Mobile Edition
Print
Get the Mag
Weekly UpdatesINTRODUCTION
It is generally agreed and well documented in the literature that innovative activities within major industrial clusters serve as an important catalyst for city development, high employment, and economic stability (Audretsch 1998; Marceau & Manley 2001; Walcott 2002). Innovative activities have similarly served as the springboard for rapid urban development among Chinese cities over the past two decades (Gurria 2006; Wu & Barnes 2008). The Chinese experiment is interesting in that city and national planners borrowed development models from elsewhere but tried to greatly shorten the timeframe normally associated with the 'city development life cycle'. This paper puts the current approach to regional development in China into a perspective that sheds light on the issues likely to impede efforts to ensure the viability of its cities.
The massive urbanization of China in recent years is unparalleled in human history. From 1978-2005, China's rural population dropped from 82 to 57 percent, as approximately 400 million new residents were added to the populations of urban centers (Pannell 2007). Economic growth and business formation have given rise to increasing wealth in various cities and the trend is likely to continue for some time. Their fast economic growth has made many Chinese cities serve as laboratories for economic and urban development experiments (Gurria 2006; Ng & Tang 2004), with Shanghai representing the pre-eminent test of spatial strategies to encourage global investment (Wei, Leung & Luo 2006; Wu 2003).
In classic urban growth thinking, cities depend heavily upon effective land planning and supporting infrastructure, economic policies, and government structures to ensure that firms invest and take risks. Since 1990 in Shanghai, these efforts have been concentrated in the Pudong New District (PND), an area of 522 [km.sup.2] to the east of the Huangpu River. The original and continuing intent of PND is to enhance the attractiveness of the city as a focus of foreign direct investment and, eventually, as a global financial center.
This paper is the result of fieldwork over the past two years that has sought to examine economic development, industrial clustering, and innovation among Chinese cities. In July 2007, we conducted a preliminary field study (visits and interviews) of city planning 'strategies' in Suzhou, Shanghai, Xian, and Beijing--cities that have adopted innovative ways to attract foreign direct investment (FDI) and have developed key industrial clusters. The 2007 study served as the precursor to a more focused study that took place in 2008, this time focused on Shanghai and PND, and especially on Zhangjiang High-Tech Park (ZHTP) and the several multinational enterprises (MNEs) whose innovative practices have inspired other Chinese cities and MNEs. Organizations and governmental entities in these cities have been generally reluctant to provide specific information beyond what is obtained during face-to-face meetings so our empirical claims are based upon personal observations, direct interviews, and information translated from Chinese web sources.
We have observed two major levels of innovation that characterize progress in Shanghai and PND. These are: (1) the widely-observed 'new' model of city development wherein a strong, centralized government 'permits' a market economy where ideas flow and economic activities flourish; and (2) the lesser-detailed efforts to accommodate social developments that complement and will be necessary to sustain this economic growth. The principal challenges to city development in China (and in PND in particular) are somewhat predictable and readily observable from developments pushed by leading private sector organizations (the MNEs in PND). Although conflicts with strong central planning are inevitable, the ways in which these issues are confronted are likely to play a major role in the long-term economic success of Shanghai.
The rest of this paper is organized as follows: The next section provides a novel framework to understand the growth of Chinese cities. We refer to this as the Innovative City Development Life Cycle (CDLC) model of Chinese cities, where the phases of the model are readily linked to aspects of the literature on innovative cities. The model is then illustrated in the sections that follow where we detail the aggregate innovations that have taken place in Shanghai and the Pudong New District (PND) since 1990, as well as more detailed innovations implemented in Zhangjinag High-Tech Park (ZHTP) where cluster activity is most obvious. We then focus on a series of social innovations adopted by one specific MNE--the Semiconductor Manufacturing
International Company (SMIC)--and that are serving as models for innovation in other development zones and cities. Finally we summarize the challenges confronting Shanghai, Pudong, and Chinese city development in general.
IINNOVATIVE CITY DEVELOPMENT LIFE CYCLE--CHINESE CITIES
China's economic development since the 1980s has followed a general pattern that emphasizes special trade zones (STZs) to accommodate economic activity. In the push for foreign direct investment (FDI), these zones were primarily designated in or near coastal cities. The most ambitious of these areas are known as economic and technological development zones (ETDZs), which are granted preferential terms and favorable tax rates to attract investment by MNEs. Throughout the 1980's and 90's, this was the dominant approach for Chinese cities to attract foreign direct investment (Branstetter & Feenstra 2002; Sun 1999; Wu & Barnes 2008). Following the initial development of STZs and ETDZs, and in order to compete more effectively on a global basis, many Chinese cities have then attempted to integrate geographically close but economically uncoordinated regions into what are called extended metropolitan regions (EMRs) (Wu & Barnes 2008). In theory, such integration allows planners to coordinate financial resources and to strengthen the global competitiveness of the city and region.
From our observations of Chinese city development and cluster formation patterns, we have developed a model that reflects an innovative city development life cycle (CDLC) model in China. The model includes the following four phases or stages of development:
Stage 1: Infrastructure Building. During this phase, city planners marshal resources to design EMRs in selected cities and/or regions. The major players are the city planners, who put together preferential terms and build hardware and software infrastructure to attract MNEs to invest. At this stage, MNEs evaluate the feasibility of establishing operations in the designated zones and, in conjunction with other civil parties, play a minor role in city planning. Since the main objective in this phase is for city planners to provide feasible solutions to attract MNEs, generous and favorable economic terms are generally offered. We use the term 'honeymoon stage' to describe the earliest interactions between city planners and MNEs.
Stage 2: Cluster Development. Once a sufficient number of MNEs establish operations in special zones, the role of city planners gradually fades away, with the MNEs assuming the major responsibilities in cluster formation. At this stage, there are likely to be power struggles between city planners and MNEs which may require adjustments from both sides to achieve the collective goal of success. The major feature in this stage is 'clashes and adjustments' as planning and implementation switch to MNEs. There are two key turning points during Stage 2. The first is the transition from planning authority vested in formal governmental agencies, such as city planners, to a more informal and evolutionary pattern of growth and maturation determined by MNE activities. The second is the initiation of a role for civil and social entities such as non-governmental organizations (NGOs) and government-officiated non-governmental organizations (GONGOs).
Stage 3: Progress Retention. Once MNEs are fully established in designated EMRs, they promote their own initiatives and innovations to ensure survival. At this stage, the role of city planners is further diminished, while civil and social organizations begin to engage in the city development process. Since MNEs play the key role at this point, we describe this stage as 'MNE-dictated developments'.
Stage 4: Harmonious Society. The term 'harmonious society' has been loosely used by nearly all Chinese cities and city planners as their ultimate goal. Roughly this means that governmental agencies will oversee the well-being of citizens, that MNEs will share corporate profits 'fairly' with local residents, and that local civil and social parties ('civil voices') will provide social assistance to ensure sustainable growth.
There is a key turning point during this stage. With their vested interests in mind, civil and social parties encourage programs such as corporate social responsibility (CSR) to ensure long-term progress. Since civil and social parties will dominate the city's planning once the city development life cycle reaches the mature stage, the major feature in this stage is 'social mandates and civil voices'.
To complement the Innovative City Development Life Cycle notion (the stages outlined above), we have also identified the major innovations associated with each of the four phases in Shanghai and Pudong's developments.
SHANGHAI AND THE PUDONG NEW DISTRICT (PND)
The establishment of the Pudong New District (PND) in Shanghai has followed the Innovative City Development Life Cycle described above. PND was conceptualized in 1990 as a special trade zone (STZ), with the Shanghai Municipal Government then choosing in 1992 to emphasize integrated regions and designating four major zones (Wei et al. 2006; Wu 2003), each with a focus on a strategically important cluster of industries and/or economic activities. The four areas are: the Lujiazui Financial and Trade Zone, the Jingqiao Export Processing Zone, the Waigaoqiao Free Trade Zone, and the Zhanjiang High Tech Park.
FEED