Even China's megacities could be eclipsed this century by nimble, entrepreneurial up-and-comers like Hangzhou

Gradually, a new round of competition is taking place among Chinese cities to build their new identity. Led by Beijing and Shanghai, many cities have started to write and rewrite their development plans.

It is a good thing in the country's transition from its past growth model, because the transition won't happen if it just remains in official policy papers. It has to be translated into actions on the local level.

But it is only a gradual, if not too slow, process, since the world is now almost eight years past some of the worst of the 2008 financial crisis. And being gradual means it comes with tremendous difficulties - economic and political - and almost inevitably, its progress is regionally imbalanced.

In the worst cases, such as the three northeastern provinces, the country's rust belt of old, state-owned industries, people still cannot tell when the change will actually happen, though it has repeatedly been called for by the central government for more than a decade. Yet another State Council policy paper was published recently promising a massive financial injection - up to 1.6 trillion yuan ($240 billion; 213 billion euros), according to some estimates - into the local economy in the coming three years.

The three provinces registered GDP growth in the first half of the year of minus 1 percent for Liaoning, positive 6.7 percent for Jilin and positive 5.7 percent for Heilongjiang, compared with the national mean of 6.7 percent.

The fundamental problem is that state ownership still accounts for way too much of the economy, exceeding 30 percent in Liaoning, 40 percent in Jilin, and more than half in Heilongjiang.

From January to May, investment from outside the state sector suffered a setback of nearly 30 percent year-on-year with the three provinces taken together, when that the country's other eastern provinces registered an average growth of 8 percent. In Guangdong, the largest province in terms of economic power, private investment went up by as much as 20 percent. These data can all be collected from the official websites.

So the key to revitalizing the local economy is not how much money the central government can keep pumping into the state sector-dominated northeastern economy, but how well local governments can duly protect private investors, particularly from corruption and a lack of service from law-enforcement authorities.

Despite the central government's ambitious plan, a survey by China Youth Daily reported that 60 percent of respondents still described it as unlikely for innovative enterprises to survive in the social environment in the northeast provinces.

The problem is not just in northeastern provinces. The local development programs of many large cities, Beijing and Shanghai included, tend to forget or take lightly the most crucial economic factor. That is entrepreneurship, which actually is a combination of the human and institutional factors.

In the two cities' latest development plans, one primary target remains the control of population, an effort that was required in the time of the planned economy. Both have failed miserably since the beginning of free migration in the reform era.

In the meantime, little was outlined as to how to mesh the nearby towns into their service systems, through integration of mass transit, and their medical, education and pension management networks.

Regional and especially intercity integration in economic development and social services is an important aspect in a society's overall urbanization. Politically, neither city has the power to even think about (or plan) it. What Chinese economists called institutional barriers to reform remain strong and hard to overcome.

The fact is that so far, China's transition has been slow partly because all cities have some aspects unfriendly to entrepreneurship-driven development. Putting people first, a point all cities' development planners like to talk about, still won't result in policies to court the best workers, best consumers (because they don't save much), and potentially best innovators in society - the millions of young college graduates.

This creates a golden opportunity for some less-well-known cities to use more flexible policies and hopefully less prohibitive housing prices to compete with the large cities for talent, for outside capital, and for new industrial capabilities.

Zhejiang province, where the forthcoming G20 Leaders Summit is set to take place in its capital city of Hangzhou, may be a case in point. Zhejiang has close to 1 million private companies and contributes more than 10 percent of the nation's largest private companies.

Zhejiang's small cities don't have any rules to curb migration. They have many companies led by people with overseas education or business backgrounds and with easy access to workers, from low-skilled and mid-skilled to high-skilled. Such cities may be the actual powerhouses of the nation's development in the 21st century.

The author is an editor-at-large of China Daily. Contact the writer at edzhang@chinadaily.com.cn

(China Daily European Weekly 08/26/2016 page13)