*2.2. New Town Development*

New town development in China is the main strategy of 'city making', and is the main form of urban development, which is closely connected to the formation of China's pro-growth mechanism. According to Wakeman (2016) "new towns are not a novelty, but have an established history and well-known experiences" [46], and this is also the case in China. New towns or 'new cities'(*xin cheng*) began to gain importance and popularity in the late 1990s, marking the major transition from industrialism to urbanism [4]. The history of new town development in China reflects the evolution of national land politics. The new towns of early 2000s reflected the efforts of local governments to consolidate their territorial authority over urban fringe and rural hinterland where rural governments used to enjoy a high degree of decentralised land control of *kaifaqu* (development zone, usually refers to industrial parks) during the 1980s and early 1990s [4]. Around this time, new towns tended to act as multifunctional satellite or commuter towns constructed to accommodate the rapid growth of the urban population (or university towns for the expansion of universities from late 1990s). However, as intercity competition intensified, the nature of new towns gradually shifted and increasingly became sites for spatial reconfiguration of the city and its wider region. Innovative and sustainable urban concepts such as financial city, eco-city, low-carbon city, smart-city, and knowledge city were used to justify (or simply to label) new town projects. These justifications or labels were designed to tap into the international urban discourses to increase global urban competitiveness and attractiveness.

In China, the term new town covers a wide range of urban development. It can be used to describe new communities, new towns, new districts, and new cities [47], from urban centres, urban fringes, to rural hinterlands. The ambiguity of new towns is not merely a linguistic problem; new towns in China are difficult to explain in terms of a single discourse, urban tradition, or historical era [25]. In practice, various actors, from municipalities to private developers, use the term 'new town' on their projects, from city-level urban projects up to tens of square kilometres, to neighbourhood-level gated communities. In this article, we only look at new town projects initiated by municipalities to see how local governments shape urban outcomes from a political economy perspective.

The study employs a conceptual framework with a two-step approach to explore the linkages between urban growth mechanisms and urban outcomes (Figure 1). In the first step, the dependency on land-leasing revenue in city's fiscal structure is examined, since this is the key indicator of urban growth process as capital accumulation. Chinese local governments have two major sources of revenue: Tax revenue and land-leasing revenues. To measure the dependency of land-leasing revenue, the ratio of land-leasing revenue to total revenue is measured (R). Where a city's land-leasing revenue is equivalent or even surpasses its tax revenue (R ≥ 0.5), then this city relies on land-leasing revenue

and can be regarded as high dependency. As a reference, in 2018, the total tax revenue of all local governments in China is 7595 billion yuan, and the total land-leasing revenue is 6291 billion yuan [48]. The R of all local governments is therefore 0.45. Using this as an average figure and considering the fact that most Chinese cities adopt pro-growth strategies, it is assumed that cities with R from 0.3 to 0.5 have medium dependency on land-leasing revenue and cities with R less than 0.3 have low dependency on land-leasing revenue. The assumption of distinguishing low, medium, and high dependency on land-leasing revenue is not generated through strict quantitative analysis (which is not the goal of the paper). Where a city has far more revenue from tax than from land-leasing, then this city no longer bound by the mechanism of urban growth to boost local fiscal revenue. Thus, it is likely that the main purpose of urban development of the city gradually changes from quantity to quality. This is then examined in more detail by referring to the overall strategies and urban outcomes of the new town projects of these cities. Cities with a high dependency on land-leasing revenue are likely to develop new towns for quantity growth both fiscally and physically. Cities with land revenue as priority have higher risk of overdevelopment and urban sprawl, and those new towns branded with sustainable and innovative concepts, if any, are unlikely to be implemented as they are subject to city branding for capital accumulation. Cities with medium dependency on land-leasing revenue may evolve a mixed growth pattern. For these cities, land-leasing revenue still matters, but they may not rely on massive spatial growth to sustain its land-leasing revenue growth. They may try to focus more on the quality of urban environment as it enhances city's attractiveness in the long run, but the implementation process is likely to be constantly challenged by the need to boost land revenue, especially in new town projects. Finally, cities with low dependency on land-leasing revenue should also have low dependency on spatial growth. New town projects in these cities are likely to aim for urban quality growth such as sustainable urban transition. *Sustainability* **2020**, *12*, x FOR PEER REVIEW 5 of 20 billion yuan [48]. The R of all local governments is therefore 0.45. Using this as an average figure and considering the fact that most Chinese cities adopt pro-growth strategies, it is assumed that cities with R from 0.3 to 0.5 have medium dependency on land-leasing revenue and cities with R less than 0.3 have low dependency on land-leasing revenue. The assumption of distinguishing low, medium, and high dependency on land-leasing revenue is not generated through strict quantitative analysis (which is not the goal of the paper). Where a city has far more revenue from tax than from landleasing, then this city no longer bound by the mechanism of urban growth to boost local fiscal revenue. Thus, it is likely that the main purpose of urban development of the city gradually changes from quantity to quality. This is then examined in more detail by referring to the overall strategies and urban outcomes of the new town projects of these cities. Cities with a high dependency on landleasing revenue are likely to develop new towns for quantity growth both fiscally and physically. Cities with land revenue as priority have higher risk of overdevelopment and urban sprawl, and those new towns branded with sustainable and innovative concepts, if any, are unlikely to be implemented as they are subject to city branding for capital accumulation. Cities with medium dependency on land-leasing revenue may evolve a mixed growth pattern. For these cities, landleasing revenue still matters, but they may not rely on massive spatial growth to sustain its landleasing revenue growth. They may try to focus more on the quality of urban environment as it enhances city's attractiveness in the long run, but the implementation process is likely to be constantly challenged by the need to boost land revenue, especially in new town projects. Finally, cities with low dependency on land-leasing revenue should also have low dependency on spatial growth. New town projects in these cities are likely to aim for urban quality growth such as sustainable urban transition.

**Figure 1.** Conceptual framework with a two-step examination of dependency on pro-growth mechanism to possible urban outcomes*.* **Figure 1.** Conceptual framework with a two-step examination of dependency on pro-growth mechanism to possible urban outcomes.

### **3. Research Methods and Data Collection 3. Research Methods and Data Collection**

The paper draws on empirical evidence from four cities in the Pearl River Delta (PRD) of Guangdong province: Guangzhou, Shenzhen, Foshan, and Zhuhai. They represent the four wealthiest cities in the PRD in terms of GDP per capita, but are very different in terms of city size and population (Table 1). Guangzhou and Shenzhen are first-tier cities and have similar levels of population and GDP, but Guangzhou's land area is much bigger than Shenzhen (i.e., Shenzhen has much higher population density). Zhuhai and Shenzhen have similar levels of GDP per capita but Zhuhai is a much smaller city than Shenzhen with a much lower population density. Foshan has the lowest GDP per capita of the four cities, and around the same level of population density as Guangzhou. They are also different in terms of administrative arrangements: Guangzhou is the The paper draws on empirical evidence from four cities in the Pearl River Delta (PRD) of Guangdong province: Guangzhou, Shenzhen, Foshan, and Zhuhai. They represent the four wealthiest cities in the PRD in terms of GDP per capita, but are very different in terms of city size and population (Table 1). Guangzhou and Shenzhen are first-tier cities and have similar levels of population and GDP, but Guangzhou's land area is much bigger than Shenzhen (i.e., Shenzhen has much higher population density). Zhuhai and Shenzhen have similar levels of GDP per capita but Zhuhai is a much smaller city than Shenzhen with a much lower population density. Foshan has the lowest GDP per capita of the four cities, and around the same level of population density as Guangzhou. They are also different in terms of administrative arrangements: Guangzhou is the provincial capital city of Guangdong

province; Shenzhen and Zhuhai are special economic zones (SEZ) while Shenzhen is directly under the central government; Foshan is an ordinary city.

A major reason for comparing these four cities is they are all located within one highly competitive regional urban system: The Pearl River Delta. It is widely recognised that these cities are often in competition with each other [49–51]. According to Porter's competitive city concept [52], cities compete with each other and their competition does not fundamentally differ from national level competition. Thus, the competitiveness of a city is determined rather by indigenous factors than external ones, among which its local socio-economic environment works as an indispensable source of growth dynamics [21]. Guangzhou and Shenzhen are in competition for the leading role in the PRD region in terms of urban economic development, while Zhuhai as a much smaller city is competing with other megacities for urban environment, liveability, and sustainability. Foshan, on the other hand, as the neighbouring city of Guangzhou, is competing with its lower level of living costs and looser controls on industry. If intercity competition motivates cities to pursue more innovative and sustainable urban development to attract investment, residents, and visitors, then examining cities that interrelate within a highly competitive urban network can provide a richer understanding of the rationale of new town development strategies, how their growth mechanism works, and what this implies for urban sustainability.

**Table 1.** Basic information of Guangzhou, Shenzhen, Foshan, and Zhuhai and their rankings in the Guangdong province.


Source: Statistic Year Books of Guangzhou [53], Shenzhen [54], Foshan [55] and Zhuhai [56].

New-town projects in each of these cities were mapped (see Figure 2). The following rules for selecting new town projects were applied: (1) All new town projects mentioned in the urban master plans; (2) new town projects planned by district governments, but not included in urban master plan; (3) national districts emphasized in the urban master plans. Although some gated communities are also labelled as 'new towns', they are not included in this study. In very rare cases, some other public actors like state-owned enterprises also develop new towns. For example, the Guangzhou Iron and Steel Group developed Guanggang, a new town on its abandoned industrial site, but as it is closer to a gated community project, it is not included either. *Sustainability* **2020**, *12*, x FOR PEER REVIEW 7 of 20

**Figure 2.** Guangzhou, Shenzhen, Foshan, and Zhuhai in Pearl River Delta (PRD) region and their new town projects. **Figure 2.** Guangzhou, Shenzhen, Foshan, and Zhuhai in Pearl River Delta (PRD) region and their new town projects.

Based on these selected cities and new towns, the following data to support the case studies were collected: (1) City-level fiscal data including tax revenue and land-leasing revenue from city-level

to gather supplementary background information regarding new town development in these four cities. Lastly, field work was conducted on some new town projects to examine how they were

Clearly, this contribution (and its approach) is not without its limitations, which are briefly outlined below. First is the limitation of the underlying conceptual framework. The assumed healthy fiscal revenue structure with a low dependency on land-leasing revenue only applies to relatively developed and prosperous cities. Underdeveloped cities (not represented in the selection) may experience very low shares of land-leasing revenue simply because they are in a recession or debt crisis. This situation is growing more common since in recent years the central government has begun to control the scale of local debts and curbed the growth mechanism by limiting the application of certain policy instruments. These cities relied heavily on land revenue before, and their sudden fall in land revenue certainly does not stimulate high-quality growth. Second, this study focuses more on the overall strategies of cities in new town development. In-depth empirical study on urban outcomes of these strategies is needed to further illustrate the physical impact of pro-growth mechanism.

In this section, the dependency on land-leasing revenue of four selected cities is examined. According to data from 2008 to 2018, land revenue has clearly played an increasingly important role in each city's fiscal revenue structure (Figures 3 and 4). For instance, the ratio of land revenue to total revenue in Guangzhou rose from 0.26 in 2008 to 0.49 in 2018, meaning that the growth rate of Guangzhou's land-leasing revenue significantly surpassed the growth rate of tax revenue. Thus, Guangzhou has become increasingly dependent on land-leasing revenue. With almost half of its fiscal revenue from land leasing, Guangzhou has become a city with medium to high dependency on landleasing revenues. Urban development in Guangzhou is not only a means to enhance its competitiveness but also a way of accumulating capital because of the economic revenues generated

Shenzhen's fiscal revenue structure is quite different than that of Guangzhou. As illustrated in Figure 3, the ratio of Shenzhen's land-leasing revenue to its total fiscal revenue never exceeded 0.3

implemented in practice.

during the development process.

**4. Examination of Dependency on Land-Leasing Revenue** 

Based on these selected cities and new towns, the following data to support the case studies were collected: (1) City-level fiscal data including tax revenue and land-leasing revenue from city-level statistic year book and budget performance reports; (2) the latest version of urban master plans; (3) basic information of each new town project including their size, concepts, locations, and initiating actors. In addition, interviews were conducted with local university researchers and urban planners to gather supplementary background information regarding new town development in these four cities. Lastly, field work was conducted on some new town projects to examine how they were implemented in practice.

Clearly, this contribution (and its approach) is not without its limitations, which are briefly outlined below. First is the limitation of the underlying conceptual framework. The assumed healthy fiscal revenue structure with a low dependency on land-leasing revenue only applies to relatively developed and prosperous cities. Underdeveloped cities (not represented in the selection) may experience very low shares of land-leasing revenue simply because they are in a recession or debt crisis. This situation is growing more common since in recent years the central government has begun to control the scale of local debts and curbed the growth mechanism by limiting the application of certain policy instruments. These cities relied heavily on land revenue before, and their sudden fall in land revenue certainly does not stimulate high-quality growth. Second, this study focuses more on the overall strategies of cities in new town development. In-depth empirical study on urban outcomes of these strategies is needed to further illustrate the physical impact of pro-growth mechanism.
