Urban Development Miracle in China: An Explanation through the Lens of Unified Development Economics Theory

The extraordinary urban development witnessed in China since the inception of economic reforms cannot be fully explained by insights or frameworks rooted in neoclassical economics. Building upon a review of pertinent literature, this paper introduces an innovative unified development economics framework, tailored to the context of China's urban ascension, and constructs the "3633" theoretical framework for China's unified urban development. Its underlying logic posits that institutional transformations during the reform era have fostered three agents - households, enterprises, and city governments - each with distinct demand- supply preferences, anticipated returns, and balance sheets, who harness six key elements (population, human capital, material capital, land, institutions, and technology) to drive their behavioral dynamic. These agents engage in three realms of activity - competition and collaboration, learning and innovation, production and consumption - leading to economic activities interweaving across sectors, space, and time. By adopting this framework, we systematically analyze the formation of economic agents during urban development since reform and opening-up, interaction mechanisms among economic agents for mutual needs, and the evolution of their capabilities, behaviors and assets underpinning urban development post-reform. Finally, through a spatiotemporal perspective, we present theoretical deductions in alignment with China's urban reality, encompassing rapid growth and transitions of individual cities, the shift from homogeneous competition to specialized cooperation among cities, and staged acceleration of urbanization.