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Shenzhen: Coping with Uncertainties in Planning

Article in Habitat International · June 2005

DOI: 10.1016/j.habitatint.2003.09.004

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Habitat International 29 (2005) 227–243

Shenzhen: coping with uncertainties in planning

Michael J. Brutona,*, Sheila G. Brutonb, Yu Lia,c
a
Department of City and Regional Planning, Cardiff University, Glamorgan Building, King Edward VII Avenue,
Cardiff CF10 3WA, UK
b
Cardiff, UK
c
China Academy of Urban Planning and Design, China
Received 22 May 2003; received in revised form 15 August 2003; accepted 29 September 2003

Abstract

In the transition in China from a centrally controlled system of planning and development, the
uncertainties inherent in a market economy were not acknowledged. This paper is concerned to (a) review
briefly the development of Shenzhen 1980–2000, (b) explore the ways in which Shenzhen addressed the issue
of uncertainty in planning and implementing development since its inception in 1980 and (c) suggest ways in
which it might address the uncertainties currently facing its future development.
It finds that in the past both a pragmatic ‘‘learn as you go’’ approach and an ‘‘experimental learning’’
approach have been adopted in dealing with different aspects of uncertainty. It speculates that a similar
approach is likely to be adopted in the future although, as the market economy becomes embedded in the
system and disagreements are articulated concerning the objectives sought through the planning and
development processes, a form of distributional bargaining may also develop.
It concludes that since its inception (a) Shenzhen has acted contingently and rationally in addressing the
different problem conditions faced in developing and implementing strategies for growth, (b) the approach
has led to the successful development of a major high quality city in a very short period of time and (c) this
success could continue if an appropriate contingent approach is sustained.
r 2003 Elsevier Ltd. All rights reserved.

Keywords: Uncertainty in planning; China; Shenzhen

*Corresponding author. Tel.: +44 (0)29-2087-4022; fax: +44 (0)29-2087-4845.

E-mail address: mjb@14qas.freeserve.co.uk (M.J. Bruton).

0197-3975/$ - see front matter r 2003 Elsevier Ltd. All rights reserved.
doi:10.1016/j.habitatint.2003.09.004
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1. Introduction

1.1. Uncertainty in planning

It has long been recognised that

* a critical task in planning is recognising and addressing uncertainties (Christensen, 1985), and
that
* planning processes should be tailored to meet particular problem conditions including
uncertainty (Bolan, 1967, 1974; Cartwright, 1973; Rondinelli, 1973; Christensen, 1985).

Shenzhen is a direct product of the economic reforms introduced in China following the
eleventh conference of the Chinese Communist Party in 1978. It has developed over a period of 23
years from a small farming and fishing settlement of between 20,000 and 30,000 population to a
mega-City of 7m+ in 2001. From inception in 1980 as the first special economic zone (SEZ),
Shenzhen has been used by the Chinese government as a test bed for implementing free market
policies and has had to deal with a range of uncertainties which were barely recognised and little
understood in China, including:
* introduction and consolidation of a socialist market economy,
* attraction of foreign capital and foreign companies,
* provision of the physical infrastructure to accommodate that inward investment.

At inception, Shenzhen Municipality with little knowledge and no experience of dealing with
such issues, adopted a contingent approach to planning and implementing development which
drew on the experience of neighbouring Hong Kong and other overseas countries. In some
instances it adopted a contingent but pragmatic ‘‘learn as you go’’ approach, i.e. policies were
introduced to deal with a problem, if they worked they were left in place until the circumstances
surrounding the problem changed and the policies were no longer appropriate, at which time they
were modified or changed. In other circumstances a contingent ‘‘experimental learning’’ approach
was adopted where policies for change that were considered most likely to be successful were
consciously adopted and monitored to see what happened, with a view to persevering or changing
those policies depending on whether or not they worked. This paper briefly
* reviews the development achievements of Shenzhen over the last 22 years and the way in which
uncertainty has been addressed during that period,
* reviews the uncertainties now facing Shenzhen in planning for the future and the way in which
those uncertainties might be addressed,
* comments on the methodological approach adopted in Shenzhen and
* speculates on the approach likely to be adopted in the future.

1.2. Shenzhen—an introduction

In 1979 Shenzhen was a small farming and fishing settlement. At that time China was
undergoing dramatic social and economic change. The country had only recently emerged from
the ‘‘cultural revolution’’, urban development had been halted for decades, urban residents made
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up only 13 per cent of the total population, physical development—buildings, roads, services,
could only be financed by government. A market economy did not exist. Although the practice of
City planning was in the process of being revived it was based on the 1950s methodology inherited
from the former Soviet Union—a centrally controlled system of planning and development using
five-year socio-economic development plans and a two tier system of land use plans—the
masterplan and site specific plans. Uncertainty did not feature in this system of planning.
Following the introduction of economic reforms in China generally, and with the
establishment in 1980 of the Shenzhen special economic zone (SSEZ) as an experiment to attract
foreign capital, technology and management skills, the town was the first in China to experience
the operation of a market economy. Overnight the certainty associated with a centrally controlled
system of planning was replaced with a complex and uncertain system inherent in a market
economy. Yet within 22 years Shenzhen had a population of between 4.5 m or 7m+ depending on
the source of statistics used, the highest GDP per capita in China, the highest per capita
disposable income of urban residents in China, and the highest values in total exports in China
(see Table 1).
Immigrants were attracted to the SSEZ and the Municipality from all over China, and as a
consequence, given the characteristics that are associated with major migrations, the population is
young, enterprising and relatively well educated, e.g. in 1997 the average age of the population
was 27.41 years and at post-school education level Shenzhen ranked second only to Beijing in the
proportion of inhabitants with a degree or diploma. (Shenzhen Urban Planning and Land
Administration Bureau 1999, p. 37.)

Table 1
The ranking in China of major economic indicators for Shenzhen for the year 2000
Index Unit Amount Rank in China
Gross Domestic Product 10000 Yuan 16654652 4
Gross Domestic Product per Capita Yuan 39739 1
Investment in Fixed Assets 10000 Yuan 6196993 4
Local Financial Revenue in Budget 10000 Yuan 2250212 3
Gross Output Value of Industry 10000 Yuan 26724181 4
Total Retail Sales of Consumer Goods 10000 Yuan 5381652 9
Total Imports and Exports USD10000 6393982 1
Total Exports USD10000 3456333 1
Total Imports USD10000 2937649 2
Foreign Capital Actually Used USD10000 296839 4
Deposits of Banking System 10000 Yuan 31690000 4
Loans of Banking System 10000 Yuan 22921800 4
Per Capita Disposable Income of Urban Residents Yuan 21626 1
Containers Handled at Seaport 10000 Standard 39936 2
Box
Passengers Departing at Airport 10000 Persons 642 4
Cargo Handled at Airport 10000 Tons 20.30 5
(Source : Unpublished China Academy of Urban Planning and Design Briefing Paper which developed the figures from
the Statistics Handbook for Shenzhen 2001 published in Chinese.)
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2. The development of Shenzhen 1980–2002

Shenzhen Municipality today consists of two administrative districts (Bao’an District and
Longgang District) which are outside the SSEZ, and the SSEZ which consists of four
administrative Districts—Nanshang, Futian, Luohu and Yantian. The SSEZ is located in the
coastal area of Shenzhen Municipality, immediately to the north of Hong Kong, and covers
327.5 km2 (see Fig. 1). To control immigration into the SSEZ from other parts of China, entrance
into and exit from the SSEZ is strictly controlled through border points and requires the
production of passports and/or identity cards.
The development of Shenzhen Municipality over the period 1980–2000 falls into two stages
(a) the founding and early expansion phase of the SSEZ 1980–1992, and (b) the improvement and
re-structuring phase 1993–2000.

2.1. The founding and early expansion phase 1980–92 (Shenzhen Urban Planning and Land
Administration Bureau, 1999, pp. 13–16)

In the early years a combination of the special taxation policy given to the SSEZ, cheap labour
and cheap land proved attractive to Hong Kong based entrepreneurs many of whom moved their
manufacturing operations into Shenzhen whilst maintaining ‘‘head office’’ in Hong Kong (China
Academy of Urban Planning and Design, 2002). Urban development at this stage was almost
random and mainly took the form of industrial estates, similar to the early industrial estates in
Britain. Associated with these industrial areas was the demand for housing, which was generally

Fig. 1. Administrative authorities in the Shenzhen region.

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provided by the developer as dormitory accommodation adjacent to the factory. Shopping and
entertainment demands were catered for by the designation of Luohu as the centre for the SSEZ.
The Municipal Government’’s priority at this stage was to provide the infrastructure needed to
attract foreign investment.
In 1982 the first socio-economic development plan for the SSEZ was published and the concept
of a clustered linear city based along a transport spine involving highways, railways, ports and an
international airport, was proposed. Some 30 km2 of land around Luohu and Shangbu were
zoned for development. Trade and manufacturing industry boomed almost overnight (Shenzhen
Urban Planning and Land Administration Bureau, 1999, p. 13). At this stage the planning system
although adapting to a market economy, was still focussed on the old centrally based planning
system centred around a two-tier system of plans—the five year socio-economic development plan
and a masterplan for urban areas with associated site specific development plans.
In 1986 Shenzhen Municipal Government began to break away from the traditional masterplan
approach with the completion of its first comprehensive plan which defined in some detail the land
uses for the six settlement ‘‘clusters’’ along the transportation spine—Shatoujiao, Luohu-Shangbu,
Futian, Overseas Chinese Town, Nantou and Qianhai shown in Fig. 2 (Shenzhen Urban Planning
Bureau and the China Academy of Urban Planning and Design, 1986). The transportation spine,
which was largely completed by 1991 with the opening of the two ports and the airport, basically
follows the coastline from east to west and its completion made Shenzhen a major economic
corridor for South China and boosted urban development along the major routes.
This rapid urban development brought with it a range of problems that had not been
anticipated, e.g.
* The 1986 comprehensive plan had seriously underestimated the rate of population growth
having failed to recognise that the new economic freedoms would encourage people to move to
find better paid employment.

Fig. 2. Shenzhen special economic zone: Proposed urban clusters 1986.

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* The developing urban area lacked a clear structure and with the exception of Futian and Qianhai,
the whole of the SSEZ in the late 1980s and early 1990s resembled a huge construction site, with a
random distribution of completed projects, work under construction and vacant plots.
* Towns and villages outside the SSEZ and operating under a different system of planning
control were competing with the SSEZ by working hard to attract industrial development
through the establishment of their own mini-economic zones inside villages and the conversion
of arable land into factories. The inter-provincial highway north of Shenzhen was dotted with
industrial parks and new houses that had not been subjected to planning scrutiny in the same
way as developments in the SSEZ had been. These areas, with a much more flexible and much
less demanding system of planning and building control and with cheap land and labour,
competed with the SSEZ for inward investment and attracted migrants from other parts of
China who were seeking work.

This concentration of population outside the SSEZ further fuelled land speculation and by 1993
the market supply of land exceeded real demand. Sites were cleared and left vacant and the
ecological balance was gradually being destroyed. Yet administratively the Shenzhen Munici-
pality, although exercising planning and other controls over developments in the SSEZ, had very
little control over the development occurring in the areas outside the SSEZ. The stage was set for
the introduction of the second phase in the development of Shenzhen—the improvement and
re-structuring phase.

2.3. The improvement and re-structuring phase 1993 to present (Shenzhen Urban Planning and
Land Administration Bureau, 1999, pp. 16–19)

In 1993 the Chinese Central Government, realising the seriousness of land speculation, began to
take steps to deal nationally with the overheating economy. At the same time Shenzhen
Municipality responded locally to its problems, especially the problems associated with
development outside the SSEZ, by bringing Bao’an County and Longgang District under the
direct administration of the Municipality and introducing a more directive planning system
through the Shenzhen Comprehensive Plan 1996–2010 (Shenzhen Urban Planning and Land
Administration Bureau, 2000). This plan, which is still operative, extended the planned area
beyond the SSEZ to include both Bao’an and Longgan Districts and also introduced a range of
administrative and legislative reforms, e.g. the ‘‘three levels five stages’’ system of plans shown in
Fig. 3 as opposed to the old two-tier system. Under the Comprehensive Plan 1996–2010 future
development outside the SSEZ is restricted to settlement ‘‘clusters’’ which focus around the three
transport axes leaving the SSEZ (See Fig. 4). The first heading northwest through Bao’an
(Western Cluster), the second heading North towards Dongguan (Central Cluster) and the third
heading North–East through Longgang (Eastern Cluster). The residual problems created by
speculative and uncoordinated development have been addressed since 1996 by creating green
wedges and major open public spaces between the growth clusters, removing temporary buildings,
de-centralising overcrowded housing areas and giving priority to the construction of public service
facilities. The Plan has put a freeze on the conversion of agricultural land to urban use and
introduced a basic zoning system identifying zones for transport use, building/development,
agricultural reserves, water reserves and landscape and natural environment protection zones. It
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M.J. Bruton et al. / Habitat International 29 (2005) 227–243 233

Fig. 3. Shenzhen: ‘‘Three Levels Five Stages’’ hierarchy of plans 1996.

Fig. 4. Shenzhen municipality: Strategy for development post 1996.

argues a strong case for co-operative development with Hong Kong and other cities in the Pearl
River Delta and proposes a three-stage strategy of implementation, viz.

* Stage 1 (1996–2000), the retention of a compact urban form based on urban ‘‘clusters’’ along
the transportation spine, and the protection of the environment by enforcing the intensive use
of already developed urban land.
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* Stage 2 (2001–2010), the building and consolidation of Shenzhen into a well-managed major
city that is comfortable to live in and with successful finance, commerce, trade, information
technology, transportation hi-tech industries and tourism.
* Stage 3 (after 2011), the establishment of Shenzhen as a modern international city with a strong
identity and image.

The plan proposes that

* the population of SSEZ be limited to 4.3m in 2010 through strict control over immigration into
the SSEZ,
* the Eastern Urban Cluster (Longgang) should develop Yantian Port as an international
container transportation hub and Shatoujiao and Meisha as tourism and business centres,
* the Western Urban Cluster (Nanshan), should become the transportation and logistics hub of
the SSEZ, as well as an education and research base and the main tourism destination for
Shenzhen.

Addressing for the first time the issue of towns outside the SSEZ the plan proposed to
* Limit the total population of the six free standing towns (Gongming, Guangming, Shiyan,
Kuichong, Dapeng and Nan’ao) to 350,000 by containing their urban areas, protecting
agriculture and ecology and promoting tourism.
* Develop the Central Cluster (Longhua) to the North of the SSEZ as a ‘‘new town’’ to
accommodate 120,000 residents with associated employment, and other supporting
facilities ‘‘symbolising the urban development progress and sophistication progress of
Shenzhen in the 21st Century’’ (Shenzhen Urban Planning and Land Administration Bureau,
2000, p. 17).

Since the mid-1990s there are indications that the city has entered a third developmental
phase—that of coping with a changing economic base as manufacturing industry moves out of the
SSEZ into adjoining local authority areas such as Dongguan, where land and labour costs are
lower.

3. Uncertainty in the planning process in Shenzhen, 1980 to present

Since its inception Shenzhen has had to produce its plans and implement the plan proposals in a
climate of uncertainty not previously experienced under the old Soviet-based system.
* uncertainty relating to the attraction of inward industrial investment (i.e. how much, what sort
and over what period of time),
* uncertainty in dealing with rapid land development in a newly introduced ‘‘socialist’’ market
economy,
* uncertainty in making provision for the physical development to accommodate inward
industrial investment, and
* uncertainty as a consequence of changing political and administrative structures.
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From the outset the Municipality addressed the different conditions which surrounded these
uncertainties, and adapted its planning and implementation methodology accordingly. Thus
where there was agreement on the need to attract inward investment but the means of achieving
this were not certain, Shenzhen adopted a pragmatic ‘‘learn as you go’’ approach to find a
solution that worked. Based on experience elsewhere, e.g. Hong Kong, Singapore, UK, it
introduced policies that gave inward investors tax advantages, cheap land and cheap labour. The
policies worked and there was little difficulty in attracting inward industrial investment for some
17 years. With the third developmental phase, when manufacturing industry began to leave
Shenzhen for adjoining authorities, where land and labour are cheaper and planning and
development controls are not so onerous the Municipality has adapted to the changed conditions.
It is now consciously experimenting with policies that are designed to attract high-tech and R&D
industries to Shenzhen, e.g. by providing high-quality high-tech industrial estates, by developing
an environmentally high-quality new town. Based on previous experience, if these experiments
work then the policies will continue to be implemented. If they do not work then they will be
modified until a solution is found that does work.
In relation to the then unknown area of land development using private monies, where there was
agreement that the land development system had to change but the means of achieving that
change were uncertain, the Municipality bravely and consciously experimented in an effort to find
a solution that worked. First,
* it replaced the then existing system of allocating land to known operators/friends on an
administrative basis with a system of leasing, when it introduced the requirement that all
developers should purchase the development rights of land, i.e. they should buy the right to use
urban land, and second,
* it decided to privatise the housing sector, i.e. the Municipality stopped providing free housing
for its residents.

Overnight the real estate industry was born and soon became the most profitable sector
of the economy. The controls previously exerted by the national financial system
were relaxed, bank loans became available and in a few years offices, apartment buildings,
hotels and factories financed by local entrepreneurs as well as those from overseas sprang
up in Shenzhen. These two initiatives probably had the greatest impact on the economic growth
and development of the city. In effect the planners and the politicians were acting as
experimenters, introducing an initiative, monitoring its performance to see if it worked, and
leaving it in place as it worked.
One of the unexpected consequences of the introduction of the reforms to the land development
system was the natural evolution of a former industrial district (Shangbu Industrial Zone) into a
thriving commercial and retail district. In the early years of the SSEZ land was allocated
administratively to state owned enterprises (SOEs), in the words of Leaf (1996) ‘‘specific agencies
of the local state’’ for industrial development. However with
* the introduction of land development reforms and the subsequent increase in rental value for
commercial as opposed to industrial use,
* the growth of the City, which absorbed into the evolving inner city industrial estates that had
initially been located at the edges the City and
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* the inability of the City government to enforce its own land use zoning controls as a
consequence of shortcomings in the planning legislative framework,

the SOEs were able to use the land they had been allocated administratively for industrial
purposes to be developed much more profitably as an unplanned commercial and retail centre
using private monies (Wang & Xu, 2002).
Whilst this development was not a conscious experiment it nevertheless was absorbed by the
Municipal planners as a learning experience and contributed to the pressures for administrative
change in the planning system in the mid-1990s away from the two-tier masterplan and associated
site specific plans inherited from the former centrally controlled economy to the more complex
arrangement of plans in the mid-1990s shown in Fig. 3 and designed to operate in the market
economy introduced into China.
At the same time with the start of the third developmental phase involving the voluntary
relocation of labour intensive manufacturing industry from within the SSEZ to the districts of
Bao’an and Longgan, and neighbouring authorities, e.g. Dongguan, where transport had been
improved and land and labour were cheaper, again acted as a learning experience for the
Municipal planners and led to the extension of the five tier system of plans which originally only
applied to the SSEZ to cover the outlying areas of Bao’an and Longgan. The planners had again
acted pragmatically and adjusted their planning system to cope with the more complex pressures
of a market economy. The Comprehensive Plan for Shenzhen 1996–2010 formally introduced
these changes, at the same time as it introduced a very different approach to accommodating the
physical development associated with inward investment.
In the ‘‘founding and early expansion’’ phase of development for Shenzhen, 1980–1993, a very
loose control had been applied in accommodating the physical development associated with
inward investment. The main concern was to bring in the inward investment. The outcome in
environmental terms was something akin to a frontier town—development that lacked cohesion
and coherence, a physical environment devoid of attraction. The Municipal planners again
learned from developments on the ground and introduced the ‘‘improvement and restructuring’’
policies set out in the Comprehensive Plan for Shenzhen 1996–2010 by creating green wedges and
major open public spaces, removing temporary buildings, de-centralising overcrowded housing
areas, giving priority to the construction of public service facilities and concentrating development
giving a structure to future developments. By acting contingently and adapting their approach to
the particular problem conditions the Shenzhen planners were operating in a way that
characterises planning in the market economies of the western world.

4. The uncertain future for Shenzhen

4.1. Introduction

A number of major uncertainties at the national, regional and local levels will have to be
addressed in the review currently underway of the Shenzhen Comprehensive Plan 1996–2010, if
the plans for the future of the Municipality are to be robust. As with the previous plan periods
these uncertainties derive largely from the adoption of a market economy.
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4.2. National uncertainties

At the national level the resolution of major uncertainties relating to (a) central–local
government relations and (b) relations between the Hong Kong Special Administrative Region
and the People’s Republic of China, particularly Shenzhen Municipality ‘‘where some people look
ahead to the gradual erosion of Shenzhen’s border with Hong Kong’’ (Sunday Times, 25th
January 2003, p. 1), will impact on the success or otherwise of development policies for the future.

4.3. Central–local government relations

Economic reform, whilst bringing rapid economic growth primarily to the coastal cities, has
also brought associated political and administrative changes, which contribute to the
uncertainties. Although the rigid planned economic system has been abandoned because of its
inefficiency and ineffectiveness, public ownership and the role of the state in production has been
largely maintained. A totally free market system with private ownership as its cornerstone has not
yet replaced the old regime, largely because many of the major players in the development process
were, and still are, ‘‘collective enterprises ...tied to specific agencies of the local state’’ (Leaf, 1996,
p. 196).
Devolution is beginning to take effect in the central–local government power structure although
the reform is gradual, incremental and experimental in nature, whilst decentralisation, which has
redefined the role of local government, is cautiously being attempted in a top-down manner. In
practice.
‘‘Local government is moving from its traditional role of producing services to a new function
of enabling the business community to produce, leading the transition from a welfare state to an
economic development state’’ (Zhu, 1999, p. 535).
However, given that top officials at all levels of government below the central state, are
appointed and monitored by the bodies at the upper levels of the system, mayors have not always
put the interests of the population they are appointed to represent before a concern to deliver
what appeals to their political masters, in the words of Zhu (1999, p. 544).
‘‘A long term agenda for development is not deemed affordable to mayors as they have stepped
down before the vision has materialized. Short term quantitative instead of long term qualitative
urban changes are pursued as a result.’’
The nature and form of central–local relations is an issue of great uncertainty—the only
certainty in this respect being that change is inevitable. Central Government would appear to have
recognised this by introducing an element of political and administrative change in Shenzhen
Municipality (and only Shenzhen). This is a conscious experiment to adapt local government to its
changing role as a facilitator of private development by introducing a new administrative
structure in the Municipality consisting of three main sections—(a) policy-making, (b)
implementation and (c) supervision. The basic concern is to separate policy-making from
implementation with the policy-making section being responsible only for policy and having no
executive powers. At the same time the implementation section is only able to implement policy
without having any powers of making it. The supervisory section comes under the direct control
of the Mayor (Shenzhen Government Online, January 21st 2003). Once again Shenzhen, acting as
a ‘‘pilot’’ for the continuing economic transformation of China, will be operating under a
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contingent experimental learning condition of uncertainty, which indicates that Shenzhen is still
seen by central government as a test bed for experiment in the market economy.

4.4. Relations between the Hong Kong special administrative region and the People’s Republic of
China (Yeh, Lee, Lee, & Sze, 2002)

In negotiating the return of Hong Kong to China the Chinese government agreed a policy of
‘‘one country, two systems’’ to maintain democratic government in Hong Kong for 50 years. As a
consequence of its special status only the Central People’s Government has the authority to plan
and administer the border region between Hong Kong and Shenzhen. To date the government has
given no indication that it wishes to exercise this authority. The Hong Kong and Shenzhen
Authorities are actively pursuing ways in which the two systems can co-operate, but economic
developments on the ground are being implemented as if they were two separate countries, which
politically they almost are. Yet, in the context of globalisation there must be uncertainty relating
to the length of time that the boundary between the two systems will continue to exist, and hence
separate planning for the two areas. If they were planned as one, a different scenario for
development might well emerge.
Economically the fortunes of Hong Kong have changed dramatically since the Asian economic
crisis, which generally coincided with the hand-over of Hong Kong to China in 1997. For decades
prior to the hand-over direct inward foreign investment was attracted to Hong Kong, creating
significant wealth. Today, inward investment to Hong Kong has fallen by 75%, from $14.6 billion
in 2000 to $3.6 billion in 2002, the property market is in free fall with prices down by 66% from
their 1997 peak, 70,000 households are in negative equity, consumer demand is weak and
unemployment touched a near record high of 7.2% in 2002 (The Times, Monday 6 January 2003,
p. 5). More recently, in the words of the Chief Secretary for Administration Donald Tsang, in an
effort ‘‘to upgrade the quality of the population’’ Hong Kong has started to accept immigrants
based partly on their wealth and talent and has adjusted tax policies to encourage families to have
more children. (New Sunday Times, March 2 2003, p. 14). Although it would be premature to
conclude from this that Hong Kong is in terminal decline, nevertheless it would seem that it is
going through a period of fundamental change and there are strong arguments that its future
should be planned in conjunction with Shenzhen, the Pearl River Delta and China as a whole
(Jacques, 2003). Until such time as Hong Kong is planned and developed in conjunction with
Shenzhen, both Authorities will be operating under conditions of uncertainty. Whilst Central
Government has a clear idea of the ends it wishes to achieve in relation to the future of Hong
Kong, globalisation and the evolving world economy may dictate different ends. It could thus be
argued that in these circumstances, where the objectives in this area are not altogether certain a
pragmatic ‘‘learn as you go’’ approach, may not be appropriate for dealing with the development
of these two administrative areas. Whilst both administrative bodies accept the decision of Central
Government, there is every indication that until such time as Central Government decides to re-
consider the position relative to these two administrative areas, they will proceed cautiously in
implementing development proposals for their areas—negotiating, co-operating wherever that is
in their interests, experimenting yet at the same time implementing proposals that are seen to be in
their own self interests. Inevitably a form of distributional bargaining will form part of these
negotiations (Schelling, 1960; Bruton, 1980, 1983).
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4.5. Regional uncertainties

At the regional level the adoption of a market economy has given rise to uncertainty by
* promoting fierce competition between the major cities in China to attract inward investment,
making them pro-enterprise in the formulation of development policies,
* giving rise to a redistribution of manufacturing industry and a restructuring from
manufacturing to service industries in the developed cities such as Shenzhen and
* leading to the introduction of a form of a free market in land.

Shenzhen is facing severe competition for inward investment within the Pearl River Delta from
Hong Kong, Macau, Zhuhai, Zhongshan, Guangzhou, and Dongguan (Yeh et al., 2002, pp. 9–
99). It is also faced with stiff competition from elsewhere in China, especially Shanghai and
Beijing. Competition within the Pearl River Delta has lead to the over-provision of major infra-
structural facilities, e.g. there are five international airports serving the Delta region–Hong Kong,
Macau, Zhuhai, Guangzhou, and Shenzhen. There is also a similar number of container ports all
vying for the trade offered in South China. In the absence of an up-to-date and accepted plan for
the Region, inevitably there is uncertainty about the long-term future of some of these facilities,
which must influence the long-term strategies for the competing authorities in the Region. In the
market economy that currently exists market forces are beginning to impact on these
developments, e.g. Zhuhai airport has a maximum planned capacity of 12m passengers yet in
1998 and 1999 it handled 71,320 and 57,850 passengers, respectively (Xu & Xu, 2002, pp. 134–
135). The situation facing Shenzhen is compounded by the fact that Hong Kong and Guangzhou
have already revised and are implementing their strategies.
At the same time competition between the administratively separate authorities within the Pearl
River Delta is leading to a redistribution of manufacturing industries as the factories move in
response to cheaper land and labour costs. Initially Hong Kong suffered a loss of manufacturing
industry to Shenzhen. Today manufacturing industry, for example, electronic assembly, and
clothing manufacturing, is leaving the SSEZ for (a) townships elsewhere in the Shenzhen
Municipality area outside the Special Economic Zone, e.g. Longgang, and (b) adjoining
authorities e.g. Dongguan, described as ‘‘a heaving, filthy metropolis where an estimated 20,000
factories have sprung up on land once occupied by peasant farms and duck ponds.’’ (where it is
estimated that ) ‘‘5 m people may have come here to work in the last decade, spurring a growth
rate of more than 20% last year’’ (Sunday Times, 25th January 2003, p. 1). Cheaper land, lower
wages, lower infrastructure costs and much lower planning and construction standards generally
account for this rapid growth. The pattern, timing and speed of these movements inevitably gives
rise to uncertainty, and all the authorities concerned are adopting a pragmatic learning approach
to planning by experimenting with initiatives that they think could give them the edge over their
competitors, e.g. Dongguan is developing a high tech industrial park; Guangzhou is proposing a
new town development in the Nansha area. Shenzhen is considering the development of a new
town in the Guanming area, which will focus on high tech and R&D developments. Implicit in
these experimental developments is the adoption of a competitive stance with each authority
attempting to ‘‘win’’ relative to its own values by attracting more economic development to its
area than to other administrative areas.
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4.6. Local uncertainties

Local uncertainties exist in relation to

* forecasting and future population,
* shortage of land in Shenzhen, and
* the developing free market in land.

Forecasting is problematic in Shenzhen, as it must be throughout China, where population data

is unreliable and inconsistent, e.g. the Shenzhen Statistics Handbook 2001 gives the 2000
population of Shenzhen as 4.69m, whilst the Census for the year 2000 gives it as 7m+. Even with
upto date and consistent data it would not be easy to forecast the distribution of local populations
accurately, given the rapid economic development and urbanisation and the large migration from
the rural to urban areas associated with that rapid development. As a consequence population
forecasts are difficult to make and cannot be relied upon.
At the same time the situation is further complicated by breaking down the population into two
categories—the registered population, who are recognised as permanent residents of Shenzhen,
and the temporary population. The temporary population consists primarily of workers who are
in Shenzhen to earn money to send home to their families living in settlements where they, the
workers, are registered as permanent residents. The majority of these temporary workers live in
dormitories attached to the factories where they work, and intend to return to their ‘‘homes’’
sometime in the future. The social, economic and land use demands of these two groups are very
different and will affect the development of the long-term strategy. The long-term future of the
temporary residents is uncertain—will they stay and want to become permanent residents? Will
they return home?
Employment and inward investment data is also limited and patchy, and as a consequence it is
impossible to attempt anything other than the crudest of forward projections.
This uncertainty deriving from inadequate data is reflected in the two widely differing scenarios
for the future envisaged by (a) the Shenzhen Municipal Institute of Urban Design and Planning,
who anticipate little or no further population growth for Shenzhen up to 2030, and (b) the
Shenzhen Municipal Bureau of Development and Planning/CAUPD who anticipate significant
economic and population growth. In this situation Shenzhen Municipality is acting contingently
by adopting an experimental learning approach and attempting to work within the existing data
deficiencies and monitoring developments on the ground to check on the validity of forecasts
made earlier.
Shortage of land. Whatever future scenario is adopted for Shenzhen it will be heavily
constrained as a consequence of a shortage of land available for development. At the moment the
area of the Municipality is 2020 km2 of which 1000 km2 are mountainous and not developable,
leaving a total of 1020 km2 available for development of which 700 km2, have already been
developed leaving 320 km2 still available for development. The uncertainty comes from conflicting
concerns (a) to protect the high-quality environment of the remaining 320 km2 from development
or (b) to take economic advantage of further growth. At the moment a distributional bargaining
situation almost certainly operates where the population in general and some technical officers are
attempting to win relative to their values by retaining the area as a green lung whilst the politicians
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M.J. Bruton et al. / Habitat International 29 (2005) 227–243 241

are attempting to win relative to their different values by developing the area as a new town to
attract high tech and R&D developments (Schelling, 1960; Bruton, 1980, 1983).
In the wider regional context there is every case for retaining the area for environmental
purposes. In the narrower focus of Shenzhen Municipality the decision is not so clear cut, and a
situation exists with the Mayor probably having the short-term objective of leaving something
tangible from his period in office, whilst the environmentalists have the longer-term objectives of
maintaining the high-quality environment area for future generations. However, a ‘‘learn as you
go’’ compromise solution is possible where the decision about the proposed new town is deferred
and the requirement imposed that all land currently designated and serviced for industrialization
in Longgan should be developed before the proposed new town is commenced. As in all instances
of distributional bargaining, power will eventually decide the issue.
The land market. Despite the fact that a ‘‘free market’’ in land was effectively introduced in 1987
with (a) the requirement that all developers should purchase the development rights of land and
(b) the privatisation of the housing market, there are uncertainties associated with the way in
which the ‘‘free market’’ in land is likely to develop in the future, e.g. the transformation of
Shangbu Industrial area into a thriving retail area. Because of the intense local/regional
competition local government (i.e. Shenzhen Municipality) has to be pro-enterprise in formulating
development strategies. At the same time, given that SOEs have been active in the provision of
social benefits and welfare to employees, local government has little option but to support SOEs,
which highlights a major area of uncertainty. To what extent should Shenzhen Municipality
pursue a pro-enterprise policy and to what extent should this be moderated by a concern to
support the SOEs and the social welfare benefits of their work?
In this area of uncertainty there is every indication that Shenzhen Municipality will follow the
‘‘experimental learning’’ approach to contingency planning. All the indications are that gradually
this contingent approach to dealing with the land market will result in the evolution of a land
market process that approximates towards a western economic system land market. On the
assumption that China is pursuing a policy of globalisation and being a part of a World economy
there is no real alternative.

5. Conclusions

Pre1978, under the old centrally controlled economic planning and development system
uncertainty was not acknowledged. In the period 1980–2000 it is clear that the planners and
decision takers in Shenzhen acted in a way that took account of the uncertainties integral to the
introduction of a market economy by adapting their approach according to particular problem
conditions. Where the planners knew what they wanted to achieve but were not sure of how to
achieve their objectives, the authorities adopted at different times a pragmatic ‘‘learn as you go’’
approach and/or an experimental learning approach depending on the problem conditions.
Thus
* The ‘‘learn as you go’’ approach towards attracting inward investment through tax incentives
and cheap land and labour was implemented in the period 1980–1998 without change because it
worked. However, when competition from other areas in the Pearl River Delta began to poach
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242 M.J. Bruton et al. / Habitat International 29 (2005) 227–243

inward investment away from Shenzhen, the authorities began to explore alternative
experimental strategies to retain that inward investment.
* With regard to the problems of accommodating the physical development associated with
inward investment the authorities consciously experimented with new initiatives by (a)
replacing the then existing system of allocating land administratively to known operators with
the requirement that all developers should acquire the development rights of land (b)
privatizing the housing market (c) introducing a five-tier system of plans and (d) developing
and implementing new policies to give the urban areas a coherent structure. Because these
experiments worked they have been retained, till today.
* The future for Shenzhen is even more uncertain today than it was in 1980 as the market
economy becomes embedded in the Chinese system. Indeed not all of the uncertainties faced by
Shenzhen are capable of being addressed directly by the Municipality. Those it has most
influence over are
* Redressing the potential loss of inward investment to neighbouring authorities, where both

the pragmatic ‘‘learn as you go’’ and/or ‘‘experimental learning’’ approaches are likely to be
the preferred methods of finding a solution that works.
* The severe competition it is facing from other cities in the Pearl River Delta and elsewhere in

China, e.g. Beijing and Shanghai, where again pragmatic ‘‘learn as you go’’ and/or
‘‘experimental learning’’ approaches are likely to be the preferred method of finding a
solution that works.
* A local shortage of land for development, where because of the lack of agreement over the

need to build a new town on a location which is of high environmental quality, an approach
that involves an element of bargaining is likely to emerge.
* The potentially more significant uncertainties over which it has little influence are
* The legal requirement that in planning for the future Shenzhen must assume that Hong

Kong will remain separate administratively from the mainland until 2047. Given Central
Government’s policy towards Hong Kong a pragmatic, ‘‘learn as you go’’ approach will
almost certainly be adopted, with at times an element of distributional bargaining.
* The changing nature of local government which is moving from a position of being a

provider of services to a facilitator of development, where a clear experimental learning

approach has been introduced at the instigation of Central Government.

The planners and decision takers in Shenzhen have acted contingently and would appear to
have used reason to cope with uncertainty by adapting their approach to the particular problem
conditions. There is every indication they will continue to operate in this way. This style of
operation has successfully created a vibrant and high-quality city over a very short period of time,
at a rate of growth that western market economies have no experience of. At the same time the
Shenzhen experience supports the conclusions of Christensen’s analysis of uncertainty in planning
‘‘planning processes can be understood as addressing different conditions of uncertainty. Thus
planners must assess the actual conditions of uncertainty that characterize the particular problem
they are confronting and then select a style of planning that suits those conditions. By tailoring
planning to real world conditions the planner is acting contingently. In doing so the planner copes
rationally with uncertainty’’ (Christensen, 1985, p. 69).
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M.J. Bruton et al. / Habitat International 29 (2005) 227–243 243

Based on experience, if the planners are alert to the many uncertainties that surround Shenzhen,
and tailor their planning approaches to meet the particular problem conditions, then the City is
likely to continue to develop in a positive and successful way.

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