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Table 3. 
Select Benefits of Being a City
CategoryBenefits
Taxes and fees • Cities enjoy a higher urban construction tax than counties (7% versus 5%). 
 • Cities can collect surcharges levied on the issuing of motorcycle registration. 
 • In Liaoning province, cities can receive CNY1 million–CNY2 million in additional subsidies each year after upgrading. 
Land-related policies • Cities generally convert more land to construction use and retain a larger share of revenues from land sales. 
Administrative powers • Cities have more authority over foreign trade and foreign exchange management. 
 • Cities can establish branches of customs offices and large state-owned banks. 
 • Cities can approve projects with a higher investment cap. 
 • Cities have authority over police recruitment and vehicle administration. 
 • After achieving the status of shengji jihua dalie (line item under province), cities report directly to the provincial administration to ask for investment projects. 
Government size, rank and salary, reputation • Cities can establish more branches of government and have a larger number of government employees. 
 • In some cases, the bureaucratic rank and salary of officials is raised after upgrading. 
 • Cities generally carry greater prestige and are more attractive to outside investors. 
CategoryBenefits
Taxes and fees • Cities enjoy a higher urban construction tax than counties (7% versus 5%). 
 • Cities can collect surcharges levied on the issuing of motorcycle registration. 
 • In Liaoning province, cities can receive CNY1 million–CNY2 million in additional subsidies each year after upgrading. 
Land-related policies • Cities generally convert more land to construction use and retain a larger share of revenues from land sales. 
Administrative powers • Cities have more authority over foreign trade and foreign exchange management. 
 • Cities can establish branches of customs offices and large state-owned banks. 
 • Cities can approve projects with a higher investment cap. 
 • Cities have authority over police recruitment and vehicle administration. 
 • After achieving the status of shengji jihua dalie (line item under province), cities report directly to the provincial administration to ask for investment projects. 
Government size, rank and salary, reputation • Cities can establish more branches of government and have a larger number of government employees. 
 • In some cases, the bureaucratic rank and salary of officials is raised after upgrading. 
 • Cities generally carry greater prestige and are more attractive to outside investors. 

Source: Fan, Shenggen, Lixing Li, and Xiaobo Zhang. 2012. “Challenges of Creating Cities in China: Lessons from a Short-Lived County-to-City Upgrading Policy.” Journal of Comparative Economics 40 (3): 476–91.

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