Land Politics and Local State Capacities: The Political Economy of Urban Change in China

: Despite common national institutions and incentives to remake urban landscapes to anchor growth, generate land-lease revenues, and display a capacious administration, Chinese urban governments exhibit varying levels of control over land. This article uses a paired comparison of Dalian and Harbin in China’s Northeast to link differences in local political economies to land politics. Dalian, benefitting from early access to foreign capital, consolidated control over urban territory through the designation of a development zone, which realigned local economic interests and introduced dual pressures for enterprises to restructure and relocate. Harbin, facing capital shortages, distributed urban territory to assuage losers of reform and promote economic growth. The findings suggest that 1) growth strategies, and the territorial politics they produce, are products the post-Mao urban hierarchy rather than of socialist legacies, and, 2) perhaps surprisingly, local governments exercise the greatest control over urban land in cities that adopted market reforms earliest.

remake the urban landscape to be better suited to both anchoring economic investment and displaying a modern and capacious administration. Yet, some cities boast successful implementation of projects to relocate enterprises and residents, establish special function economic zones, and landscapes generally free of illegal construction and slums, whereas other cities have poor records of implementing their own urban planning projects and landscapes that reflect such a lack of control.
This article draws on a paired comparison of two similar cities in a single region-the Northeastern rust belt-to argue that patterns of urban land politics are products of the different political economies created by changes in the post-Mao urban hierarchy and the sequencing of opening and reform. Dalian in Liaoning Province, like many cities that benefitted from early access to foreign capital as a result of preferential policies bestowed by Beijing, designated a development zone outside the urban core to rebalance the concentration of economic power in favor of pro-reform coalitions while leaving the urban core, the pre-reform power base, undisturbed during the early states of reform and opening. The city of Harbin, which did not enjoy open privileges until the mid-1990s, instead pursued decentralization of authority over policies such as housing, enterprise reform, and the growth of private entrepreneurship, distributing urban land control to assuage losers of economic reforms and spur growth. The different reform era urban political economies-resulting from changes to the urban hierarchy and the distribution of preferential policies from Beijing-have produced different approaches to urban territory and patterns of land control in these initially similar cities.

I. MUNICIPAL STATES AND URBAN POLITICS IN CHINA
Territory-politicized space over which groups struggle for control, occupation, and access-is an important locus of political conflict in China. 3 Urban land may simply be a commodity, but territorial politics emerge when various factions struggle for political control of land. Confrontation between citizens and local authorities over land has been one of the most visible flashpoints of state-society conflict in rural and urban China alike. In rural areas, the requisition of collectively-owned (jiti 集体) farmland has constituted an incendiary process of conflict between peasants and local governments. 4 In urban China, both the international media and scholars have turned their attention toward grand projects of urban renewal and transformation and the dislocations and historical destruction that accompany them. 5 Moreover, the combination of local government reliance on land-leasing for revenues and real estate speculation has driven up housing and property values across urban China, constituting a potential social crisis as many are squeezed out of the housing market and a potential economic crisis in the form of an asset bubble. 6 You-Tien Hsing has characterized the urban politics of the 1990s in China as "competition for urban land control." Hsing envisions municipal state agents pitted against collective and state-owned factory managers and other quasi-state actors who have de facto rights to urban land based on long-term usage, in a struggle for control of land resources within the urban core: "China's urban politics unfolds as an intra-state struggle over land by these two sets of statist actors." 7 However, not all cities appear mired in the kind of intra-state conflict that she emphasizes. Moreover, participants outside of the state-urban residents, private economic actors, informal sector workers who occupy dilapidated or unmanaged spaces, and so forthmay mount significant challenges to the local state's pursuit of territorial control. Why are some local governments successful in outmaneuvering competitors for land control when others are not, and under what conditions do other urban groups exercise meaningful control over the urban landscape? To this end, we may understand variation in the local state's ability to monopolize the allocation of urban property rights territorial consolidation and territorial fragmentation. A local state has consolidated its control over the territory within its purview when it is the sole arbiter of the rights to the use, transfer, and income generated from urban land. Territorial fragmentation characterizes cities in which multiple and competing claims to urban land, from groups both in and outside of the state, thwart the municipal state's efforts at spatial restructuring. This article expands on Hsing's formulation to address this inter-urban variation. More specifically, I propose a comparative political economy of land politics that links differences in economic development strategies to patterns of urban territorial control. 8 What follows details how different political economies of growth and reform took shape in initially similar cities as they sought to pursue growth given different resources and constraints. While much has been made of decentralization and urban China as a "laboratory for reform," the distribution and timing of preferential policies from Beijing allowed some cities access to foreign capital before or as they undertook politically difficult reforms, while others undertook reforms under resource constraints. These changes to the post-Mao urban hierarchy have created fundamentally different rules of state-market relations across urban China, in evidence in this article with regard to growth and territorial strategies. In both cities, the management of land was integral to growth and reform strategies, but according to different logics. Dalian neglected the traditional urban core to build a new base of economic vitality and political support in the development zone, then later simultaneously recapitalized on downtown land while implementing enterprise reforms. Harbin, facing capital shortages, treated urban territory as a resource for distribution to real and potential losers of reform, steadily relinquishing control to residents, enterprises, and even lower levels of the municipal government. The management of intra-local competition established patterns of territoriality that continue to mark urban landscapes and structure urban politics today.
Some clarification about methods, sources, and definitions is in order before proceeding.
First, I analyze the relationship between land politics and political economy at the municipal as opposed to the provincial level for two primary reasons. First, because financial revenues generated through land development (in the form of both taxes and land-lease fees) accrue to local governments, decisions about specific sites of urban redevelopment and expansion are generally initiated and implemented at the local level. Second, preferential policies that determine the sequencing and extent of reform and opening are also bestowed on cities rather than provinces. Given that the opening of land-leasing markets was national policy in the late 1980s and early 1990s and a lack of variation in provincial level policies toward land and housing, the comparison of cities is most appropriate. 9 That Harbin is a provincial capital and Dalian is not may complicate the comparison, as some scholars have suggested that power in provincial capitals leans heavily toward the state and away from social actors, and therefore that they should be analyzed in a category unto themselves. 10 In this comparison, however, the provincial capital proves to be the lesser capacious in managing land politics, so if anything the the relevance of political economy and the sequencing of reforms seems robust to differences in administrative hierarchy in this case. In considering urban politics in China, however, the boundaries of the "municipality" is all but clear, since cities encompass urban districts as well as counties and sub-urban cities. 11 In this article, I discuss land politics in the urban districts (shiqu In the reform era, the once-privileged provinces of the Northeast have suffered a "drastic reversal of fortune" as they are home to the greatest "institutional liabilities and legacies of the command economy" and have seen precious little of the dynamism that characterizes regional economies elsewhere. 13 Yet, the fortunes of reform have favored Dalian and Harbin very differently (see Table 1). Dalian has managed to "reterritorialize" itself out of the rustbelt and into the global economy. 14 Harbin, on the other hand, is said to have "dropped off the central government's radar screen" after 1979. 15 These differences in political economy, rooted in the distribution of preferential policies from Beijing, are attended by differences in demonstrated control over the urban landscape.
In the early 1990s, Dalian began to attract the attention and envy of many cities as it amassed prestigious awards and titles related to its achievements in the urban environment: "Environmental Protection Model City" in 1992, one of China's "Ten Most Beautiful" in 1992, and the first city in China and second in Asia to be included in the UN "Global 500" for livable environments in 1995. 16  ( Table 1 here) The urban landscape in Harbin, on the other hand, confronts the visitor with a visual mélange of the results of the reform era. Harbiners often refer to the three core urban districts of the city, Daoli, Nangang, and Daowai, as "heaven" (tiandi 天地), "purgatory" (lianyu 炼狱), and "hell" or "the inferno" (diyu 地狱), respectively. Daoli District is home to much of the city's characteristic Russian architecture, the commercial and retail center of the city, and a great deal of new development projects that capitalize on prime real estate prices through high overhead commercial centers or high-rise residential buildings. Many of the city's universities as well as its embryonic Central Business District are located in Nangang District, where main arteries display department stores and modern residential compounds next door to informal street markets, pre-reform housing units, and buildings associated with now closed factories with the character for "demolition" (chai 拆) displayed prominently on every surface. During my tenmonth tenure in the city, many of these areas slated for demolition remained untouched by bulldozers and occupied by former residents, even without heat in China's harshest winter.
Daowai District, called "the inferno" not only as a reference to hell but also because of the frequency of conflagrations when residents heat wooden homes by fire, typifies post-industrial urban blight: abandoned buildings, haphazard new construction, few signs of disposable income, few large parks and green areas, and so forth. Yet, residents seem in no hurry to flee their neighborhoods for higher ground. Street-level commerce is visibly vibrant, real estate prices (even for quite old structures) are as high as other parts of the city, and relations among neighbors appear mutually dependent. 18

(Figure 2 here)
Harbin has mounted two unsuccessful attempts to expand outside the urban core: a new district north of the Songhua River and a "high technology development zone" to the west. These new areas are called, respectively, "Ghostown" (guicheng 鬼城) and "Corruption Street" (fubai de yitiaojie 腐败的一条街). Land for the Songbei new zone was requisitioned in the mid-1990s, but development did not begin until the first few years of the 2000s. 19 In the district's early period, many wealthy Harbiners purchased apartments in Songbei as investments, but have not been able to rent their properties and have themselves not moved because of transportation inconvenience and the lack of commercial and retail development in the area. 20 The development zone to the west is home to the Heilongjiang provincial government complex as well as some of Dalian is a case of territorial consolidation; the local state has secured itself as the sole authority over the use, occupation, and allocation of urban territory. Harbin, conversely, is a case of "territorial fragmentation," since various groups outside and inside the local state stake claims to urban spaces and thwart municipal efforts at spatial restructuring. The next two sections detail how a globally-oriented political economy augmented the local state's control over land in Dalian and a political economy of survival eroded that control in Harbin.

II. TERRITORIAL CONSOLIDATION IN DALIAN
With its coastal location at the tip of the Liaodong peninsula, Dalian 24 The DDA offered a number of formal benefits to foreign firms to entice them to either invest in local enterprises or relocate to the DDA, including a lower tax rate and no real estate taxes for the first three years of the investment period. 25 The strategy of development zoning gained greater momentum in the early 1990s after Deng Xiaoping's southern tour. In October 1992, the Dalian Tax Free Zone (baoshui qu 保税区) was established adjacent to the DDA in Jinzhou District, China's "first domestically located, foreign-run (jingnei guanwai 境内 关外) economic area." 26 Space was also designated for high-technology parks around the DDA and to the southwest of the city center. Figure 4 maps the locations of the 17 smaller "development zones" established between 1992 and 1999 (15 in 1992 alone) throughout the city; only one of the special zones is located within the three core urban districts (Zhongshan, Xigang, and Shahekou).

(Figure 4 here)
These spatial strategies held certain advantages for the firms that invested in them, advantages economists associate with clustering and agglomeration; access to transport, concentration of skilled labor, opportunities for technology transfer, dense warehousing networks, and so forth. 27  The new area has an extraordinary number of benefits. Principally, it avoids the downtown area's 'urban heart disease.' Population density [in the urban core] is already declining (though it was already lower than national standard). The migrant populations would threaten the low population density, so it is best to attract them to the new urban area. 28 Dalian has indeed long been a leading destination for rural-to-urban and inter-urban migration; according to official data, Dalian has by far the largest "floating population" in the Northeast.
The official migration rate between 1980 and 1989 averaged 12 per cent increase per annum. 29  Relocation targeted enterprises desperate for capital infusion; municipal authorities would guarantee capital infusions for the enterprises in exchange for turning over downtown land. The typical process involved leasing development zone land at a very low cost to an enterprise (an MBIC official in an interview insisted that land was essentially "given away"), and then leasing out the enterprise's former downtown space with a promise that some of the capital acquired would be released to the moved enterprise for facility upgrading and technological investments. 36 Critically, city officials would also assist with locating foreign joint venture partners for enterprises that agreed to move, enabling the city to simultaneously reclaim downtown land from enterprises and execute management and ownership restructuring. For example, the Bohai Beer Securing the acquiescence of factory managers who faced underperforming enterprises and painful downsizing in any case was not especially challenging. The thorny parts of the relocation campaign-and the ones rarely discussed in public celebrations of the remaking of the city-concern the housing compounds that had dominated urban core neighborhoods and the workers who occupied them. 39 In interviews, officials and urban planners referenced opposition to the relocation work of the 1990s. One urban planner recalled many petitions and attempts at protest in 1994 and 1995, but said that because the local party organizations, residents' committees, and work units themselves were not behind the residents, their efforts at collective organization failed. 40 Another official clearly stated the dilemma facing residents: they stood to lose both their homes and their jobs should they choose to resist relocation. Enterprises often laid off a substantial portion of their work force when they moved and underwent restructuring. Since The result of both of these types of competition is a strong municipal state that acts as arbiter rather than participant in urban politics and maintains a near monopoly on the use and designation of urban land.

III. TERRITORIAL FRAGMENTATION IN HARBIN
City officials in Harbin have encountered significant resistance to their plans for urban renovation and relocation, and plans for urban expansion have fallen prey to mismanagement and intra-local territorial conflict. Harbin's urban landscape is more of a pastiche of power bases than a canvass onto which the local state projects political power and generates wealth. These power bases consist of firm or residential occupants who perceive themselves as de facto-if not de jure-claimants to property rights over urban land that the city has sought to appropriate or reallocate. Unlike its regional counterpart, Harbin had nearly no access to foreign capital early in the reform era and therefore reforms to the public sector were introduced in a climate of resource scarcity. As officials in Harbin weathered the economic reforms of the 1980s and 1990s under these different political economic conditions, the municipal state steadily relinquished control over the urban landscape as a political and economic strategy in its dealings with public sector enterprises, laid-off workers, and the entrepreneurial sector. In this section, I take up each of these arenas in turn.

Public Sector Firms
While Dalian officials during the 1980s turned outwards, skirting potentially messy programs of reform and contests over urban property with centrally located SOEs, Harbin city officials steadily reinvested, politically and economically, in large state-owned enterprises. City officials did introduce reforms to the state sector, but those reforms were efforts at enterprise conglomeration, consolidation, and upgrading, i.e. revitalizing threatened enterprises by diversifying the economic activities within their purview and further decentralizing authority over their operations. This political economic strategy produced a concomitant territorial strategy of distributing and decentralizing control over urban land.
Harbin's 1985 master plan sought to limit industrial "sprawl" and rationalize layout by concentrating infrastructure investments in extant compounds, mostly located in clusters created early in the Maoist era for heavy enterprises and within the city's six core urban districts.
Harbin's four largest industrial compounds were slated to receive investment to "rehabilitate" facilities and housing. 44 Plans expressly avoided the acquisition of new urban land and confined new industrial construction to existing compounds. Harbin in the 1980s only officially acquired four plots of new land for urban construction, all of which surrounded major industrial compounds within Daoli and Nangang districts. 45 As early as 1986, the city's highest officials were wrestling with actors from the formal state sector over land control. A 1986 project to build a new transport tunnel through Nangang and Xiangfang Districts interfered with the land operated by a local factory, whose manager asked for over 8 million RMB in compensation. The factory's compliance required the intervention of the mayor himself, who went to the factory manager with the money and personally counted out each bill to reach a "mutual understanding" with the manager. 46 This strategy of devolving economic and territorial power to enterprises empowered a plurality of urban interests vis-à-vis Harbin's municipal authorities. As enterprises in Dalian were becoming dependent on city authorities for funding and survival, Harbin authorities were becoming dependent on enterprise managers for their acquiescence in basic urban plans.

Laid-Off Workers: Housing and Redistribution
Layoffs and factory closures, particularly in the late 1980s through the late 1990s, created potentially destabilizing sets of "losers" to market reforms, and the use of urban land and control of territory constituted a key resource for redistribution to these groups. 47 Harbin in the 1980s became nationally famous for rehabilitating dilapidated housing compounds that were part of major industrial clusters but not relocating residents.
Urban China experienced a push toward housing construction in the late 1970s and early 1980s with multi-level investment with contributions from central and local governments, investors, enterprises, and individuals. 48 In Harbin, new funds for housing were dispersed directly to enterprises. 49 In conjunction with the Municipal Construction Bureau, the enterprises used the money to renovate work unit housing and build new housing within compounds. The flagship projects were the renovation of Harbin's two most famous slums, the "36" and "18 corner" slums, both of which were in the 1950s turned into work unit housing compounds attached to machinery plants under the Harbin MBIC. These plants were some of Harbin's first to undergo privatization and layoffs in the 1990s. 50 One Harbin urban planner in charge of such a project in Nangang District in the late 1980s viewed renovating housing as a form of "insurance" for soon-to-be laid-off workers, since they would get ownership over the apartment that they could then rent at a higher price or feel more willing to take entrepreneurial risk because their housing was secure. 51 Investing in housing compounds of threatened enterprises was a territorial strategy, resulting from Harbin's political economy of survival, of assuaging potentially contentious "losers" of reforms.
Harbin's general approach to urban territory was one of decentralization, permitting neighborhoods and enterprises to draw up and implement their own local plans (xiangxi guihua 详细规划), albeit with approval of the city's Urban Planning Bureau. An essay by a prominent urban planner in Harbin reflects on the process of planning in the 1980s: Harbin has had a difficult time incorporating widely accepted and national standards of good living environments. For example, average living space per person is much lower than the rest of the country, but neighborhoods and surroundings are much more convenient. Harbiners do not want to demolish large parts of the old city to build green space, and new space for commerce and the tertiary industry has developed somewhat organically in the downtown area without a great deal of demolition and reconstruction. 52 Yu concludes that local discretion over the built environment is a condition particular to Harbin and one that has benefitted the distinctive quality of Harbin's urban form. In short, while Dalian was centralizing territorial control, Harbin was distributing that control in exchange for cooperation with reforms to the state-run economic sector.

Emergent Private Industry: Informal Property Rights and the Informal Sector
As formal sector workers experienced layoffs and wage cuts or anticipated the inevitability, many turned to petty commerce and street-level services as a means of livelihood.
The spaces in which these activities emerged in Harbin were those that boasted a rich tradition of Boulevard boasted 139 independent commercial enterprises by the end of 1991, Fendou Road had over 300, and Jingyu Street over 400, most of which were small businesses run by petty entrepreneurs. 57 By 1995, the number of these markets had grown considerably. There were 30 more such designated areas, and the city of Harbin boasted three of the nation's fifty largest industrial product markets. 58 These markets were not only a substantial source of income and economic activity for the city, but also major outlets for reemployment of former public sector workers. By 1998, the city hosted 621 official locations with nearly 78,000 registered businesses, employing over 127,000 people, 60 per cent of whom were laid-off industrial workers. 59 The privatizations of the late 1990s further diversified control over land in the urban core in two important ways. First, as in many Chinese cities, the sale of public assets, particularly of small and medium SOEs, to private entrepreneurs in the late 1990s entailed rapid commodification of the land occupied by those enterprises. Privatizations were carried out in a climate of particular desperation in Harbin. As a result, many SOE land assets were acquired at much lower rates than they were likely worth. In addition, new owners of former SOE land assets frequently leased land use on secondary markets without ever paying the local government for use rights, either paying sub-market rent to the local government without paying land appreciation tax or simply illegally leasing land for commercial purposes. 60 The second way in which these privatizations contributed to the erosion of state land control concerns the simultaneous implementation of housing privatization and SOE restructuring. In part because of the enterprise reforms in the late 1990s but also in part to stimulate an ailing economy following the Asian Financial Crisis, housing previously owned and managed by work units was privatized all over China in 1998. In Harbin, the implementation of housing privatization during a politically difficult climate of layoffs and strikes, in combination with the fiscal difficulties of SOEs and the local state, led to the sale of public housing at high losses for the state, entrenching workers in their longtime homes and neighborhoods and denying local government prime urban real estate for years to come. 61 For example, municipal officials not only sold off SOE housing in Xiangfang and Pingfang districts at highly subsidized rates, but also invested further funds in upgrading those housing compounds. 62 These were the exact industrial compounds to experience substantial worker unrest, particularly joint strikes and marches among a number of small and medium SOEs, in January 1997. 63 By the late 1990s, land control had become one of the most politically salient issues in Harbin, taking a close second place to labor issues even during the most intense strike wave of the decade in 1997. 64 Harbin's economic policies generated territorial strategies that emboldened quasi-state actors in enterprises and encouraged new claimants to downtown land in the form of a new class of urban entrepreneurs. In addition to struggles with firms and residents, various arms of the municipal administration dealt differently with their constituencies in struggles over land control, precluding the municipal state from exercising the kind of unified control over territory that its counterpart in Dalian did. Once relinquished, territorial control becomes difficult to re-assert; in an institutional climate in which property rights over land are highly ambiguous, informal control constitutes a powerful claim to ownership. 65 Moreover, entrepreneurs and residents who occupy the same space for long periods of time find it easier to articulate a collective interest over their continued right to that space. 66 In this sense, informal control over territory becomes self-perpetuating: once a municipal state becomes mired in territorial fragmentation, the path becomes difficult to reverse.

IV. CONCLUSION
Urban landscapes in China are canvases onto which governments project political power, and land is the primary commodity through which urban governments generate revenue. Ambiguity in national institutions governing property rights, however, leaves substantial maneuver space at the local level, producing variation in local state control over land. 67 The level of territorial control a local state exercises, therefore, offers insight into local state capacity and state-market relations. Based on a comparison of two cities that faced similar initial constraints yet, because of preferential policies and the sequencing of reforms, adopted different courses of managing urban territory, this article has established a framework for a comparative political economy of opening at the local level. Such a finding suggests that urban China will not likely converge on any single model of land politics or urban property rights in the near future, but rather be home to multiple different models that tend to be self-reinforcing. This continued divergence in land control regimes will complicate the ability of the central government in Beijing to achieve uniform results in a number of recent policy goals, such as the provision of subsidized housing, reining in the conversion of agricultural land, and cooling housing and real estate markets. These data are selected shares by ownership, and therefore do not add to 100%. *** These data are selected shares by ownership, and therefore do not add to 100%.