Editor's recommendation
1. Compare global experience, analyze the local status, base on the current development difficulties of China, and focus on Shanghai's development path.
2. Call for the abolition of the threshold for free population mobility, advocate the development of large cities to promote China's urbanization process, and advise the replacement of the pursuit of regional GDP balance with a balanced per capita GDP. Let the construction land indicators be transferred across provinces, let migrant workers enjoy the same public welfare benefits in big cities, let left-behind children enter the city for education, and let the urban diseases be solved in the crowded... Beyond prejudice, it is reasonable.
3. Escape back to Beijing, Shanghai and Guangzhou! Systematically demonstrate the benefits of developing big cities to individuals, groups and countries!
4. Professor Lu Ming, the most influential young scholar in Chinese humanities and social sciences, has been studying and advocating opinions for many years, and is based on empirical anti-sterility and consensus-building work.
Introduction to content
Economist Professor Lu Ming's " Great Countries and Great City " focuses on the practical problems that exist in China's current urban and rural economic development. House prices have risen sharply, smog covers the sky, traffic congestion; the dilemma of empty-nest elderly, left-behind children, and migrant workers... China's urbanization process has just passed halfway, but the symptoms of big cities and the hidden pain in rural areas have become the focus of people's attention. Can the problem be solved by restricting the population inflow in big cities and allowing migrant workers to return home? No! Go to the city and talk about homesickness. The author compares global experience, based on local status, and based on empirical evidence, and advocates the importance of China's development of big cities. Social problems should be relieved rather than blocked. Only by allowing the market itself to fully play its role in regulating production factors, including labor, can we fundamentally solve the current difficult social problems. The function of the government is not to compete with the market, but to lay out scientific infrastructure and provide public service supply with a long-term perspective in places where markets are aphasia. "Great Powers and Great City" will tell you that only when economic development is concentrated can we move towards balance. Only by replacing the pursuing balance of regional GDP by pursuing balance of per capita GDP can we fully exert the national competitiveness of a major country and enhance the public interests of all people.
Author Profile
Lu Ming, a distinguished professor and doctoral supervisor at the Antai School of Economics and Management, Shanghai Jiaotong University. As a visiting professor (or part-time researcher), he was hired in many universities such as Fudan University , Peking University and Ichibashi University , and has served as consulting expert of the World Bank and the Asian Development Bank, and participated in international cooperative research projects such as the World Bank and the Asian Development Bank. The main research areas are labor economics, urban and rural and regional development, and socioeconomics.
was named one of the most influential young scholars in Chinese humanities and social sciences in 2015.
trial reading
Why is the dream of a great country so charming?
Then why is it very important as a big country? Whether in the past modern economy or in the modern economy, "big" has many benefits.
Let’s start with the pre-modern economy. The ancient Chinese split and reunification eventually turned towards unification. Why? The ancient emperors thought of three things. The first thing is to collect taxes. "The Book of Songs: Xiaoya" says, "All under the sky is the king's land; and all the land is the king's minister." Based on this concept, for the emperor, the bigger the country, the better. The second thing is also very important, which is to diversify risks. The same earthquake may be devastating to a small country, but for a big country like China, it can achieve "support from all sides when there is any difficulty"; for the emperor living in the capital, building roads and canals connecting the capital and other places is a very important function to ensure that the food supply in the imperial city will not be affected by natural disasters in some places. The third aspect is safety. China's "Central Plains" are mainly plains and there is no particularly insurmountable natural barrier. Therefore, once the ancient Chinese dynasties were divided into several small countries, wars continued, and once the country was unified, it would be relatively long-term. At the same time, major powers also have an economic effect on scale in providing national defense and protecting the security of the entire country - when the country is large, per capita military expenditure can be diluted. The economies of scale that a big country, such as
, are still important in modern times, and can even be said to be even more important.For example, to diversify risks, in ancient times, risks in different regions mainly came from natural disasters, while in modern times, technology, finance, policy, and international environment may all become sources of economic risks. Recent studies have found that large economies have relatively small economic fluctuations. The old Chinese saying goes, "The East is not bright, the West is bright", but the same is true for the modern economy.
In the modern economy, the economic structure is mainly industry and service industries. At this time, the importance of scale is stronger than that of the pre-modern period. I will list several main aspects here.
First, big countries may develop "strategic industries" with the help of economies of scale. For example, the large civil aircraft industry has a very large initial investment. The larger the domestic market, the lower the average production cost. If we want to ensure that the industry achieves a balance between revenue and expenditure, we must have a minimum domestic market size so that the cost of manufacturing these aircraft can be basically compensated. So far, there are only three places in the world that have large enough markets to meet the scale required to develop the large aircraft industry, one is the United States, one is Europe, and the other is China.
The second aspect is technological innovation. Due to the large market size of China, many small technological innovations can survive in this market. Market size is conducive to innovation, which is very important. China's market sales volume is large enough to make up for the initial investment in the product research and development stage, and is also conducive to the large-scale production of certain sub-products. For example, "car safety buckle" - I guess this is a product that can only be purchased in China. Its function is to insert it into the socket of the seat belt and some cars with reminding them to tie the seat belt will "shut up". Foreigners once were surprised that China actually called this unsafe thing "car safety buckle", and at the same time, they were also surprised that there were so many styles of such products. In this regard, readers only need to search for "car safety buckle" on Taobao to experience it. One of the pictures of the safety buckles reminds you that "for the safety of you and your family, please use a seat belt to drive a car" (Who says Chinese people don't have a sense of humor?). Here, although I have given an example of black humor, there are actually many examples of scale that are conducive to innovation, including Taobao itself. You should know that if you leave the total population, Taobao cannot live so well. The world's online shopping platforms are developing the best in the United States and China, which is not unrelated to the many people who speak English and Chinese. Similar examples include mobile software (such as WeChat). Even now many multinational companies are moving R&D bases to China, which is also eyeing China's huge market.
The third aspect is the provision of public goods. In the pre-modern era, public goods mainly refer to national defense, but in modern times, public goods have become more common. For example, satellite navigation system, the United States was the first to develop and apply satellite navigation systems in the world, followed by Western Europe and Russia. For China, due to the benefits of economies of scale, we can develop our own satellite navigation system. In fact, China's "Beidou" satellite navigation system has begun to work. At the same time, China has begun to enter the ranks of global public goods providers. For example, Gulf of Aden 's escort and participation in medical assistance to fight the Ebola virus is international public goods. Because China's economy is large, although it is still a developing country, we still have the ability to provide such international public goods. Recently, China initiated the establishment of the Asian Infrastructure Investment Bank, which is another example of the nature of international public goods.
The fourth aspect is related to modern service industry . Nowadays, the truly powerful countries in the world have their competitiveness concentrated in the so-called modern service industry, and the industries that mark a country's strength are basically finance, medical care, education, and culture. There are three iconic sources of competitiveness in the United States, one is Wall Street, one is university, and the other is Hollywood. These modern service industries all require a certain scale to attract first-class talents from all over the world. The cultural and educational industries benefit particularly from the economies of scale in major countries, because these two industries have certain cultural barriers between countries.For example, the value of mainland movie stars has increased rapidly, so film and television stars from Hong Kong and Taiwan have entered the mainland to film, and singers are also competing to participate in TV programs, which is related to the scale of the mainland market. The reason why programs like Hunan Satellite TV " I am a singer " have cross-border appeal is related to their large-scale production; and the fact that a satellite TV station in a province in China can have such a large-scale investment in TV production is related to the advertising revenue behind this market scale. The same is true for the education industry. Business schools can offer international MBA programs to teach "China's economy". Correspondingly, studying China's economy itself can become an important topic. If these are separated from the scale of China's economy, they may be difficult to succeed.
The modern global economy has achieved "globalization", and international trade is very important. No country can achieve development in the closed-door country. In this case, there is a very important benefit that can only be enjoyed by a few major countries (or economies). This benefit is that it can obtain the seigniorship tax as an international vehicle currency (IVC). In international economic and trade exchanges, the transaction cost of using foreign currencies as a medium of transactions is negatively correlated with the degree of global use of this currency. To become an IVC, a country's economy must maintain its advantage over other economies for a considerable period of time. Currently, the main IVCs in the world are the US dollar and the euro. The pound, which was once an IVC, was gradually replaced by the relative decline of the British economy, and the ratio of Japan to the United States GDP was only 60% at its peak in 1991. Therefore, the yen has never really become an IVC. In the future, as the RMB gradually becomes internationalized, it should only be a matter of time before the RMB becomes IVC. At the end of 2015, the RMB was included in a basket of currencies for the IMF's special draw rights and ranked third, which is a landmark event.
Although you can get many benefits as a big country, this does not mean that the larger the country, the better. As a country's land area increases, the country's population size, ethnic diversity and natural resources will also increase, which will increase the country's governance costs. The transaction costs of commercial transactions between different ethnic groups within a country are even comparable to the transaction costs of trade between different countries. Therefore, the optimal size of a country depends on the trade-off between the benefits brought about by the increase in the country's size and the increase in governance costs. In fact, even in the peace period when there was no large-scale war in World War II, the scale of many countries around the world changed due to this comparison of costs and benefits. The most well-known example is the disintegration of the Soviet Union after the end of the Cold War.
The good and difficult of unification of
are known by the emperors in ancient China. After Qin Shihuang unified the six kingdoms, he did a lot of things that were conducive to maintaining national unity: for the sake of governance, Qin Shihuang realized "the same track, the same writing," and unified the weights and measures. Among them, unifying the text is particularly important. Without this step, I guess today's Beijing dialect and Minnan dialect may be two languages, not two dialects. Another very important thing is infrastructure construction. The Qin Dynasty built a "Chidao" from the capital to all directions of the country, and set up many stations along the road, which created conditions for information transmission and maintenance of national unity. However, the next question is how a great country governs and maintains unity.
Looking back at the history of ancient Chinese political or reform, what dynasties hesitated about in history is to implement centralization or decentralization of power in politics. The ancient communication technology and transportation infrastructure were not as perfect as they are now. How could we manage such a large country? So two basic choices emerge. The first option is to decentralize power. For example, after the emperor conquered the country, he distributed all parts of the country to royal relatives. Another type is centralization. The Qin Dynasty established a county system. One of its basic characteristics is that the appointment and removal power of local officials is brought to the central government. Until today, the appointment and removal of provincial local officials is still in the central government; the appointment and removal of officials below the provincial level is not allowed to be appointed and removed by the central government, which is only a matter after the reform and opening up.In history, some dynasties experienced political turmoil and division in the later period of their rule, and even the final destruction of dynasties was caused by political decentralization, especially under the feudal system, where local princes each became kings, which would threaten national unity.
Big cities are immortal - inclusive employment opportunities
Although a large number of scholars advocate not to set restrictions on the development of large cities based on the benefits of economic agglomeration, many people still believe that the priority development of small and medium-sized towns can quickly non-agriculturalize a large number of farmers, reduce the psychological cost of rural labor flow into cities, better combine the urban and rural markets, and require relatively little construction funds, which is more in line with China's national conditions. In fact, the development of large cities and small and medium-sized towns is not mutually exclusive. The development of small and medium-sized towns is based on the development of large cities and is driven by their radiation functions. If the laws of the market economy are violated and the development of large cities is restricted, the result will be that small cities will not develop well.
Due to insufficient understanding of the economic effect of cities in scale, China's urban development policies have always tended to control the urbanization process and limit the population size of large cities. In terms of urbanization speed, the government seems to be intentional to lower the speed of urbanization. For example, the 12th Five-Year Plan proposed that by 2015, the urbanization rate will increase from 47.5% when the plan was formulated to 51.5%, an increase of 4 percentage points in five years, lower than the rate of 1 percentage point in the past year. In fact, by the end of 2014, the urbanization rate had exceeded 54%. In terms of adjustment of the urban system, policy orientation is to focus on promoting the development of small and medium-sized towns, while restricting the development of megacities is specifically reflected in the urban population size restrictions and household registration system.
The 12th Five-Year Plan proposes that "megacities should reasonably control the population size, large and medium-sized cities should strengthen and improve population management, continue to play an important role in absorbing migrant populations, and small and medium-sized cities and towns should relax settlement conditions according to actual conditions." In actual operation, the population restriction policy in large cities is mainly aimed at low-skilled people, which is reflected in the settlement conditions of various places.
For example, Shanghai's settlement implements a scoring policy. Only bachelor's degree or above are qualified for scoring, and the scoring is tilted towards graduates with high education, key universities (such as 211 universities, key universities built by the Ministry of Education) and high-skilled (such as university rankings, foreign language level, computer level). In Shenzhen, migrant workers implement a point system for household registration. Only when the cumulative points reach a certain point value can they apply for household registration. The calculation of points is also tilted towards high-skilled labor. Fresh graduates must have a bachelor's degree or above and a bachelor's degree or above to apply for settlement. The distribution of household registration in Beijing is linked to work units, and the indicators for staying in Beijing are allocated more to public institutions, large state-owned enterprises and foreign-funded enterprises. However, due to the limited number, within these enterprises, the indicators are often allocated to laborers with relatively higher education levels. Not only megacities, but even in some medium-sized cities I surveyed, the settlement standards take educational level as a condition. If all cities across the country don’t have low-skilled people at the same time, where will they go to urbanize?
There is a real concern that as the city population expands, cities will not be able to provide sufficient jobs, thereby aggravating the unemployment problem. It is often believed that low-skilled people will face greater risk of unemployment during urban expansion. So, is this really the case? People who are worried about employment have ignored a simple truth. If those outsiders cannot find jobs in big cities and cannot obtain welfare benefits from locals, then what will they do in big cities?
Almost all arguments against urban development seriously ignore the benefits of urban expansion, which are often not directly visible compared to the disadvantages of urban expansion. The most important source of the benefits of urban development is the so-called "human capital externality". The meaning of this word is that when a person's education level is improved, it can not only improve his income, but also learn and influence each other in his interactions with others, and promote the dissemination and production of knowledge. Therefore, other people's income can also increase.
Some people may say that since the benefits of urban development come from the "human capital externality", then cities only need to keep college students. If you think this way, you're a big mistake. "Human capital externality" is not only enjoyed by college students. Workers with low education levels can also obtain externalities such as knowledge, skills, and information in cities. Even rural immigrants with low education often say that they can gain insight in big cities, which means this.
If you look further, the income increase effect of low-skilled workers in big cities is often greater than that of high-skilled workers. The reason is that everyone can get "human capital externalities" from high educators in the city, thereby increasing their income. However, if a college student stays in a big city to develop, he will face competition among college students, which will reduce their income and thus offset some of the "human capital externalities" to increase income.
, but those with low skills are complementary to those with high skills. On the one hand, in the same production unit, the two are complementary. For example, if the financial district needs to be equipped with cleaners and engineers need to be equipped with operators; on the other hand, if the entire city is regarded as a production unit, then high-skilled and high-income people also need restaurant waiters and housekeeping waiters. I will talk about this question in detail below.
empty interface is unreliable, let’s look at the results of data analysis. More than 10 years of research have found that "human capital externality" does exist. A study I am doing with Professor Edward Glaeser of Harvard University also uses Chinese data to confirm that "human capital externality" exists. A city's per capita education period increases by one year, and the average wage of the city's labor force can increase by 21%, and it is indeed the greater "human capital externality" obtained by low-skilled people.
Generally speaking, cities with higher per capita education levels in cities are also relatively larger cities. Therefore, those who oppose the development of big cities say by intuition alone that as the population size of cities expands, cities will not be able to provide sufficient jobs, which will aggravate the unemployment problem. Opponents of big cities also believe that low-skilled people will face greater risk of unemployment during urban expansion. At the same time, the original urban residents will face more intense labor market competition, which will also aggravate the unemployment problem of the original residents.
So, is the fact as people worry? Existing empirical research has found that the impact of foreign labor entering cities on local residents’ unemployment is very small, but it will indeed bring competition to the labor market, thus inhibiting wage increases. In theory, labor inflow does not necessarily increase unemployment, which is mainly because of the economies of scale for urban development, and the increase in urban population will continue to create new employment opportunities. However, for a long time, empirical evidence about urban expansion helps create jobs is still lacking, and there is no empirical research to provide evidence for how workers with different skills can benefit from urban expansion. In response to these policy debates, Gao Hong and Hirosa Sato and I used the China Family Income Survey (CHIPS) 2002 urban residents data research found that the economic scale effect of urban development is conducive to job creation. For every 1 million increase in urban population, the average employment probability of individuals increases by 0.66 percentage points. Compared with the total urban population size, the concentration of high-skilled workers has a greater impact on employment. On average, for every 1 million more college graduates in a city, it increases the probability of employment for individuals in the region by 4.34 to 6.61 percentage points.
We also found that the employment increase effect of urban expansion is greater for lower skilled labor. For workers whose years of education are less than or equal to 9 years, the employment probability of every 1 million more university graduates in the city will increase by 8.58 percentage points. For workers whose years of education are between 9 and 12 years, this effect has dropped to 3.57 percentage points. Workers with years of education greater than 12 years benefit less, at only 2.12 percentage points.
The effect of urban scale promoting employment varies among workers of different skill levels, and this phenomenon may also be related to China's system. Under the current household registration system, local residents with household registration enjoy better public services and various benefits. Under the constraints of the household registration system, the settlement policies of various places (especially large cities) are tilted to different degrees towards people with high education levels, which encourages people to obtain household registration and corresponding benefits in big cities by excessive pursuit of high diplomas, which aggravates the competition among college students and the difficulty of employment. When high-skilled people are trying to stay in megacities, due to their complementarity with low-skilled labor, the aggregation of college students brings a demand for a large number of low-skilled labor. At this time, the supply of low-skilled labor in cities is subject to institutional constraints. In this way, there is more demand and less supply for low-skilled people, and low-skilled people are more likely to find jobs.
Recently, Beijing Normal University Xing Chunbing and Zhang Junfu from Clark University in the United States jointly completed a study. They found that big cities have many characteristics. In addition to higher population density, the per capita GDP of big cities is higher, there are more large industrial enterprises, while basic education schools are larger in scale, more roads, and less industrial pollutant emissions. Even after controlling for urban characteristics related to urban scale, rural immigrants are still more willing to go to large cities. A representative immigrant is willing to sacrifice 1.72% of his monthly income to go to cities with a population of 1%.
A common worry is, if everyone goes to big cities, will the big cities be crowded? Don't worry, no. The city being crowded is just the imagination of some people who are afraid of the development of big cities. No city in the world has been crowded. In other words, long before a city was crowded, the cost of living in cities was already very high. Even if there are no artificially set institutional barriers, the higher cost of living in large cities (especially housing prices) will become a market mechanism that hinders immigrants from entering large cities. So, after deducting the cost of living, will the net income of immigrants in big cities drop significantly? A study by Gao Hong of Fudan University showed that even after deducting price differences and the cost of living differences represented by housing prices, the actual income in big cities is still higher. In other words, it is because of the institutional barriers to labor mobility, and the balance of population mobility among Chinese cities is far from reaching.
China is entering the post-industrial stage, and after that, cities (especially big cities) are even more important. The law of development of human society is that the more developed the country, the higher the proportion of the service industry in GDP, the higher the urbanization rate, and the population is further gathering in big cities. What is the reason? Because population density is conducive to the development of the service industry. Compared with agriculture and industry, products in the service industry are more untransportable, and most service products need to be completed face to face. At the same time, modern service industry is increasingly relying on knowledge, information and technology as core inputs, and face-to-face communication is conducive to the production and dissemination of knowledge, information and technology.
So, what about the consumer service industry? The consumer service industry follows people and money. On the one hand, in densely populated areas, fixed investment in developing consumer services (such as convenience stores and restaurants) is easier to be shared, and business is easier to do; on the other hand, cities with higher labor productivity, the more rich people, and the stronger people have a demand for consumer services. Among them, services such as restaurants and housekeeping are actually liberating high-skilled people from housework, which is conducive to improving their labor productivity and promoting social division of labor. It is also for this reason that the more a modern city develops high-tech industries and the more production-oriented services it develops, the more demands it drives for consumer-oriented services. As I have repeatedly emphasized, it is because of the above economic laws that the governments of big cities cannot think that they do not need low-skilled workers. On the contrary, a large number of employees in the consumer service industry are workers with low education levels, and the work they are engaged in cannot be replaced by machines. It can be said that given the education level of a country's labor force, it will instead attract large cities to work with a large number of low-skilled laborers.
China's tertiary industry's share of GDP increased from 40.5% in 2001 to 48.2% in 2014, which has exceeded the secondary industry and is approaching the landmark 50% threshold. Careful readers will find that 50% of this point is already too late for China. Compared with countries in the same stage of development internationally, China's tertiary industry accounts for about 10 percentage points lower than that in the country. Coincidentally, China's urbanization rate is about 10 percentage points lower than that of other countries with the same development stage.
The reasons for the lag in China's urban service industry are many aspects. The most common explanations are two: First, in the past 10 years, the continuous low interest rate (the real interest rate after the nominal loan interest rate minus the inflation rate) policy has reduced the cost of capital use and encouraged investment. Correspondingly, industrial sectors with more capital use (especially the heavy industry sectors) have grown rapidly, excluding the growth of the service industry with less capital use; another factor is that the proportion of labor income in income distribution continues to decline, which has also become an important factor restricting the growth of people's income and service consumption. In addition to these reasons, China's urban development model must also be reviewed. If the misunderstanding of hostility to large cities is not corrected early, and the pursuit of low density in urban development will still harm the development of the service industry for many years.
