China’s Great Migration

BEIJING – China’s Henan province has a population of about 100 million – larger than that of most countries. In China’s administrative system, a province is at the highest level of sub-national government, followed by counties, cities, and townships. But a township in Guangdong province can easily serve a population of 500,000 to one million – larger than that of many cities outside of China. Thus, it is difficult to overestimate the importance of regional issues – particularly inter-regional disparities – for China’s politics.

China is divided by nature. Among the large continental countries, including India and Brazil, only China has a small segment of coastline but vast interior regions. When the main object of human consumption was food, this was not a problem, because what mattered was land and water. But in modern industrial, urban, and market-based societies, what may matter increasingly are transport costs, which means that geography can cause deep regional inequalities.

Though such disparities can, of course, have other causes as well, geography does seem to explain a lot. First of all, it explains why China’s coastal regions developed earlier and faster after the country launched its market reforms and opened to the world. It was not “preferential” policies or skewed resource allocation by the government that caused China’s coastal cities to boom, but rather their proximity to the ocean, which was and remains the cheapest way to move resources and products.

China may have more and larger high-tech and service industries – sectors that do not depend so heavily on transport – in the future. But, as China grows increasingly dependent on imports of resource commodities to meet its basic needs, its coast will continue to enjoy a transport-cost advantage.