier cities increases the political risks for the top leadership in Beijing. To begin with, expanding the size of more cities will just mean that there are more potential local strongmen that the PBSC will have to control. But it is more difficult to control these local strongmen as they multiply. For instance, the CCP won’t be able to have the heads of all these cities serve on the Politburo. Nor will all of them be rising stars slated for future positions on the PBSC if they continue to toe the Party line.

Equally important is the geography of these second and third-tier cities. Currently, many of the largest localities in China are located in easily accessible areas along China’s coastal region. This makes them fairly easy to control from Beijing. By contrast, the cities that the CCP intends to build up will be farther inland and therefore more impervious to being controlled by the PBSC in Beijing. It’s no accident that Bo Xilai—the most obvious local strongman in recent memory—plotted his power grab from Chongqing.

Besides the strain it will place on central-local relations, urbanization will also increase the potential for mass unrest in China. It’s no secret that there is already a massive amount of political unrest in China. The Chinese Academy of Governance, for instance, has estimated that the number of protests in China doubled between the years of 2006 and 2010, when there were 180,000 reported mass incidents.

Most of these protests pose little threat to the CCP’s hold on power, however, because they overwhelmingly take place in rural areas and are over extremely localized disputes. History demonstrates that regime threatening unrest rarely emanates from rural areas except when there is a strong local vanguard movement—such as the Chinese Communist Party—to unify these disparate protesters. There are a number of reasons for this.

To begin with, as already noted, rural protests tend to be over extremely localized grievances that don’t necessarily ignite people across the country. Moreover, population densities in rural areas are small and thus there is a low potential for unrest to spread quickly and create a domino effect. The potential for unrest to spread significantly is also mitigated by the fact that there is rarely a large media presence in rural areas. Even the local populace itself is unlikely to be tech savvy in documenting the government’s response and posting it online for the rest of the country and world to see. Thus, most “mass incidents” in China go uncovered in the local and foreign media.

Finally, if need be, the central government can portary egregious actions taken by the government as the fault of the local leaders alone. It’s completely plausible—and indeed even likely—that the central government was not aware of the actions of the local governments. Thus, rural populations can continue to believe that if only the central government knew what was going on in their local areas, they would move quickly to stop it. The fact that rural populations often travel to Beijing to petition the central government over local grievances demonstrates that this dynamic is alive and well in China today.

However, all of these conditions that make rural unrest manageable for the CCP are not present in large cities. Urban dwellers tend to have similar grievances and thus will be able to relate to protesters in different cities. High population density and large media presences—both traditional media and tech savvy citizens—will make it a lot more likely that protests could spiral out of control quickly. It’s harder for Beijing to claim ignorance of the actions of local governments in cities where the central government has a large presence, and the leader of the local government is a Politburo or other high-ranking member of the Party.

None of this is to say that urbanization will bring about the collapse of the CCP that the West has been forecasting since 1989. But it does put the CCP at greater risk of having to contend with massive unrest, the likes of which it has not seen since Tiananmen Square. Should that massive unrest combine with the defection of Party members sick of central government control, the challenge to the CCP’s power could be unprecedented.