Urbanisation in China: The impact of the tax-sharing system and the definitions of new strategies

This working paper examines the evolution of Chinese cities and the challenges they are currently facing. It aims to identify possible patterns of urbanisation in the next forty years. The first part analyses the transformation of Chinese cities as a consequence of the economic policies implemented within the country. The authors argue that the economic reform has accelerated China's urbanisation. Other factors of this massive urbanisation include the improvement of transport infrastructures and the transformation of China's industries. The reform of the tax system between central and local authorities in 1994 is also examined, and its consequences on urbanisation, and its limitations. Based on this analysis, the second part introduces the possible strategies China may adopt for the development of its cities. The objective of these policies will be mainly to control the path of urbanisation to prevent the emergence of super large city and encourage the creation of city networks. Future urban policies will also need to tackle such issues as rural flight and environment protection.