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April 12, 2019

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Breaking down administrative barriers key to Delta integration

The integration of the Yangtze River Delta region has gained momentum since President Xi Jinping designated it as a top national strategy last year.

But questions remain as cities in one of China’s most prosperous regions — comprising Shanghai and the neighboring Zhejiang, Jiangsu and Anhui provinces — try to chart a path to closer integration and better connectivity.

The Shanghai Academy of Social Sciences (SASS) has sought answers to some of the more compelling questions.

Wang Zhen, vice president of the government-affiliated think tank, says the top priority is the dismantling of administrative barriers within the city cluster.

“This is a particularly thorny issue that hinders progress,” he was recently quoted as saying.

Administrative barriers are often seen as analogous to “dead-end roads.” Owing to failures in coordination of planning and financing, among others, there are many obstacles in the region that haven’t been solved, Wang said.

Likewise, there are also difficulties in intra-regional collaboration in areas like market access, environmental protection and public services.

Zhang Daogen, president of SASS, agrees. He said different standards and institutions inhibit integration. The next goal for officials is to institute policies that make it easier for capital, resources and people to flow across local borders — and at a much lower cost.

To begin with, officials can bring their highway tolls in line with one another. For example, tolls in Shanghai are collected based on the type — passenger or freight — and size of the vehicle. In Zhejiang and Jiangsu, motorists are charged by weight. This disparity often causes confusion. The best way to tackle the resulting conflicts of interests, said Zhang, is to waive the tolls altogether.

He also suggested that city officials look to the European Union for inspiration.

The EU is known for the free flow of goods, capital and people within its boundaries. The Yangtze Delta, in comparison, falls behind in terms of physical connectivity.

Despite the EU setting an example, it remains a bloc of great diversity, with each member state clinging to its unique cultural identity, a problem not found in the delta. Cities within the Yangtze Delta share a more or less homogenous cultural heritage. This natural affinity is something officials should make better use of.

Further alignment

This area is home to a sixth of the country’s population, generates a quarter of national GDP and produces about a third of exports. Growth could get a big boost from better freedom of movement. An open attitude toward outsiders and ease of settling down are critical to a city’s attractiveness.

It is perhaps with this in mind that a handful of second-tier cities in the delta, including Nanjing and Hangzhou, recently relaxed the rigid household registration permit (hukou) system and came up with more favorable terms to encourage young talent to put down roots there.

Wang also noted that the region is home to many leading universities which should make it much easier to incentivize high-tech institutes, industries and investment into the much-vaunted G60 High-Tech Corridor — named for the G60 Highway that links Shanghai, Hangzhou, Suzhou and Hefei, capital of Anhui Province.

Apart from a better hukou system and more promising industries, the delta also needs a fully aligned public service system. In the past, a patient from Zhejiang would have had to travel back home to reimburse medical expenses racked up in Shanghai.

Zhang believes that these barriers to accessing health care, education and elderly care need to come down.

If the Yangtze Delta is to be a template for reform on a national scale, breakthroughs and innovations should first be replicated within the area under the central government’s auspices.

For example, Zhang Zhao’an, also a vice president of SASS, wants to see expansion of the free trade account allowed in Shanghai’s Free Trade Zone pilot area. He also advocates the expansion of Shanghai’s one-stop online service platform to other provinces.

The platform makes it considerably easier for businesses or citizens to obtain services. The thing is, Zhang explained, better logistics and connectivity are reform “at a low level.”

Obstacles will also have to be overcome in common management of land, investment and a sharing of taxes.


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