‘Drivers of Urban Development in China: Measuring Development and Comparing Models’

This study uses data from 99 Chinese cities covering the decade from 2000 to 2010 to look at factors that drive urban development in China. There are data available to test standard measures of development like housing price. However, there are fundamental problems with doing so due to a Chinese housing market shaped by factors like planned construction with waiting lists, housing as the best and most viable option for the typical Chinese with savings to invest, and the still-growing phenomenon of ghost cities. This study considers using housing price, regional gross production, GDP, employment, population, and disposable income to capture the reality of urban development over the past decade in China, settling on three models using regional gross production, GDP and disposable income. In particular, the study asks whether traditional economic factors, development of the new economy, the creative class model, or the rising power of cultural development is most associated with urban development in the major cities of China in the past decade. Using regression models, the study finds that tourism income was significantly positively related with all three measures of development, and fixed cultural investment was significantly positively related with regional gross production and GDP, though cultural policy spending did not. This provides some support for the role of cultural factors in development in China. Urban sprawl (measured by residential area/population) was found to be significant positively correlated to disposable income but not RGP or GDP, suggesting rise in disposable income also gives rise to empty housing used for investment. Change in the number of university students was significantly negatively related to GDP, implying that, without other controls for the cost of education, an increase in the current number of university students shifts resources away from economic activity.