S16: Mayor Economy

• “West of the mountains’: terrain characterised by a plateau bounded partly byTaihang Mountains
• Former banking capital; coal and mining capital in Mao’s China
• Home to the largest number of historic buildings: 70% of China’s surviving buildings built during or predating the Song dynasty (960-1279)

• Third-tier Chinese city, 250 km west of Beijing.
• 2020 census: a population of 3,105,591, of whom 1,790,452 lived in the metro area.
• Buddhist influence from Northern Wei Dynasty (386 to 535 AD): Yungang Grottoes

• Renewing Datong: How to balance conservation and development?
• Mayor Economy: What is it? Is it the key to the China model?
• What is land finance? Key to understanding Chinese urbanization

• A land leasehold market was established, separating ownership from use rights.
• Urban land-use rights can now be leased for profit.
• Land became a commodity, leading to urban expansion and increased land values.

• China’s national housing market started in 1998, and urban housing was mostly privatized by then.
• Homeownership jumped to 80% by 1998: Over 70% of urban household wealth is in real estate, while only 11% is in financial assets.
• Housing prices have risen much faster than household incomes over the past two decades. This makes many households asset-rich but cash-poor.

• Land prices in Chinese cities are driven up by auction systems and buyers’ expectations of future value, leading to speculation.
• Local governments increasingly rely on land sale revenue, which tripled between 2010 and 2021.
• Land sales and related taxes accounted for 37% of total local government revenue in 2021.
• Local governments use land plots and future land sale income as collateral to borrow funds.

• Who is Mayor Geng?
• What drives him as a politician?
• What is his work style as mayor?

• What is Mayor Geng’s vision for Datong and what does the project entail?
• What resources does Datong possess?
• How many households does he plan to demolish?
• What’s the budget? How is the project funded?

• In 2008, work began to rebuild all manner of centuries-old buildings in a dramatic bid to steer the local economy away from coal and toward tourism.
• “One axis, two cities” concept: Geng favored urban renewal and proposed a plan to restore the old city and build a new district, linked by a river as the “axis” between tradition and modernity.
• More than 3 square kilometers of Datong’s city center became a giant construction site: Thousands of homes would have to make way.

• Special-purpose companies, known as Local Government Financing Vehicles (LGFVs), emerged to circumvent borrowing restrictions.
• LGFVs played a key role in raising funds for China’s stimulus package after the 2008 financial crisis.
• Local governments use land assets to fund financing vehicles that borrow from banks and issue bonds for extra funds.

• How do citizens of the old city communicate with the government to make their complaints?
• How does the mayor respond? Why are many told that there’s nothing that can be done for them?

• How does Mayor Geng get re-elected? What is the process?
• Where does he fit in the CCP’s rank and file? How does he work with his subordinates?

• What happens to Ying’s home?
• What happens to Mayor Geng and his Datong project? How do townspeople react?
• Explain: “Datong is not what it used to be.” What changed exactly?

Rebuilding Prince Dai’s Residence, a complex from the Ming dynasty that was no longer present by the Qing dynasty. Demolition for a replica of this residence started in 2010.

• Scholars found Datong’s city plan misguided as it focused on Ming and Qing replicas.
• Datong’s true historical value is linked to the Northern Wei dynasty.
• Over one-third of the old city’s streets and buildings have disappeared since 2008.
• Old houses are often torn down for modern copies, despite plans for “restoration.”

• What is the “mayor economy”? How successful is it as an economic model?
• How can we think of the Chinese state as a corporation – China, Inc? What are its prominent features?
• What’s the relationship between central and local governments? Specifically, what incentives do local officials face?
• How does the film, The Chinese Mayor, confirm or challenge Jin’s arguments?

• The Chinese state is powerful and can mobilize action for national goals.
• It combines central political control with decentralized economic activity.
• The state is adaptable, able to change policies and priorities quickly.

• The Politburo’s Standing Committee is like a top management team.
• China uses a system called “nomenclatura” for appointing officials, similar to corporate incentives.
• The Organizational Ministry screens candidates for promotions in the party, government, and state-owned companies, acting as the world’s largest human resources department.

• Granting power and resources to local officials can lead to corruption and profiteering.
• Granting local autonomy can boost morale but shifts power away from the central government; officials are rotated to prevent them from building local power bases.
• Intense competition among officials can contribute to local protectionism and economic waste (creating GDP with no real value).

• How do we know what we know about Mayor Geng?
• Is the documentarian reliable? What is his relationship with Mayor Geng?
• Why does Mayor Geng allow himself to be filmed? How do you find him as an interviewee?
• What are we not seeing?

Positive

• 2015: Datong secured hosting rights for 2019 Youth Games, restarting the stalled construction of five major venues.
• Datong’s total tourism revenue reached 76.2 billion yuan, exceeding half of its annual GDP.
• Transformation from a “Northern Coal City” to a capital of historic tourism.

Negative

• Critics felt the city spent a lot of money with little to show: Large tracts of land within the city walls still empty
• The population of the old city dropped significantly, from 100,000 to under 30,000.
• Daily life in the old city is difficult as essential facilities have moved out.
• Scholars and central gov criticized widespread demolition and replacing old buildings with fake structures.

Context

• In March 2019, government bodies criticized five cities, including Datong, for severe damage to historical heritage.
• Datong was specifically noted for widespread demolition and replacing old buildings with fake structures.
• Datong was given a three-year deadline to rectify the situation or risk losing its “National Historical and Cultural City” title.

The Challenge:

Once the demolition started, Datong can never go back to the way it was: One can only continuously improve it. But how?

• Tension between conservation and development
• Funding and debt payment
• Relationship between central and local government
• Popular interests