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New-Town Policy and Development in China

This paper discusses the role of new towns in China in balancing regional development. A framework of excessive city size is formulated based on typical urban economics. In line with the theory of public goods, the new-town policy is a component part of urbanization policy. New towns are supposed to disperse the overcrowded populations of large cities, improving their welfare, and appear to be a regional public good. Data show that new towns in China have helped reduce regional disparities by promoting urbanized migration of the rural population. The new towns of China ultimately failed to meet their goals.