Asymmetrical Integration: Public Finance Deprivation in China's Urbanized Villages

Abstract

China's unprecedented urbanization since the 1978 economic reform has left many rural villages engulfed by expanding urban jurisdictions. Because of the collective ownership of land, these villages have not vanished over night. On the contrary, they have maneuvered to bypass planning and construction codes and rebuilt themselves into high-density neighborhoods, housing millions of migrants in the cities. This paper analyzes the continued survival of the collective economy of these villages-in-the-city ( chengzhongcun) from the perspective of public finance. Urbanized villages remain financially responsible for public services within their jurisdictions, including infrastructure, sanitation, policing, social welfare, and even education. Neither the problem of urban—rural disparities, nor the consequent lack of adequate public services has been resolved by the integration of these villages into urban areas. These villages have had to find new ways to cope with rapid population growth, finance an urbanized community, and at the same time, bear the burden of their stigmatization as a cancerous growth within otherwise ‘modern’ cities. Using the rapidly urbanized Pearl River Delta region as an empirical case, this paper explores how the urban villages are asymmetrically integrated within the cities: they contribute to the city's growth, but receive little or no public support. In contrast with the common sense that incorporation into an urban jurisdiction will bring about rising fiscal investment, in China, it is the rural villages that are financing the growth of cities.