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Corruption threatens progress in PRC's cities

Beijing and Shanghai won their respective bids to host the 2008 Olympic Games and the 2010 World Exposition. Moreover, Lu Hao (陸昊) -- a political amateur with a master's degree in economics from Peking University -- was elected Beijing vice mayor in January at the age of 35. From the way that these cities are being managed and their unusual personnel arrangements, it is not hard to detect Chinese efforts at international marketing through its cities. Behind this attempt is a hope to polish its international reputation and boost development.

However, does the central government have sufficient resources to pass around to all cities hosting international events? If not, what will happen to the relationships between the central and local governments, and between the major cities?

The central government's top priority is to solve the problem of the massive number of unemployed. It's also planning for a social welfare system that includes unemployment subsidies. But its ability to draw resources is questionable.

The corruption of officials is the biggest problem in China. This problem directly affects the Chinese Communist Party's reputation and casts doubts about its ability to rule the nation. Moreover, the central government has problems collecting local taxes -- which directly affects its ability to distribute resources.

Most cities dare not hope for subsidies from the central government. They only hope the government can loosen some policy restrictions, making it possible for them to solicit foreign capital through preferential treatment so as to facilitate city development that paves the way for hosting international events. Merciless competition between cities has begun, even between cities that should to help each other.

For example, such a fight broke out early this year between Hong Kong and Shenzhen in the Pearl River Delta. Shenzhen Mayor Yu Youjun (于幼軍) publicly criticized Hong Kong Chief Executive Tung Chee Hwa (董建華), claiming that the territory's economic prosperity will trail behind that of Shenzhen in the future, despite Hong Kong's plans to develop high-tech industry.

Yu's remarks came after disagreements over Hong Kong's reluctance to open its checkpoints between the two areas 24 hours a day. On the other hand, Shanghai dominates the Yangtze River Delta, while other cities -- including Ningbo, Changzhou and Suzhou -- that are geographically or economically related to it cannot integrate at all. As the regional economic leader, Shanghai has no intention to carry out any integration of cities or regional production chains.

In his book, entitled China Impact, Japanese scholar Kenichi Ohmae divided China into several major economic zones based on production chains, including the Shanghai-dominated Yangtze River Delta and the Hong Kong-dominated Pearl River Delta. His comments are best viewed as predictions because he has ignored both the central government's inability to distribute resources evenly and the chaotic city development resulting from the lack of integration mechanisms.

According to Chinese President Jiang Zemin's (江澤民) speech to last year's 16th National Congress, one of his goals was to make China a "well-off society," with equal prosperity in urban and rural areas. But now it seems China will become more like Brazil, where severe wealth gaps exist between cities.

Although China's international marketing policy is correct, corruption is likely to create unexpected disasters. Besides, if cities can only attract foreign capital with preferential treatment, they will be severely tested once the global economy recovers or the businesses pull out because the rule of law commands so little respect.

Hsu Tung-ming is a freelance writer based in Beijing.

TRANSLATED BY EDDY CHANG
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