Size and urban growth of Chinese cities during the era of transformation toward a market economy

The paper examines the growth of Chinese cities at prefecture level or above by first applying a non-parametric method. Kernel regression of the mean of growth rate conditional on city size reveals a U-shaped relationship between city growth and size, and rejects Gibrat's law. That is to say that large cities take the form of divergent growth while small cities are convergent to each other. This U-shaped growth-size relationship holds for the registered (hukou) population in 1989-2012 as well as for the permanent population in 1999-2012. Furthermore, our results show that the growth of large cities becomes more divergent using the permanent population than using the hukou population, whereas the growth of small cities becomes less convergent. The permanent population counts a portion of floating population, so it is then concluded that rural-urban migrants move to large cities disproportionately, making large cities grow faster than small cities. Estimated results from rank-size OLS regression confirm the divergent growth of large cities, and, at the same time, reject the notion of random growth of Chinese cities (which is also supported by panel root tests). Our findings have profound policy implications. The national strategy of urbanization that stresses the growth control of mega and super-big cities has had no effect in the past and may continue to be ineffective in shaping the urbanization trajectory in China in the next couple of decades. Sustainable urbanization will depend largely on whether and how well big Chinese cities prepare themselves in accommodating fast growth.