Spatial and institutional urbanisation in China

This paper sheds new light on the characteristics of urbanisation in China, which commenced as a comprehensive social–economic plan in 2014, from the perspective of ‘spatial urbanisation’ and ‘institutional urbanisation’. The paper argues that urbanisation in China comprises not merely ‘spatial urbanisation’, i.e., the concentration of population in certain areas as has been commonly observed in developed countries, but also ‘institutional urbanisation’ in which the institutional barrier has remained in situ to prevent migrants from becoming urban citizens and to suspend true urbanisation. To obtain clear picture of two kinds of urbanisation, the paper conducted the simulation analysis using input–output model. This econometric analysis indicates that ‘spatial urbanisation’ will boost the manufacturing sector, leading to economic growth, while ‘institutional urbanisation’ will cause a structural change towards a service-based economy, which could result in the so-called ‘middle-income trap’ being avoided. Nevertheless, the advancement of ‘institutional urbanisation’ is extremely costly rather than ‘spatial urbanisation’.