Summary of Key Points
This article focuses on the real challenges faced in the advancement of regional integration efforts, such as those in the Yangtze River Delta and the Beijing-Tianjin-Hebei region. Despite years of calling for the removal of administrative barriers, the progress has stalled at the most practical issues: how to allocate resources and how to evaluate achievements. By examining cases where corporate relocations have encountered difficulties, the article identifies the two main roots of these barriers—financial settlement restrictions and local governance priorities. It draws on experiences from the United States, Europe, and Japan to suggest that the key to overcoming these obstacles lies not in raising awareness but in designing mechanisms that encourage local governments to cooperate, making cooperation more beneficial for even the most self-interested parties.
Detailed Analysis
1. The Real Stumbling Block: Lack of Agreement on Benefits, Not Technical Barriers
Many believe that regional integration is hindered by technical or market factors, but the examples provided in the article are quite telling. For instance, a company based in a central city of the Yangtze River Delta wanted to relocate its production facility to a neighboring province with lower costs and more relaxed environmental regulations. Despite thorough planning, the move fell apart over the issue of who would bear the tax responsibilities. After years of negotiations without resolution, the company decided to give up. The same situation exists in the Beijing-Tianjin-Hebei region, where the biggest obstacle to the implementation of technological advancements in Hebei is not the lack of technical capabilities but the question of who will benefit or suffer from the changes.
These everyday examples highlight that the real barriers to integration are not about a lack of resources but about unseen issues related to the distribution of benefits.
2. The Two Fundamental Components of Administrative Barriers: Money and Performance Evaluation
Administrative barriers do not emerge out of nowhere; they are built on two main factors:
- Financial Issues: Under China’s fiscal system, local governments at the same level (such as Suzhou and Wuxi, or Beijing and Langfang) cannot transfer funds directly. For projects like building subways across cities, who will pay for them, and who will collect the revenue? When establishing industrial parks across provinces, who will provide the land and how will taxes be allocated? If a company moves from City A to City B, the investment incentives and performance metrics in City A are lost, making local authorities reluctant to facilitate the relocation.
- Performance Evaluation: Local officials are evaluated based on the GDP, tax revenue, and investment within their own jurisdictions, not on the overall regional benefits. As a result, each locality acts like an independent entity, trying to retain businesses within its borders and setting invisible barriers for companies from other areas. They may even invest in duplicate infrastructure in new sectors (such as biomedicine or low-altitude economy) out of fear of losing their own performance metrics.
3. Three Innovative Approaches from Around the World
Regional integration efforts worldwide have encountered similar problems, and these three approaches offer valuable lessons:
- United States: The Minneapolis-St. Paul metropolitan area pools a portion of the taxes from new commercial properties into a common fund, which is then redistributed based on population and financial capacity. This reduces the impact of corporate relocation on local finances and encourages cities to work together towards shared goals.
- European Union: The EU has a cross-border cooperation fund that supports projects spanning borders. To receive funding, regions must collaborate with their neighbors. Cooperation brings financial benefits, making it more effective than holding countless coordination meetings.
- Tokyo Bay: The nine local governments in the region do not form a unified government but agree on specific issues such as transportation, environmental protection, and disaster prevention. They establish coordinating bodies to manage these areas, sharing responsibilities and funds on a rotating basis. This approach avoids challenging local autonomy while effectively addressing practical problems.
4. Moving from Awareness to Mechanism Design
Previous progress in integration has been driven by mandatory measures (e.g., Beijing’s commitment to reducing its industrial footprint). While such efforts have been successful, more subtle institutional issues are now emerging. How can tax bases be shared? How should performance evaluations be revised? How can powers be transferred effectively? These cannot be resolved by mere directives; they require well-designed mechanisms.
The article concludes that successful integration relies on designing systems that make it rational and profitable for local governments to cooperate, rather than relying on their willingness to change their behavior. For example, sharing tax bases eliminates the incentive for regions to compete for businesses, while external funds create financial incentives for cooperation, and the transfer of specific powers helps in solving practical problems. Only by establishing such mechanisms can we truly break down administrative barriers.
This article does not merely repeat slogans but highlights the fundamental nature of regional integration: it requires ensuring that all participants benefit from cooperation for it to be more than just empty rhetoric.