Analysis Of Urbanization In China From The Perspective Of Industrial Agglomeration

The analysis of urbanization in China needs to solve the problem that why it isnecessary to analyze urbanization in China and to decide from which perspectiveshould the analysis precede. Also, the question of what approaches to be adopted hasto be answered. Firstly, while urbanization in China now is full of inspiringopportunities for good, it also associates with development lagging behind.Accordingly, there is unlimited and indefinite potentiality needing propulsion andpromotion. In addition, the essence of urbanization and towns’ development lies inspatial agglomeration, and the spatial agglomeration of economic activities is the mostapparent trait and the commonest form of expression of urbanization. Furthermore,new economic geography school, based on increasing returns, the market structure ofmonopolistic competition, and costs of transportation, recreates the analysis model ofspatial economics, which places the foundation of the return of urbanization, on thebasis of spatial agglomeration, to mainstream economics. In sum, the key point of thisanalysis is the urbanization in China, with concrete and specific study by way ofSpatial Economics (New Economic Geography) in the perspective of (industry)spatial agglomeration.The progress of towns’ formation and development in the perspective of spatialagglomeration experiences the initial concern, the halfway lost, the efforts of theregression and the dawn of the renaissance. The initial concern mainly displays itselfin the mention of urban economy by the ancient Greek scholar (such as Xenophon,Plato, etc.), the research of economic operation mode based on the costs oftransportation by early economists Hom ladder Long, and the research framework ofindustry layout and urban development reflected in the ambitious and slightly messybooks by Smith. The halfway lost chiefly reflects in the “refrigerated” handling ofspace factors by Ricardo based on the analysis which was later called “Ricardo vice”by Schumpeter, and the primary theoretical system and the exclusion of the spacefactors by Marshall. The efforts of the regression principally undertake the attention paid to space factors in the stage of halfway lost, which reflects in the innovativeattempts of analysis technology. Location theory and urban economics are therepresentatives. Failed ends result from the lack of framework model with thepresumption of increasing returns, costs of transportation and factor mobility in thecontext of monopolistic competition. The dawn of the renaissance essentially exhibitsin the processing technology and the explanatory angle of industry agglomeration andurbanization innovation by new economic geography school, providing a standardanalysis framework of mainstream economics to the research of space factors.The two-stage model of towns’ formation and development, based on theperspective of spatial agglomeration, includes the situation of homogenous space andthat of non-homogenous space. The two-stage model in the situation of homogenousspace proceeds via combing the facet of endogenous motivation that promotesagglomeration with the aspect of self-reinforcing mechanism that comes fromagglomeration externalities. Specifically, the two-stage model in this situation can bedescribed as follows. The first stage is the endogenous process of the formation ofagglomeration: the diversities in the area of consumption and production makeincreasing returns, which promotes the centralized layout of manufacturingenterprises, leading to agglomeration, as well as resulting in the agglomeration ofother related economic entities and elements to make a city. The second stage isexternal process of self-reinforcing agglomeration: after the formation of the city, theagglomeration formed by externalities can achieve the economic effect of urbanagglomeration by means of externalities, which promotes further agglomerationbetween enterprises and economic entities, consequently, rendering the causalrelationship of cycle of accumulation. On the other side, the two-stage model in thesituation of non-homogenous space expands and extends by way of combing theelement of exogenous incentive that stems from comparative advantages with theaspect of self-reinforcing mechanism that can be ascribed to agglomerationexternalities. Compared with the two-stage of homogenous space which is based onmarket conditions, the two-stage model under this non-homogenous situation has thefollowing two phases. In the first phase of the model, spatial comparative advantages from spatial non-homogenous situation make up the exogenous motivation incentivepromoting towns’ formation, which can be distinguished from the internal motivationof diverse preferences in the first stage of two-stage model in homogenous space. Inthe second phase of the two-stage model, the things happening are almost the sameregardless of the characteristics of the space, whether homogenous or not. What needsnotice is that the assumption and presupposition of the two-stage model in bothsituations discussed above are the perfect and complete performance of the market.However, the appearance and interference of government may have effects on thetwo-stage model, which can either be promoting and positive effects or be digressing,even deforming, and negative effects.On the basis of two-stage model, it is practical to analyze the urbanization inChina since the foundation of the people’s republic of China. Owing to the specialsystem of our country, the urbanization in China rarely conforms to the two-stagemodel. The deformed spatial industry agglomeration can be defined as the industryagglomeration that comes from control and plan considering political, nationalsecurity and other non-economic factors. On the other hand, the adaptive spatialindustry agglomeration can be termed as the industry agglomeration that results fromcontrol and plan taking into account market-economic factors. The deformed spatialindustry agglomeration before the reform and opening can be seen as a distortion anddeviation from the two-stage model, while the adaptive spatial industry agglomerationoccurring after the reform and opening is the return to the two-stage model. Since thereform and opening, the impediment and block of agglomeration come from thesubjective conceptions and perceptions, including restrictions on foreign population(especially those on migrant workers), vigorous development of small cities (mainlyas a blind rural urbanization), unnecessary pessimism of the urban-rural gap and so on.Consequently, the return to the two-stage does not proceed smoothly. Further analysisof current agglomeration indicates that the diversified agglomeration in the process ofurbanization in China can promote the effect of agglomeration, which thereforeadvances towns. Hence, it is necessary to revise and adjust the factors that do not beappropriate for adaptive spatial industry agglomeration and that may lead to deformed spatial industry agglomeration. There are also necessities to rectify the erroneousconceptions that may obstruct the effect of agglomeration economics and to guide toachieve a variety of industry agglomeration to advance the effect of agglomeration.Accordingly, urbanization in China can really return to the track of development ofthe “two-stage”.Research of urbanization based on agglomeration cannot neglect and downplaythe spatial welfare issues, which can be mainly epitomized as spatial imbalance of thegap between the space of urban and rural space. Economic effects and welfare arealways concomitant. After the analysis of towns’ formation and development based onthe spatial agglomeration and study of current situation of the development of China’sindustrial agglomeration and urbanization, the focus of our exploration and discussionchanges from the empirical research in the facet of agglomeration and towns’formation to the standard research of unbalanced development brought about byagglomeration, namely the analysis of the model of the welfare effects. With respectto the problem of the gap between urban space and rural space, it is necessary tonotice the inevitability of the loss of relative welfare resulting from spatial imbalanceof which the gap between urban space and rural space is a representative, in theprocess of returning to the two-stage model. It is equally necessary to be consciouslyaware of the particularity of overall welfare owing to the insufficient effect ofagglomeration which can be attributed to inadequate agglomeration. Therefore,coordinated and supporting development of urban and rural areas should beconsidered and analyzed when urbanization is being guided to return to the two-stagemodel.In sum, the problems and tasks that the process of China’s urbanization on thebasis of agglomeration mainly faces can be divided into two categories. The one is thedigression and even distortion from the two-stage model of towns’ formation, mainlydisplaying in the insufficient agglomeration development in the progress ofurbanization, since the foundation of the people’s republic of China. And the otherone is the issues of dual loss of both overall welfare from insufficient agglomerationand relative loss from spatial imbalance, exhibiting itself by the problem of gap between urban space and rural space and by the fact that the problem is obvious andmay go into further deterioration. As far as this paper is concerned, there existsreasonable and accessible development path of urbanization, which deliberately andelaborately considers the efficiency of agglomeration and fairness of rural space andurban space. That is the vigorous development of a large metropolitan area dependingon the development of the eastern coastal cities and major cities with suitablesituations and resources in the central and western regions, associated at the sametime with urbanization in cities of small and middle size and scale hinging on countrydevelopment in relatively marginal and backward areas outside the metropolitan area.In other words, it is a binary urbanization path of development, with the both inharmony.