Building knowledge city in transformation era.pdf

Building knowledge city in transformation era:Knowledge-based urban development in Beijing in the

context of globalisation and decentralisationapv_1415 73..90

Pengjun ZhaoFaculty of Spatial Sciences, University of Groningen, Landleven 1, 9742 AD, Groningen, The Netherlands.

Email: [email protected]

Abstract: This study examines knowledge-based urban development in Beijing with the objectiveof revealing the impact of the ‘synergetic’ forces of globalisation and local government interventionon knowledge-based urban development in the context of the coexisting processes of globalisationand decentralisation. The findings in this paper show that due to the rapid growth of the culturalindustry sector, knowledge-based urban development has created various kinds of ‘cultural industryclustered areas’, which were recently promoted by the 2008 Olympic Games. ‘Synergetic’ global andlocal forces are leading knowledge-based urban development, with the emergence of a localcoalition regime in which local government manages local development, considered as ‘enterprises’in the decentralisation process, while the State retains a significant influence on knowledge-basedurban development. The central and municipal governments tend to emphasise strategies to ‘facili-tate the climate for growth’ rather than the centrally planned control they exerted prior to the 1980s.

Keywords: Beijing, cultural industry, knowledge-based urban development, globalisation,decentralisation

Introduction

Since the 1970s, the effort to transform indus-trial cities into knowledge-oriented economycities has been accompanied by a growinginterest in the ‘knowledge city’ (KC) in the West.The cultural economy, as a major sector of theknowledge economy, has accounted for anincreasing share of labour, economic outputand trade among the advanced economies ofthe Organisation for Economic Cooperation andDevelopment over the last quarter of a century.The core of the cultural industry includes anumber of creative activities that produce cul-tural products: art, design, new media, music,motion pictures, television, books and architec-ture (Gibson et al., 2001; Power, 2002).Knowledge-based urban development has beenapplied as a major way to create the KC (Yigit-canlar, 2007). It is claimed to have the advan-tages of driving local economic development,promoting economic diversification, stimulat-ing innovation and creativity, enhancingthe image of a place and increasing social

cohesion. A vast amount of research has shownthat the new economy, in particular the culturalindustry, has been a crucial force in urbandevelopment (including redevelopment) inWestern cities since the 1970s (e.g. Hanson,1985; Gdaniec, 2000; Scott, 2000; Balsas,2004; Bayliss, 2004; Dungey, 2004; Leibovitz,2004; Mommaas, 2004; Raspe and Oort, 2006).

A similar trend towards knowledge-basedurban development began in China’s big citiesin the early 1990s when these cities, in particu-lar China’s global cities, underwent an eco-nomic transformation from industrial cities topost-industrial cities – for example Shanghai,Beijing and Guangzhou (Wu, 2003). In thesecities, the ‘de-industrialisation’ and tertiarisa-tion of the economy triggered rapid growth inknowledge-intensive development and the cul-tural industry (Tian et al., 2002; Lin, 2004). Thecultural industry has since become an importantnew sector in the urban economy and for urbandevelopment. For example, in Shanghai, cul-tural industries accounted for 6% of GDP in2004. In Beijing, cultural industry amounted to

Asia Pacific Viewpoint, Vol. 51, No. 1, April 2010ISSN 1360-7456, pp73–90

© 2010 The AuthorJournal compilation © 2010 Victoria University of Wellington

doi: 10.1111/j.1467-8373.2010.01415.x

10.1% of GDP in 2004 and it was expected thatthe 2008 Olympic Games would have an addedvalue of RMB 100 billion (about US$12.5billion), which would mean a share of 10.7% ofGDP. At the same time, knowledge-based urbandevelopment is being promoted by local gov-ernment in response to the rapid growth of theknowledge economy. As Zhou and Ma (2000)argued, Chinese cities are currently undergoinga profound land-use shift from industrial to post-reform de-industrialisation. A recent study byWu (2004) showed that since the late 1980s,Shanghai has been undergoing an acceleratedprocess of urban development and reconstruc-tion due to the dramatic growth of the culturalindustry in areas such as audio and motionpicture production, news media, publishing andInternet services.

Of all the conditions for knowledge-basedurban development, global linkage activities arethe most significant, identifying opportunities,advancing and implementing technology,financing and handling transactional flows, andstructuring and servicing global markets(Knight, 1995). Many empirical studies illustratethe powerful influence of globalisation in trans-forming the urban economy and encouragingurban development (e.g. Smith and Feagin,1987; United Nations Centre for Human Settle-ments, 2004). The prevailing globalisation dis-course has tended to cause metropolitandevelopment in global cities to be greatly influ-enced by forces of global capitalism (Ohmae,1995; Knox, 1996). In particular, with the rise ofa hierarchy of global cities, regional industrialand financial decision-making are increasinglydominated by transnational corporations, whichare likely to usurp the sovereignty of the nationstate.

However, a counter-reaction has beenobserved, allowing national and local govern-ments to continue to have considerable spacefor manoeuvre, namely the establishment of a‘global-local’ nexus (Dicken, 1994; Cox, 1997;Parnwell and Wongsuphasawat, 1997) or ‘glo-calizsation’ (Swyngedouw, 1997). On the onehand, national states are seeking to retain orreassert some influence at a global level. AsMacLeod and Goodwin argued, ‘the nationalstates are not passive recipients of some globallogic but are, through the actions of theirconstituent properties (governments, courts,

bureaucracies), active agents in the structura-tion of globalisation’ (Macleod and Goodwin,1999: 506). On the other hand, local govern-ments have attempted to adjust their gover-nance to maximise opportunities for economicgrowth. The mobility of capital and the compe-tition with other cities for investment has forcedlocal governments to adopt a more innovativeand even an ‘entrepreneurial’ approach topromote local growth (Leitner, 1990; Short andKim, 1999). A related phenomenon is thegrowing influence of the ‘urban regime’ (Stone,1989; Lauria, 1997), urban ‘growth machines’or a ‘growth coalition’ (Logan and Molotch,1987) in relation to local economic growth.

In the practice of developing the culturalindustry and related knowledge-based urbandevelopment, some researchers agree that aState government policy of intervention is nec-essary (Mommaas, 2004; Evans, 2005). Likeother new sectors of the economy, the culturalindustry has more ‘flexible’ features and placesmore demand on cooperation between differentsectors than does traditional industry. A harmo-nious environment is crucial for the ‘flexible’features and for cooperation between differentsectors. Through formal government manage-ment, an overall harmonious environment canbe achieved. However, others have argued thata policy of intervention in relation to the localcultural industry is ‘inimical’ to the achieve-ment of the many objectives of knowledge-based development. In particular, ‘blunt’ top-down government management, focused ondirective management is unlikely to accomplishmuch at the local level (Kunzmann, 2004;Scott, 2004). Market forces should be fosteredto develop local knowledge-based urbandevelopment.

The above argument can be proved usingempirical evidence of knowledge-based urbandevelopment in a context of transformationfrom a centrally planned system to a marketsystem. In the transformation context, a varietyof forces, including the market force of globalinvestment and the force of local governmentintervention, as well as the remaining Stateforces, mean that the process of knowledge-based urban development presents a morecomplex dynamics. An empirical investigationusing a case study from a transformation contextwould reveal more valuable information in

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relation to the forces influencing knowledge-based urban development.

This study examines knowledge-based urbandevelopment in Beijing, one of the most rapidlydeveloping cities with respect to the growth ofthe cultural industry in China. Since the 1980sreforms, China’s economy has been in theprocess of transforming from a centrallyplanned system to a market system. The trans-formation involves the interaction of three pro-cesses: globalisation, marketisation and thedecentralisation of administrative and fiscalpowers (Wei, 2001). Globalisation is one of theleading forces promoting the urban economy,including the cultural economy and urbandevelopment within its global cities (Lin, 2000;Wu, 2001; Ma, 2004). The globalisation ishighly integrated with the local level of govern-ment intervention in the current decentralisa-tion context. After the early 1980s, there wasa clear tendency towards the decentralisa-tion of economic and fiscal administrationand decision-making. The decentralisation ofdecision-making and the injection of foreigninvestment into local economies led to the reor-ganisation of the decision-making system from a‘top-down’ model in which the State deter-mined the ‘game rule’, into a system of interac-tion in which market forces from localjurisdictions (e.g. municipal government) andfirms (domestic private-owned firms or foreignfirms) have a higher level of participation indecision-making processes (Ma, 2002). Thecoexisting mechanisms of globalisation anddecentralisation, combined with State interven-tion, would mean that the knowledge-basedurban development in China differs from that inthe West certainly. The objective in this paper isto reveal the impact of the ‘synergetic’ forces ofglobalisation and local government interventionon the cultural industry and to investigate theresponses of knowledge-based urban develop-ment in the creation of Beijing as a KC in thecontext of globalisation and decentralisation.

Economic transformation andknowledge-based urban developmentin China

While traditional industrialisation programmeshave been central to the development ofChina’s cities over the past half-century, cultural

industries have become increasingly importantas instruments of urban growth and changesince the 1990s. According to the NationalBureau of Statistics of China (NBSC (NationalBureau of Statistics of China), 2004), the cul-tural industry consists of seven kinds of eco-nomic activity: news and media services;publishing and copyright services; radio, televi-sion and film-related services; culture and arts;the Internet; cultural leisure and entertainment;and the manufacture and sale of cultural prod-ucts. In 2004, the cultural industry had anadded value of RMB 344 billion (about US$43billion) and 9.9 million employees, contributing2.5% of GDP and accounting for 3.8% of allurban jobs. In China’s global cities, the culturalindustry has already become a major economicsector driving these global cities to establish animportant role in the network of great worldcities.

Of all the forces affecting the culturaleconomy and related knowledge-based urbandevelopment, the forces derived from the trans-formation process which is characterised byglobalisation, decentralisation and marketisa-tion are the most important. Figure 1 shows theeffects of globalisation, decentralisation andmarketisation on the cultural economy andknowledge-based urban development. First,since the 1980s, the relationship between thecentral government, local jurisdictions andenterprises has been reorganised in the contextof the decentralisation process (Shen, 2005,2007). Local governments and state-ownedenterprises have now been given much moreautonomy in their pursuit of growth. In contrastto the tight command control exerted by thecentrally planned system in the pre-reformsocialist command economy, the central gov-ernment has encouraged local governments toaccept more responsibility for their own eco-nomic growth, social development and expan-sion of their income. The role of the State inrelation to local growth is changing from‘command control’ to ‘governance guidance’.Local government tends to be an ‘enterpriser ormanager’, utilising the resources (e.g. naturalresources or institutional resources) in itsadministrative region and in competition withother jurisdictions (Wank, 1999). At the sametime, local governments and enterprises or firmshave entered into a relationship described as

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‘local state corporatism’ (Oi, 1992, 1999). Moti-vated by economic and political interests, localleaders tend to employ any means, includingthose which are informal and unofficial, toenhance local economic performance (Ma,2002). In this sense, local governments tend tobehave as ‘industrial firms’ in relation to localeconomic development (Walder, 1995). Thecity tends to be an entrepreneurial city, empha-sising local economic development using thenewly emerged market rules in China.

Second, public administration has allowed arange of non-government organisations intoservice provision and urban development, suchas private enterprises and developers. Multi-stakeholder arrangements have emerged in thecurrent decentralisation process, opening broadspaces for market powers to enter the urbangrowth process, in particular, foreign directinvestment (FDI). Urban development hasmoved from being government-led to market-led (Wu, 2001; Feng et al., 2008). The globalforce endowed by FDI has been playing animportant role in urban growth in China (Sit andYang, 1997; Gu and Shen, 2003; Wei et al.,2006). Before 1978, urban growth was mainlydriven by internal forces under a self-reliantsystem. Since 1978, when an open policy andreform were initiated, external forces, especiallyforeign investment inflow, have emerged as anew driving force of urban growth. From 1979to 2006, the accumulated actualised foreigninvestment in China totalled US$685.4 billion(NBSC (National Bureau of Statistics of China),

various years). In 2002, China had become thelargest FDI recipient in the world, receivingUS$53.5 billion (United Nations, 2003). FDIcontributed greatly to China’s economy, in par-ticular the new economy. Before 2002, FDI wasfocused on the manufacturing and high-techindustries. However, after 2002, when Chinaentered the WTO, more sectors opened toforeign investors. The service sector, in particu-lar, the new high-tech enabled services andsocial services, including the cultural industry,has now become the new field of interest forFDI. From 2003 to 2006, the FDI in the culturalindustry had increased by 14.6% while that inthe manufacturing industries is in obviousdecline by 7.8% (NBSC (National Bureau ofStatistics of China), various years).

In relation to the growing cultural industry,knowledge-based urban development can beidentified in two ways. First, the cultural indus-try acted as a major source of employment anda powerful engine in the reorganisation of urbanland use. Its use of land increased much morethan other areas of tertiary land use and becameone of the most important categories of urbanconstruction land. Second, new ‘transitionalspaces’ (Melchert, 2004) – such as ‘culturalindustry clustered areas’ (CICAs) – have beenintroduced into the existing urban fabric. TheCICAs can usually be categorised into twotypes, the ‘cultural industry services areas’(CISAs) in city centres and the ‘cultural indus-trial parks’ (CIPs) in suburban areas. The CISAsfocused on creative design for advertising and

Figure 1. The framework of knowledge-based urban development in the coexisting processes of globalisation anddecentralisation

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cartoons, film production, television and art.These CISAs redeveloped city centres dramati-cally by reusing old industrial factory buildingsand residential areas. Most CIPs, which focuson the manufacture of cultural products, areself-sufficient and located in suburban areas orin high-tech industrial parks. By developinglarge areas of land at the city fringes, the sub-urban CIPs became the bases from which thenew forms of knowledge-based economygreatly expanded their urban space in the late1990s in China.

The growth of knowledge-based economyin Beijing

Beijing city has a history of more than3000 years and has been China’s capital sincethe thirteenth century. In 2005, its total popu-lation was 15.36 million, with a total land areaof 16 410 km2 (BSB (Beijing Statistic Bureau),various years). Like other big cities in China,since the 1980s, Beijing has experienceda process of economic transformation wherethe knowledge-based economy has becomethe main sector of economic growth and thekey factor in urban development (Melchert,2004).

After 1949, the central government set guide-lines to transform cities from ‘consumptivecities’ into socialist ‘productive cities’. Beijingwas among the key cities targeted for the newsocialist industrial initiatives. The socialistindustrial reconstruction of Beijing had twoaspects, the first being that heavy industry –such as the petrochemical, iron and steel indus-tries and manufacturing sector – developed inits suburban areas. The second aspect was thatlight ‘street industry’ – such as spinning andtextiles or printing – spread in the city centre. Bythe end of 1976, heavy industrial factoriesoccupied 4.43 million square metres in thesuburbs and there were 1400 street factories inthe city centre (BZEC (Beijing Zhi Edit Commis-sion), 2004). As a result, Beijing became one ofChina’s most important industrial bases, whilealso being the cultural and political centre ofthe whole country. Since the early of 1980s, tenperipheral constellations focusing on traditionalindustry (e.g. manufacturing, steel and chemicalplants) were located in suburban areas (seeFig. 2). These peripheral constellations were

connected to the centre by a radial road systemand were planned to contain rapid populationand industrial developments.

The situation did not change until the 1980s,with the rapid growth of the knowledgeeconomy under the support of the socialistmarket reforms and the process of globalisation.In the 1980s, a wave of globalisation enabledBeijing to begin to achieve the aims of a modernand global city. Since then, Beijing’s industrialpolicy has been altered to ‘encourage the newknowledge industry, while limiting the develop-ment of heavy industry’ (BIUPD (Beijing Insti-tute Urban Planning and Design), 1983), tocontrol environmental pollution and improvethe city’s liveability. In 1993, the State govern-ment made an important decision to decentra-lise some fiscal management powers toBeijing’s municipal government. A series ofpolicies favouring foreign investment weregranted to Beijing, in particular the establish-ment of foreign financial institutions wereapproved. For example, the municipal govern-ment established the Foreign Investment Utili-sation Office in Beijing in 1993. Since then,foreign investment in this post-socialist capitalcity has greatly increased. FDI in Beijingincreased from US$0.24 billion in 1991 toUS$4.55 billion in 2006, with an averagegrowth of 26% annually (BSB (Beijing StatisticBureau), various years).

As a result of the increase in foreign invest-ment, ‘de-industrialisation’ and tertiarisationhave been the new main trends in the urbaneconomy of Beijing. The tertiary sector has out-stripped the secondary to become the largestsector in terms of GDP since 1994. In 2005, thetertiary sector accounted for 70% of the totalGDP of Beijing, while the secondary sectoraccounted for only 25% of GDP (BSB (BeijingStatistic Bureau), various years). Within the ter-tiary sector, the areas related to the knowledgeeconomy and the cultural industry in particularsaw dramatic growth and became the mainfactors of tertiary increase. The cultural industrywas viewed as an important economic growthpole and the new driver behind the modernisingof Beijing’s economic structure. By the end of2007, there were 623 000 people employed inthe cultural industry, accounting for 9.7% of thetotal tertiary workforce in Beijing. The addedvalue produced by the cultural industry reached



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RMB 99.26 billion in 2007, an average increaseof 230% since 2004 (see Fig. 3). The share of thecultural industry in the GDP of Beijing grewfrom 10.1% in 2004 to 10.6% in 2007.

Combined with support from the State, theinfluence of the municipality on knowledge-based urban development increased greatly inthe decentralisation process. Following China’saccession to the WTO in 2002, Beijing, asChina’s capital, became an emerging globalcity. In its new strategy, the government ofBeijing asserted that the cultural industry shouldbe the key economic growth pole and the newdriver behind the modernisation of Beijing’seconomic structure. In 2004, the ‘Beijing Cul-tural Industry Development Plan 2004–2008’was authorised by the municipal government tohasten the growth of the cultural industry.According to the plan, the cultural industrywould be one of the primary economic sectors,accounting for 9% of the total city GDP in2008, and six cultural projects would be set upbefore the 2008 Olympic Games (e.g. the

Figure 2. Urban spatial structure of Beijing urban area, 1983Source: The author, edited from BIUPD (Beijing Institute Urban Planning and Design), 1983.

Figure 3. Growth of the cultural industry in Beijing,2004–2007

Source: The author, edited from BSB (Beijing StatisticBureau), various years.

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National Grand Opera, a national publishingand copyright trade centre, and a national filmand television programme centre).

In 2006, the municipal government intro-duced another milestone document in the formof the ‘Beijing Municipal Several Policies forPromoting Cultural Creative Industry Develop-ment’ (PGBM (The People’s Government ofBeijing Municipality), 2006). In this document,a number of related preferential policies wereset down to encourage the development of acreative cultural industry, for instance: relaxingmarket entry restrictions in the creative indus-tries and permitting any enterprise or privatecreative industry deal to operate under officialsupervision; and granting preferential tax treat-ment and technological support to the culturalindustry, etc. The new municipal policies pro-vided broad-spectrum support for the develop-ment of the cultural industry in Beijing. Inparticular, the new policies opened space forFDI in the cultural industry.

At the same time, the policy of interventionby local governments at the district and countylevels became a new powerful force whichgreatly promoted the growth of the culturalindustry, with support from the State and themunicipality. Various preferential policies wereintroduced to support the cultural industry, withan aim of obtaining local revenue. For example,

Hui (2006) reported that the creative industry,one kind of cultural industry, was being pro-moted as the pillar industry of the ChaoyangDistrict. The district implemented a series ofcultural market reforms and enacted local regu-lations to promote the growth of the culturalindustry, such as tax reductions, relaxation ofpermissions, and support policies for humanresource management. As a result, the culturalindustrial sectors (e.g. education, culture andthe arts sectors) have maintained a steadygrowth while manufacturing has declined dra-matically since the early 1990s.

The case of knowledge-basedurban development

Knowledge-based urban development isencouraged to support the cultural industry inBeijing. It can mainly be seen in the develop-ment of CICAs. By the end of 2005, there were10 CICAs in Beijing. According to the ‘BeijingCreative Cultural Industry Development Plan forthe 11th Five-Year Plan (2005–1010)’, anothereight CICAs will be developed (see Table 1). TheCICAs significantly restructure urban space inthree ways – through urban redevelopment inthe historic city centre, urban redevelopment onold suburban heavy industry sites and through

Table 1. The cultural industry clustered areas in Beijing, 2006

Creative cultural industry activities Clustered areas Size

Performance, entertainmentevents and city tourism

Chaoyanggongyuan Cultural Park* Land area of 288.7 haHuanlegu Entertainment Thematic Park*Chang’anjie Cultural AreaShichahai Tourism Area

Industry product design Desheng DRC Industry Design Base*Exhibition and trade centres New National Exhibition Centre* Floor area of 0.66 million m2

Media base for movie, TV,Cartoon and internet game

China Movie Base* Land area of 34.14 haNational New Media Industry Base*Dongcheng Cultural Industry Park*Sanchen Cartoon and Internet Game Base*Beijing Digital Entertainment Area

Gallery, sculpture andpainting studio

Dashanzi Art AreaSongjiazhuang Painter Village

Traditional folk handicraftsand industry arts

Baigongfang Folk Art Base Land area of 4.2 haGaobidian Folk Industry ParkLiulichang Traditional Cultural Park Land area of 100 haPanjiayuan Curio and handicrafts Market

Publication, andelectronical products

Zhongguancun Creative Industry Area

*CICAs are planned areas.



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urban expansion in suburban areas. These arefurther explored below.

Urban redevelopment in the city centre

In 1999, the Beijing municipality published the‘Beijing Historical Cultural Preservation AreaControl Plan’ in which 25 street areas becamehistorical preservation areas. According to theplan, the cultural industry will be the firstsector to be developed in the process of theurban redevelopment of Beijing’s core area.These planned areas have a total land area of1038 hectares, which accounts for 17% ofBeijing’s entire core area. In the redevelopmentscheme, the land use of the services sector willincrease and account for more than a quarterof total land use (BIUPD (Beijing InstituteUrban Planning and Design), 1999), while resi-dential and industrial land will be reducedby 1.5% and 7.8%, respectively. Most of theservices sector encouraged will be culturalindustrial services. For example, in Beijing,Qianmen is a historical preservation areafound in the city centre. It was developed as ahistorical tourism area emphasising traditional

cultural activities such as arts, crafts and per-formance. Moreover, some historical com-mercial areas in the city centre such asWangfujing, Xidan and Dashilan have beenrenewed to accommodate the unexpectedgrowth of the cultural industry (see Figs 4,5). Insome areas, Western-style social facilities suchas bars and galleries have been developed.

Local government interventions play a signifi-cant role in the development of the culturalsector in the historical core areas. Since thecultural sector can contribute to local revenue,the development of the cultural sector is wel-comed by local government. The local govern-ment intends to cooperate with privatedevelopers during the development process. Aswell as providing preferential policies toencourage the cultural sector, the local govern-ment even acts as an ‘agent’ between the devel-opers and residents during the planning andresidential relocation process. On the one handit is a branch of the municipal governmentwhich represents the interests of local citizensand on the other hand it can be a ‘partner’ ofdevelopers or a developer itself (Fang andZhang, 2003).

Figure 4. The customer flow in Qianmen in Beijing

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Urban redevelopment in the oldindustrial areas

Since the 2000s, the cultural industry hasbecome the new sector for urban redevelop-ment in the old heavy industrial areas outsidethe city centre. A typical case is the ShijingshanIndustrial area, which is located in westernBeijing. The industrial area is one of the 10peripheral industrial constellations (see Fig. 3).The Beijing Shougang Group (Capital SteelFactory), built in 1958, is one of the main fac-tories in the area. In 2003, the factory occupied8 km2 and had 106 000 employees. It not onlyproduces RMB 24.2 billion of product value peryear but also discharges 108 000 tons of PM10air pollution and consumes over 50 million tonsof water per year. In order to improve air qualityin Beijing, the central and municipal govern-ments decided to close the factory by 2008 andcompletely remove it from Beijing by 2010.During the period of socialist industrialisation(before the 1980s), the factory played a signifi-cant role in Beijing’s economic growth. At theend of 2003, the factory still accounted for 40%

of employment and 50% of local tax revenue inthe Shijingshan District. When the factorymoves out, the district will have to change itsindustrial strategy. In the ‘Shijingshan 11thFive-Year Plan (2005–1010)’, the local districtgovernment announced that ‘in order toface the challenge of the decline of traditionalheavy industry, the district will restructure itsindustry and develop high-tech industrial andknowledge-intensive services, especially focus-ing on cultural entertainment, business, techno-logical services and tourism . . . in future, thedistrict will be a “Capital Recreation District”(CRD)’. In 2006, Shijingshan Science Park, witha planned area of 345 hectares, was opened.The park focuses on the new economy, such ashigh-tech industry, high-tech enabled servicesand the cultural industry. These new economicsectors are expected to take the place of thedeclining traditional steel-related sectors andsustain local growth.

As a key project of the CRD’s core area, theconstruction of the ‘Beijing Cyber RecreationDistrict (BCRD)’ began under the institutionaland financial support of the municipality in

Figure 5. The distribution of some CICAs in Beijing, 2006



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2004. Simultaneously, according to marketeconomy rules, a management department,namely the ‘Beijing Digital EntertainmentDevelopment Limited Co. Ltd.’ was created bythe district government with a mission tomanage development planning and construc-tion, and attracting investment for the BCRD.Figure 6 shows the organisational structure ofthe management department of the BCRD. Withthe support of State and municipal policies onthe cultural industry, the local district govern-ment manages the BCRD in accordance withmarket rules. Management by the district gov-ernment is involved but limited to providingmacro guidance, in particular, the implementa-tion of preferential policies. However, the firmsor enterprises act freely on the open marketaccording to market rules. In this sense, aspecial regime of local cooperation betweenlocal government and enterprises is formed,which as we saw above is described by Oi as‘local state corporatism’ (Oi, 1992, 1999). Thelatter facts show that this regime mechanism isvery good at promoting BCRD development. Inthe first half of 2007, the BCRD had alreadycontributed a product value of US$283 million.The number of firms dealing in the cultural

creative industry was more than 40 by the endof 2007.

Urban expansion in the suburbs

The third kind of knowledge-based urban devel-opment is the cultural industrial parks, whichare found in the suburban areas. According tothe municipal government’s spatial plan, somecultural industrial parks will be developed insuburban areas, such as the China Movie Baselocated in Daxing District. However, most ofthe current cultural parks have developedwithin existing high-tech industrial parks andshare facilities and infrastructure with them, forexample, Zhongguan Science Park (ZSP) inHaidian, the Beijing Economic and TechnologyDevelopment Area (BDA) and Fengtai SciencePark (see Fig. 5). The Zhongguancun CreativeIndustry Area is located within ZSP, which is themost successful national science park. Since theearly 1990s, the creative cultural industry hasbeen promoted as the main sector in ZSP, withan emphasis on software, cartoon and film pro-duction, publishing, and industrial design,among other activities (see Table 2).

Figure 6. The organisation of the management department of the BCRD

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At the end of 2005, the added value of thecreative cultural industry accounted for 26.7%of the total added value generated by ZSP. Thefast growth of the cultural industry in ZSPcaused a dramatic expansion of urban space.Between 1990 and 2004, 27 km2 was devel-oped by the creative cultural industry withinZSP. In addition, according to the developmentplan, ZSP has a total planned land area of426.63 km2, which will account for 26% of thetotal built-up area of 1650 km2 in Beijing in2020 (BIUPD (Beijing Institute Urban Planning

and Design), 2004). The land area occupied bythe creative cultural industry in ZSP will greatlyincrease over the coming years. A case in pointis the development of the western part of theZhongguancun area, where a new base for acultural digital and media industry will be set upover the next three years (see Fig. 7). In 2006, inorder to promote the growth of the creativecultural industry, the district government con-structed a special department – the ‘HaidianCreative Cultural Industry Service Centre’ inZSP. In fact, the department is an agent of the

Table 2. Sectors of the Zhongguancun Creative Industry Area in Beijing, 2005

Sector Firms Added value% 100 million RMB %

Software and cartoon 4856 22.3 93.3 25.9Computer and communication services 3372 15.5 67.2 18.7Cultural research and services 4808 22.1 111.0 30.8Publishing and copyright services 251 1.2 21.2 5.9Movie, TV and audio 692 3.2 46.3 12.9Fashion and art design 1270 5.8 5.8 1.6Advertisement services 5714 26.2 13.4 3.7Culture and arts services 318 1.5 1.6 0.4Arts and crafts products 513 2.4 0.5 0.1total 21 794 100 360.3 100

Source: Author edited from BHSB (Beijing Haidian Statistic Bureau) (2006).

Figure 7. The customers of e-plaza in Zhongguancun in Beijing



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government, implementing preferential policiesand cooperating with enterprises in the processof cultural industry development. As a conse-quence, a growth coalition among local govern-ment, private enterprises and developers hasoccurred, which is similar to that found in theBCRD.

FDI is playing an important role in the devel-opment of ZSP in particular. Since the 1990s,FDI in ZSP has grown rapidly, especially after2002 when China entered the WTO. The accu-mulated actualised FDI has reached US$152billion (BSB (Beijing Statistic Bureau), variousyears). The actualised FDI increased fromUS$2.28 billion in 2005 to USD 2.68 billion in2006. FDI has become one main driving factorin local growth. During the period 2002–2006,the industrial output value (IOV) from the enter-prises operated by FDI took a 50.4% share ofthe total IOV of ZSP. The enterprises operated byFDI contributed a share of 44.6% to the totalrevenue of ZSP, although their number onlyaccounted for 11.8% of the total number ofenterprises located in ZSP.

The Olympic Games and urban development

As the biggest ‘cultural project’ in China, the2008 Olympic Games offered excellent oppor-tunities for growth in the cultural industry ofBeijing. The Beijing Organizing Committee forthe Games of the 29th Olympiad (BOCOG) pro-posed the notion of a ‘Human and CulturalOlympiad’, emphasising the development ofthe cultural industry in areas such as culturalperformance, publishing and print, theexchange of intellectual property rights, filmand television, cartoons, advertisements, mediaand the Internet. The Olympic Games andrelated projects have redeveloped Beijing’surban space dramatically in two main ways.First, through the development of new largecultural facilities. For example, the OlympicGame Park, occupying a land area of 1215 hect-ares and located in northern Beijing (see Fig. 5),was built as the national sports and culturalcentre. Several large cultural facilities were alsoestablished, such as the National Grant Opera,the China Art Museum, the China New Scienceand Technology Museum, the New China CCTVStation and the New Beijing BTV Station. Sec-ondly, the Olympic Games were to revitalise

the city through the redevelopment of oldindustrial sites. In order to ensure a high-qualityenvironment and atmosphere for the OlympicGames, more than 200 factories were movedoutside the fourth ring road. For example, thefactories in the Fatou petrochemical area, whichwas one of 10 peripheral industrial constella-tions, were to be relocated by 2008 (see Fig. 3).Some of these factories were important nation-ally owned enterprises (NOEs), such as theBeijing Petrochemical Plant, the Second BeijingPetrochemical Plant, the Beijing OrganicChemical Plant and the Beijing Coking Plant.The old factories were to be replaced by newcommercial services buildings and high-qualitycommoditised housing on the same sites.

Discussion

In some cities in the West, knowledge-basedurban development has been occurring sincethe 1970s, with these cities being transformedfrom industrial cities into knowledge-orientedeconomies. In the case of Beijing, the findingsin this paper show that knowledge-based urbandevelopment in China is following a similarpath to that in Western cities. Knowledge-basedurban development has grown rapidly since theearly 1990s, when a process of economic trans-formation took place in the global cities ofChina, turning them from industrial into post-industrial cities. The CICAs, which are compa-rable to the ‘cultural quarters’ referred to byMontgomery (2003, 2004) or the ‘cultural clus-ters’ of Mommaas (2004) found in Westerncountries, have emerged as the major tools inthe making of the KC of Beijing. These similari-ties are apparent through a comparison ofFigures 2 and 5. Knowledge-based urban devel-opment through the CICAs has changed urbanspace dramatically. These CICAs are identifiableaccording to three forms of cultural industrydevelopment in Beijing: the regeneration of theexisting historical urban fabric in the city centre;the replacement of heavy industry, leading thecultural industry to become the new economicactivity in the old suburban heavy industrialareas; and the great expansion of the culturalindustrial parks on the city’s edges. The 2008Olympic Games have had a comprehensiveeffect on urban development, which has notonly stimulated urban expansion but also led to

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the urban redevelopment of old industrial areasin the city centre.

Previous discussions of knowledge-basedurban development in the West have concludedthat the process of globalisation is a significantfactor influencing the knowledge economy andurban development (e.g., Knight, 1995; Yigit-canlar, 2007; Yigitcanlar et al., 2008a). The find-ings in this study verify this. Since the 1980s,political reform has led to the transformation ofa centrally planned system into a market systemin China. In the transformation process, globali-sation, marketisation and decentralisation havebecome the new forces of urban economicdevelopment. The market forces of globalinvestment have also grown rapidly to becomeone of the major powers in the cultural industryand urban development in China (Lin, 2000;Wu, 2001; Ma, 2004). As this paper has shown,even in Beijing, the capital of China, wherethe central control of the State still has a greateffect on local economic development, FDIhas increased dramatically and become amajor force behind knowledge-based urbandevelopment.

Undeniably, the effect of the market forces ofglobalisation on knowledge-based urban devel-opment is influenced by local conditions. The‘global-local’ nexus mechanism (Dicken, 1994;Cox, 1997; Parnwell and Wongsuphasawat,1997) or ‘glocalization’ (Swyngedouw, 1997)has had a significant influence on knowledge-based urban development. Cities vary greatly intheir capacity to perceive and respond to oppor-tunities created by globalisation. To a largeextent, the effects of global forces on localdevelopment outcomes depend on the degreeto which local government can meet, adopt andmanage these forces. In other words, the capac-ity of local governments to adopt and manageglobal market forces is also significant forknowledge-based urban development (Yigitcan-lar and Velibeyoglu, 2008; Yigitcanlar et al.,2008b). Furthermore, the capacity of local gov-ernments to perceive these global market forcesdepends on the nature of their institutions andorganisations. The findings in this study showthat in the decentralisation process the ability oflocal governments to cooperate with globalmarket forces is enhanced and the collaborationbetween global market forces and local govern-ment intervention plays a significant positive

and important role in knowledge-based urbandevelopment.

The institutional reforms are the primarystimulus factors in the growth of the neweconomy and related urban development(North, 1990; Schneider-Sliwa, 2002). Urbandevelopment is a result of an urban economicand institutional process at a given spatial-temporal scale (Knox, 1994). Recent work onurban development in developing countries hassuggested that urban development can beviewed as ‘a complex interplay of processes andagencies operating at different scales’ (Changet al., 2004: 415). Namely, urban developmentis the product of the rescaling of State power,which is being redistributed among differentsectors (government and non-government).Decentralisation, as one main aspect of therescaling process, affects urban developmentgreatly through providing a new institutionalcontext for urban growth. In many developingcountries, in the context of urban growth, it hascaused two major shifts to take place. One is thedecentralisation of government mandates tolocal levels. In the decentralisation process,there has been a shift from the traditional cen-tralised, top-down decision-making approachto one in which local governments are empow-ered to make their own decisions to resolvelocal problems and to deal with local develop-ment (Choguill, 1994; Batterbury and Fernando,2006). The second is that the public administra-tion has allowed a range of non-governmentorganisations to enter the service provisionsector and become involved in urban economicdevelopment, in particular FDI. Attractingforeign investment is a major way in whichdeveloping countries can become integratedinto the global economy and capitalise fromglobalisation. In fact, FDI has already becomeone main factor in metropolitan growth in somedeveloping countries; China (Wu, 2000; Weiand Jia, 2003) and India (Shaw and Satish,2007) being two major examples.

In the case of Beijing, there are at least twoinstitutional factors affecting knowledge-basedurban development. First, there are the institu-tional reforms to government structures andmanagement rules. As mentioned, decentralisa-tion releases some State powers to local govern-ments, meaning that local jurisdictions have atendency to be more responsible for their own



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economic growth. The subsequent competitionamong local jurisdictions creates great opportu-nities for the growth of a new economy. As wellas these vertical changes in relation to thedistribution of management responsibilitiesbetween the State and local governments, hori-zontal reforms to government managementhave also regularly occurred. For example, newspecial management organisations have beeninstituted by the State and the municipal gov-ernments to encourage the development of thenew economy. At the same time, a series offormal government rules and regulations havebeen enacted that privilege the new economy.

The second institutional factor promoting thenew economy is the market institutions them-selves. As mentioned above, since the 1980sBeijing has been undergoing a transformationfrom a centrally planned system to a socialistmarket system. This transformation has changedthe rules of urban development. During thetransformation process, the distribution ofthe powers influencing urban developmentchanged from a centrally planned command-control system into a multi-factor system inwhich market rules dominate. The traditionalpower of the State in urban development hasalso been greatly decentralised, giving greaterpower to local governments and other non-government sectors such as external FDI andprivate sectors. This market-led developmentwhich is encouraged by market forces isgrowing (Wu, 2001).

Due to the different historical and socialbackgrounds, the effects of the cultural industryon urban space in Beijing are somewhat differ-ent to those found in Western countries. First,Beijing, like other cities in China, has a morecomplex transformation context than cities inWestern countries. China’s cities are not onlyexperiencing a dramatic globalisation and mar-ketisation process, but also a decentralisationprocess. Marketisation in particular has con-nected firmly with localism and created uniqueforms of the ‘synergetic mechanism’ of ‘local-ism and marketism’; for example, ‘local statecorporatism’ (Oi, 1992) and ‘local capitalism’(Smart and Lin, 2007). The mechanism of ‘local-ism and marketism’ has created a special kindof market power behind the industrial transfor-mation and its spatial effects: local governmentscan adjust their management rules or regula-

tions to facilitate new economic growth whennecessary, and behave like an ‘enterprise orfirm’ (Walder, 1995).

Second, in relation to land development pro-cesses, the effects of the cultural industry have astrong connection with land development inBeijing due to local government enthusiasm forland-use right transfer. According to the growthmachine model (Logan and Molotch, 1987), acoalition of local interests led by propertyrenters is the dominant player in contemporaryurban development in the USA. In China, acoalition between local government and privatedevelopers at the district level may have a muchstronger influence in relation to formulating aland development agenda, although the Statemay still be the leading power at the municipallevel. Leasing public land-use right has not onlybecome a direct source of local revenue butalso a ‘capital’ attracting investment against abackground of market-oriented urban landreform (Zhao et al., 2008).

Third, the State still has a significant influenceon knowledge-based development in China’sglobal cities, although there is a national trendtowards globalisation and decentralisation. AsZhang (2003) argued, the sheer scale of invest-ment and the national context, rather than far-sighted economic management at the locallevel, are the keys to the economic success ofShanghai, and the prevailing views regardingthe relationship between the local and the Statemarkets in Shanghai need to be revised. Withspecial concerns about the chaotic marketadvances of early 1990,Yang (2004) pointed outthat the ‘government failure’ in the decentrali-sation process was likely to push China’sleaders to undertake a ‘wide-ranging’ set of gov-ernment reforms to strengthen the power of theState. The State strongly intervened inknowledge-based urban development throughland policy, tax policy and other related poli-cies. This mechanism was called ‘managedopenness’ and was considered to have charac-teristics unique to China (Weiss, 1999), foralthough the government favoured marketisa-tion this did not mean that the market couldcontrol all development without State interven-tion. The analysis in this study shows that someindustrial zones, including CICAs develop-ments, are greatly supervised by the State. TheState, however, does not act in a vacuum, but

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has to mobilise local resources to attract foreigninvestment by commanding or even bargainingwith local municipal governments. Further-more, while globalisation and economic trans-formation alter the role of local governments ineconomic development, the State tends toemphasise strategies to ‘facilitate the climate forgrowth’ rather than concentrating on control-ling individual sectors and local developmentas it did before the reform.

Conclusion

Since the 1980s, in an attempt to meet theopportunities offered by market reform and glo-balisation, China’s global cities have beenundergoing a profound transformation fromindustrial to post-industrial cities. The culturalindustry has played a significant role in thiseconomic growth and urban development.Knowledge-based urban development hasreplaced traditional industry developmentwhich took place before the 1980s and signifi-cantly restructured urban space in the globalcities of China. Examining the case of Beijing,this study has shown that CICAs have emergedas the new homes of the cultural industry. TheseCICAs represent knowledge-based urban devel-opment in three ways – in the city centre, thecultural industry has introduced new economicactivities into the existing historical urbanfabric; in the old suburban heavy industrialareas, the cultural industry has replaced heavyindustry to become the new economic forcethere; and at the city’s edges, the cultural indus-trial parks involved in land development haveexpanded urban space and relocated the popu-lation and employment dramatically. In addi-tion, the Olympic Games not only offered newopportunities for the growth of the culturalindustry but also simulated knowledge-basedurban development by constructing large cul-tural facilities and speeding up the urban rede-velopment of the old industrial areas in the citycentre.

Many previous discussions of knowledge-based urban development in the West havefocused on the impact of the globalisationprocess. However, in China, the mechanisms ofglobalisation coexist with those of decentralisa-tion, in which local autonomy has increased thepower of local governments in the decision-

making process. This means that knowledge-based urban development in China has differentfeatures to that in the West. In China, the marketforces of global investment are highly integratedwith the forces of local government interventionin promoting the cultural industry. These ‘syner-getic’ global and local forces are the leadingpowers in knowledge-based urban develop-ment, with the emergence of a local coalitionregime in which local governments managelocal development as ‘enterprises’ in the decen-tralisation process, although the State still has asignificant influence on knowledge-basedurban development. The State and municipalgovernments tend to emphasise strategies to‘facilitate the climate for growth’ rather thanengage in centrally planned control as was thecase before the 1980s.

In relation to the practice of developing thecultural industry, two contrary arguments areusually raised. First, that policy intervention isnecessary to foster knowledge-based urbandevelopment and secondly and conversely thatgreat space should be left to market forcesinstead of policy intervention; at the very least,‘blunt’ top-down government managementshould be avoided. The analysis in this studyindicates that the synergetic forces of the globalmarket and local government intervention,combined with State and municipal policy, havepromoted knowledge-based urban develop-ment well in the case of Beijing. Therefore,policy intervention and market forces need tobe treated on their own merits when policydecisions are made to foster knowledge-basedurban development designed to create the KC.Effective policy intervention should aim for acompromise between strict government controland market forces. In particular, in China, wherethe centrally planned system and strongcommand-control remain at large, urban policyshould favour organic knowledge-based urbandevelopment that involves global market forcesand local policy intervention within the contextof the coexisting processes of globalisation anddecentralisation.

Acknowledgement

Many thanks are given to Dr Johan Woltjer, anassociate professor in the University of Gronin-gen, for his comments and suggestions.



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