China's Pan-Pearl River Delta: Regional Cooperation and Development

4. Regional Cooperation in China’s Administrative Region Economy: Its Links with Pan-Pearl River Delta Development

4 Regional Cooperation in China’s Administrative Region Economy: Its Links with Pan-Pearl River Delta Development Junde Liu The forces of globalization have led to cross-boundary cooperation worldwide. China has experienced exceptional economic growth since implementing economic reforms 30 years ago, and the country’s significance on the world stage is increasingly recognized. At the same time, inter-regional competition and conflicts are becoming increasingly evident within China’s borders, which has led to the unusual phenomenon of the ‘administrative region economy’ (ARE) and, in turn, given rise to regional imbalance. The focal point for scholars and governments, both within China and internationally, has thus become finding ways to strengthen inter-provincial/regional cooperation, sustain economic growth and narrow the regional gap. This chapter draws on the ARE concept to analyze regional economic conditions under transition and the implications of the administrative region system for regional cooperation. The aim is to investigate and establish a collaborative framework for economic development among administrative regions, and to provide suggestions for Pan-Pearl River Delta (Pan-PRD) cooperation in light of the concurrent workings of AREs. ARE: The Typical Regional Development Pattern in Post-Reform China The 1980–2000 period marked the first phase of China’s economic restructuring. When commissioning research projects in the Wannanshan district of Anhui province, strategic regional studies in Fujian, the upper Minjiang River basin, and Jiangsu-Suzhou-Wuxi-Changzhou, and an administrative region survey in Taizhou (Liu 1996), my research team discovered an unusual phenomenon, characterized by the self-administration of municipalities, intense competition for capital, resources, projects and labour, the duplication of infrastructure and economic structures, and conflicts of interest. I call this phenomenon, which is a reflection of the impact of the country’s administrative system on urban and regional development and planning, 64 Junde Liu ‘ARE under China’s transition’ (Shu and Liu 1994). Studies carried out in Haikou and Jiangshan (Liu, Wu and Shu 1993), Hainan Province, Caojia Du, and Shanghai (Liu 1998), and other cities in the Yangtze River Delta (YRD) region (Liu 2000) have confirmed its existence. Characteristics of the ARE The term ‘administrative region economy’ (ARE) refers to the unique economic structure of China’s administrative regions. It stems from the restructuring of the country’s economy from a hierarchical to a horizontal economic system, and corresponds to Shu’s (1995) ‘economy of regional economies’.The boundaries of the administrative regions in an ARE act as invisible walls that constrain collaboration among localities (Zhou 1999). The other typical characteristics of an ARE are as follows. Competition among enterprises is heavily influenced by government intervention. The flow of productive capital among locations is severely hindered, and local economic structures appear stabilized. Finally, administration appears institutionally inseparable from the economy at various administrative levels, and the economic conditions of the outermost strips of administrative regions are usually deteriorating (Shu 1995). ARE has both positive and negative connotations, and is different from a ‘dukedom economy’. For example, since China’s economic reforms, the central government has delegated a considerable degree of authority to municipal governments, which has resulted in unprecedented growth in many localities and, in turn, significantly contributed to the country’s economic boom. At the same time, however, the ARE structure has motivated the privileging of personal interests, increased the self-centredness of local municipalities, and led to the duplication of infrastructure, fragmentation of markets and municipal isolation. Regional economic growth is now dependent on the institution of administrative regions. In essence, China’s emerging ARE has the following attributes, which can be grouped into four broad categories (Liu 2004). (1) Administrative nature of the ARE. Administrative region governments play a role in directing regional economic growth and have the administrative power to ensure the achievement of economic goals, which is the major difference between an ARE and an economic zone economy. In an ARE, the regional economy is dependent on the institution of administrative regions, and an administrative region is a mesosphere of political and administrative power. The larger the share of administrative region resources that a municipality withholds, the more advantageous the position it commands in that region’s development. 65 Regional Cooperation in China’s Administrative Region Economy (2) Closed-door nature of the ARE. Because of personal interests in each administrative region, secrecy is the norm. There is little or no movement of productive capital among municipalities, and resource utility is not maximized...