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Integrated urban-rural development is new norm

GAO FAN | 2020-09-17
(Chinese Social Sciences Today)

A farmer stacks hay bales in Xiangyang County, Guanghan City, Southwest China’s Sichuan Province. Photo: XINHUA

The transformation of the urban-rural relationship is a realistic problem that developing countries commonly encounter in the process of modernization. Since the founding of the People’s Republic of China (PRC), China’s socialist modernization has been accompanied by an evolving urban-rural relationship. The urban-rural relationship has supported the attainment of socioeconomic goals at different stages, while in turn the achievements of socioeconomic development have led to the dynamic adjustment of the urban-rural relationship. 
To some extent, China’s modernization process is the evolutionary history of the urban-rural relationship. In particular, after completing two phases of “rural areas supporting urban areas” and “urban areas helping rural areas,” the urban-rural relationship in China has entered a new stage of integrated development.
The 19th CPC National Congress proposed that “we need to put in place sound systems, mechanisms and policies for promoting integrated urban-rural development.” To this end, the questions of how to comprehend such a shift toward integrated development and what is the nature and practical mechanism for it are worthy of discussion.
Historical progress
Drawing on the movement of contradictions between productive forces and relations of production, Marxist political economy theory expounds that the relationship between urban and rural areas will go through separation, then opposition and finally on to integration and development. The theory also identifies the significance of integrated urban-rural development in the enabling of all members of society to develop in an all-around way. 
Treating the urban-rural relationship as a process of historical evolution and associating it with human development is the prominent feature of Marxist theory on the topic. Since the founding of the PRC, China’s urban-rural relationship has gradually moved to a state of integrated development.
From 1949 to 1977, China established an urban-rural institutional system in which “rural areas support urban areas.” During this period the government facilitated mandatory plans, the hukou system (the household registration system), and the people’s commune system to borrow rural support for urban development, which has been beneficial to setting up and perfecting the industrial sector in China, though it has intensified the institutional imbalance between cities and villages.
After 1978, market reforms partially addressed this imbalance, making room for spontaneous allocation of production factors between urban and rural areas. Due to the reallocation of factors prompted by the market reforms, farmers’ living conditions have generally improved.
However, the rural labor force factor mainly has a one-way outflow pattern, while the income and consumption gap between urban and rural areas has been widening. Though still under the market mechanism, the urban-rural relationship characterized by “rural areas supporting urban areas” has been weakened in some ways, and the imbalance of urban-rural development prevails.
In the 21st century, with rapid economic growth and the opposition between urban and rural areas, the Chinese government seeks innovative development ideas and policies to promote the urban-rural relationship. The former includes the scientific outlook on development, integrated economic and social development in urban and rural areas, and the mechanism of “industry promoting agriculture and urban areas helping rural areas.” The latter involves abolition of the agricultural tax, increasing financial input in rural infrastructure and public services, and targeted poverty alleviation. 
The essence of these measures is to resort to national power to promote strategies of “urban areas helping rural areas” and urban-rural integration, signaling a shift of focus to the countryside from an urban oriented mindset. 
The integrated development of urban and rural areas is the evolution of policies where “rural areas supporting urban areas” and “urban areas helping rural areas,”  given that residents of urban and rural areas would benefit from a division of economy and interaction. 
There is no hierarchy between urban and rural areas when they mutually promote and support each other. Both urban and rural residents are participants, advocates and beneficiaries of integrated development. Therefore, we would argue that integrated urban-rural development is based on the logic of residents’ personal choices and market resource allocation. The government is mainly in charge of the supply of public goods such as maintaining market order. In the end, the adjustment of the urban-rural relationship is rooted in improving the overall welfare of the society as a whole.
For China, achieving integrated urban and rural development is consistent with breaking through the bottleneck of unbalanced and inadequate development and also with the goal of building a moderately prosperous society in all respects. It can be said that the integrated development of urban and rural areas acts as a ballast in China’s overall modernization. It is not a short-term strategic arrangement, but a long-term strategic one.
Concrete measures
China’s economic development and institutional reform complement each other, and the adjustment of the urban-rural relationship is also inseparable from institutional dynamics. The imbalance between urban and rural areas is reflected in urban-rural income and consumption disparities, which in essence originates from the long-standing urban-rural dual structure. 
As a result, integrated urban-rural development should focus on breaking down barriers from the perspective of institutions, so that urban and rural residents gain more equal opportunities and more efficient market order. 
It is the internal logic of integrated urban-rural development that institutional reform impacts the behavior of subjects who in turn influence the relationship between urban and rural areas. The key to the integrated development of urban and rural areas in China is to form a set of systems conducive to the complementary and interactive development and win-win cooperation of urban and rural areas.
First of all, the “urban orientation” and “villages as tools to support cities” mindsets need to be abandoned. Rural development should be regarded as an inherent requirement and component of modernization. In addition to the supply of agricultural products and production factors, more attention should be given to stable social order, food security, cultural inheritance, and ecological protection in rural areas. A more objective comprehensive understanding of the role of the rural sector is of significance to China’s overall modernization.
Next, a wider range of products and factors flowing between urban and rural areas should be encouraged. With all of the diverse services and industrial forms in today’s world, the quantity, type, quality and profits of rural products should be enhanced. By combining the outflow and inflow of rural production factors, we should boost capital, knowledge, information, technology, management, data and other factors in the flow from city to countryside.
 In the end, more combinations of factors will be generated based on market demand, thus forming a more extensive and sustainable pattern of factor flow between urban and rural areas.
Third, the reform of the property rights system for factors of production and the market transaction system should be deepened. The reform of farmland and homestead systems should follow the principle of “separation of three rights,” which means on the premise of respecting ownership and contracting rights (or qualification rights), management rights (or right of use) should become the focus of farmland property rights system reform. 
At the same time, the process of transforming rural land into urban land should be standardized, while forming a pricing mechanism for land transfer aided by the market, so as to highlight farmers’ power in land transfer and income distribution. In this regard, the government should better play the role of market transaction information provision and market order maintenance.
Finally, we should accelerate the equalization of basic public services in cities and villages. The significance and scope of basic public services should be clearly defined and dynamically adjusted as time goes on. In the provision of basic public services, a bottom line for residents’ living conditions and the responsibility of the government should be made clear. 
As a long-term development goal, the integrated development of urban and rural areas should take into account whether different subjects have the capacity and willingness to pull through with this strategy. Therefore, the institutional design for integrated urban-rural development should not only consider the question of “what should be done,” but also the question of “what the reality is like,” and it should make concern for incentive-participant compatibility an integral part of deepening the reform.
Theoretical value
Looking back on China’s modernization, the policy has evolved from “rural areas supporting urban areas,” to “urban areas helping rural areas,” and furthermore to integrated urban-rural development in an all-around manner. Throughout this process, our understanding of the relationship between cities and villages has deepened. The former two policies both included constraints and development plans, which have strongly supported China’s modernization during certain periods. 
In the new era, China has highlighted the integrated development of urban and rural areas and put more emphasis on allocation efficiency and equal access to basic public goods in cities and villages, so that both urban and rural residents can share the achievement of China’s development.
Integrated urban-rural development goes beyond economic dimensions to include a diverse spectrum of social, cultural, ecological and other fields. It is the integration not only of urban and rural areas but also different sectors in rural and urban areas. Therefore, integrated urban-rural development emphasizes the need to narrow the gap between cities and villages and the living standard of residents, but it doesn’t mean a convergence of the urban-rural income or consumption gap. In fact, the equalization of welfare is more consistent with integrated urban and rural development than a narrowing income gap.
By connecting China’s urban and rural relations with the deepening of economic reform and fundamentally exploring ways to reshape urban-rural relations, we can form a more targeted and long-term public policy for urban and rural development. 
In addition, the study of local factors in the formation and transformation of China’s urban and rural dual structure would help map the trajectory of urban and rural development and promote theoretical innovation. To study the impact of national development strategy, development concepts, and government behaviors regarding the urban-rural relationship, as well as the interaction between economic institutional reform and the urban-rural relationship, would also be of help. Overall, this would support the establishment of a socialist political economy with Chinese characteristics.
Gao Fan is a professor from the School of Economics at Fudan University. 
edited by YANG XUE