There’s been an extraordinary amount of hype about the government’s plan to build a new city southwest of Beijing; some are saying it could be China’s biggest public-works project ever. The plan for the Xiongan New Area was personally overseen by Xi Jinping himself, according to an official account, and it has been lauded as a qian nian da ji, or roughly a “great plan for the next millennium.”

Xi Jinping inspects the Xiongan New Area

Xiongan is the latest development in the Beijing-Tianjin-Hebei integration plan, a pet project of Xi’s that aims to develop the regions around the capital. The official line is that the creation of the new city will ease Beijing’s pollution and congestion problems by allowing some less essential facilities and functions to be relocated out of the capital. But the enormous propaganda blitz has not permitted much detailed discussion of the specific benefits and costs of these initiatives.

So this seems like a good moment to air some critical views, which are not being permitted much space domestically. The piece below was published by the outspoken property tycoon Ren Zhiqiang in August 2015, before Ren was censured for his public criticism of Xi Jinping’s policies. The article has been repeatedly deleted from Chinese internet sites, though it can still be found by searching for its title. Since the Xiongan announcement, the piece has been getting forwarded around again, and its argument is still relevant.

Here is my somewhat abridged translation:

Once again a new wave of construction is being prepared, in the name of Beijing-Tianjin-Hebei integration and to support the development of the capital. It has really made everyone excited! But after reading these propaganda documents and summaries, I do not see there is anything that should make people happy.

China has shouted out the slogan of “urban-rural integration” before, but why was there no way to achieve such a goal? The root cause is that there was no way to break down the restrictions on free movement and migration in the hukou system. And this has produced a whole series of related problems.

In the planned economy era, population movements were restricted, and the people’s communes used the so-called “integration of government administration and economic management” to tie farmers to the land. After the reform of the household responsibility system and national identity cards, farmers could leave their land and go to the cities. But the hukou system did not allow them to change their identity as peasants. “Rural migrant workers” took the place of the working class. Social security, healthcare, education, housing, family–all are still linked to the land.

Whenever I see these slogans of “urban-rural integration” and “Beijing-Tianjin-Hebei integration” I think, if we cannot make human rights equal, and completely eliminate all vestiges of these differences [created by the hukou system], then how can we discuss integration? Can Hebei and Tianjin people equally share all the rights of Beijing hukou holders? Can they share Beijing’s benefits of education, health care, social security, employment and so on?

This so-called integration is nothing more than Beijing squeezing out the industries, businesses, and people that it doesn’t want, and arranging them in Hebei and Tianjin. In this way Beijing can still enjoy the goods and services they provide, but does not have to bear the burden they put on Beijing. The end result of this so-called integration is to dump a big burden on the surrounding areas, in order to ensure that Beijing can meet its goal of strictly controlling its population.

Even the purchase of housing in Tongzhou [a suburb of Beijing where some city government offices are being relocated] by people who have a Beijing hukou and pay taxes in Beijing has become a barrier that integration cannot cross. So how can the population of Hebei and Tianjin be integrated?

Urban density is the result of market competition, and also the result of a choice between urban and rural areas. Not to acknowledge the role of competition and choice, and to attempt to use the government’s administrative power to force integration, must result in failure.

Market competition necessarily leads to concentration of technology, resources, human capital and innovative capability; these resources will be matched with the most advantageous areas, where their returns are highest. Currently they are being concentrated in cities, especially large cities. No administrative power can change these flows and this concentration. Economic rules cannot be changed by decree.

Some people say the equalization of public services and public resources can solve this problem. Can public services really be equalized? Yes, they can. But this requires the whole society to have reached a relatively high level of economic development. Currently even developed countries like the U.S., U.K., Germany, and Japan cannot achieve this goal, so how can China in its current circumstances achieve it?

Let me ask a question: to punch someone with the most force, do you open your fingers, or close them into a fist? If we took those great professors who are concentrated in Peking University and Tsinghua University and “equalized” them by sending them to backward regions, would this raise or lower the overall level of education? If all of Beijing’s good doctors were “equalized” out into backward areas, would this improve the level of health and research capabilities?

Does the process of “integration” and “equalization” raise the efficiency of resources? Or is it just the use of [political] authority to redo the allocation of industries and human resources? And will the market agree?

When Tongzhou prevents people who do not have a local hukou from entering, can it develop talents on its own? It is hard to see how blocking talented people from moving in can benefit Tongzhou’s overall development. When Beijing strengthens these kind of restrictions in order to control its population, can it attract talented people? How can you know who can become a great entrepreneur or political leader?

When urban incomes are so far above rural incomes, when incomes in Beijing are so far above those in Hebei and Tianjin, how can people not be allowed to seek those high-income jobs? 38% of China’s rural population is engaged in agricultural work, but this only generates 9.5% of its GDP. This is root cause of the urban-rural divide and income gap. If urbanization cannot be used to lead more farmers to change their economic role, how can this income gap be eliminated?

All countries in the world have faced the same conflicts in the process of urbanization, but there is not one that has used administrative power to limit urbanization. All have dealt with it by using market methods and allowing people to freely choose. And in fact when people in the cities can get along harmoniously, this raises the efficiency of cities. …

After many years of reform in which China has moved from complete public ownership to allowing some private ownership, most people have already become property owners. Even more people are working hard in hopes of becoming property owners. So the allocation of financial and other assets is decided by their owners, not by administrative power. If it limits property owners’ freedom to deploy their assets, then they will have no choice but to move abroad.

The backward areas of Hebei may feel that these industries that Beijing is getting rid of are actually an advance for them. Those industries that Beijing thinks use too many resources and generate too much pollution can perhaps generate higher incomes than agriculture. But is it only possible to reduce pollution in advanced regions, or is it also possible to reduce pollution in backward regions? Is this kind of transfer of industries being more responsible to society and to nature, or is it just passing off responsibility?

Perhaps the final goal is still to integrate Beijing, Tianjin, and Hebei, and to optimize the city of Beijing. But this goal is not one that can be decided by administrative power.

Today China Mobile just canceled roaming charges among the three regions [of Beijing, Tianjin, Hebei]. But how many restrictive policies have not yet been canceled? Can cars without Beijing license plates freely enter Beijing? Why can Beijing create restrictions, but Tianjin and Hebei cannot? Can this lead to integration?

When a society based on small farmers modernizes, individuals become the main actors in both economic production and social life. The prosperity of a region or a city, and even of a nation and a people, depends on the innovative capabilities of individuals, and is decided by the depth and extent of innovation. It is not something that can be decided by administrative power. When any administrative official limits or blocks an individual’s innovative capacities and ability to choose their environment, it must weaken the spirit and development of innovation, and harm the overall economy.

This so-called integration is not a market-based process. A shift to rely once again on administrative power to arrange the pattern of economic development must ultimately be a failure.

In conclusion, when CCTV is cheering for Beijing-Tianjin-Hebei integration, a rational understanding of the story behind it may be necessary. A clear head leads to fewer mistakes.

I don’t really agree with Ren’s market fundamentalism, which is rather explicitly a counsel of despair for everywhere but the most developed urban centers. It is however another example of how economically-liberal thinkers in China are increasingly hostile to the government’s regional development policies, which they see as a huge waste of resources recalling the failures of the planned economy.

But I think Ren is right to call attention to how the grand plans for “integration” call for lots of more-or-less forcible relocations of people and industries, but do nothing to break down the hukou system’s institutionalized discrimination based on geographic origin. On the whole I think China could do with less focus on building new development zones and more focus on liberalizing migration.