China’s Urbanization and the World Economy
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China’s Urbanization and the World Economy

Fan Zhang

This innovative book places China’s urbanization within a broader global context, including a detailed estimate of China’s total domestic market and its impact on the world economy.
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Chapter 6: Infrastructure and housing construction

Fan Zhang


To get rich, build a road first; to get rich first, build a fast road. (Chinese saying) Urbanization is both a process of concentration of population and a process of geographical expansion. The infrastructure and housing construction played a great role in Chinese cities' geographical expansion. Cities of all sizes in China have been rebuilt during the past 30 years. Someone who left the country five years ago might not find their way around in their today hometown because every block has been rebuilt. Infrastructure is here defined as: (1) public utilities, for example electricity and water supply, telecommunications and waste collection; (2) roads and irrigation; and (3) railroads, urban transportation, harbors and airports (World Bank 1993). Urbanization increased the demand for investment in infrastructure. In the past decade, economic growth in China became infrastructure-led growth. Some research shows that the marginal contribution rate of infrastructure investment to gross domestic product (GDP) is higher than that of the whole fixed assets investment (Yu et al. 2008). China has followed an infrastructure model of building ahead of demand, 'building impressive infrastructure at lightning speed' (Kim and Nangia 2008). China has had an extremely high savings rate in the past decade and allocated a large amount of resources for investments in general (Table 6.1). China's savings and investments were much higher than those of many countries in the world. There have been two institutional factors involved in China's infrastructural investment process.

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