A Study On The Real Output Adjusted By Cost Of Living And The Optimal Size Of China's Cities

The total population of China is huge, and its urbanization speed is quite quickly. In the future, Chinese city populations still need to add 200 hundred million people at least, so how they are collocated effectively between the cities influences directly to the long-term economic growth and efficiency of China. Currently, the resident population of Shanghai, Peking, Chengdu, Tienjin, Guangzhou and Shenzhen have already exceeded ten million, their city problems, such as the city size expanding rapidly, traffic congestion, environment pollution and housing price upswing etc., are outstanding abnormally. Whether these cities already excessively concentrated, which cities'population size is feater, and which cities'population size still has a bigger growth potential? This paper preliminary explores the Efficient Size of Prefecture level Cities in China based on the perspective of Costs of Living.It can bring Agglomeration Economy, enhance produce efficiency and push economy growth to the concentration of produce and population in some degree; the over concentration of produce and population will form Agglomeration Diseconomy, increase the organization cost, congestion cost, environment cost and costs of living, and restrain economy growth.On the transitional phases from "Low Price Industrialization" to "High Price Urbanization", the local government of China depends on the land income in excessively, making the housing price heighten, increasing the cose of living of labor force in the cities, then causing the wages level and production cost rise, injuring the industry competition ability.Therefore, the problem of "cost of living" and "the people's livelihood" is being paid attention more and more. But majority studies on the regional economics or urban economics districtly use nominal output or nominal income, neglecting the price differences among the districts or cities. this may causes errors easily. The paper built up the cost of living index respectively according to the Housing cost and a cost of basket of commodity. The Nominal Output and Nominal Income divided by the cost of living index are defined as "Real Output" and "Real Income", thus the nominal values can't compared between the cities are transformed into the true values comparablely.The rank result of real GDP, real GDP per person, real GDP per land and real wages level are has already shown the remarkable difference comparing with people's traditional cognition, but it is more near to people's true living experience.Optimum City Size reflects the balance of the higher produce efficiency and higher cost of living producing by the concentration of produce and population. This paper improves the basic city model established by Henderson etc., and carries on the empirical research to the Efficient Size of Chinese Cities, based on the panel data of prefecture level cities in China in 2004-2009 years and real GDP per person, real GDP per land and real wages level adjusted by the cost of living index. Using he Nominal GDP per person to measure, there are 21 cities over concentrated in 2010,52 cites in order, and the rest statistically significantly undersized, accounting for 74.5% of total city number. Measuring with the Real GDP per person,22 cities are over concentrated,145 cities are feat,119 cities are undersized (accounting for 41.6%).It is thus clear that, after considering the cost of living, the great parts of cities have already no longer suited to continue increasing population, if they don't work hard to promote the city functions and lower living cost.The results are similar to use the real GDP per land, the undersized cities descend to 79.4% from 92%. But the results are bad when using the Nominal Wage and Real wage.The factors influencing the city size are numerous, It need to take all factors into consideration when confirming the efficient city size, avoiding forming the super big city over congestion, and drawing up the national policy about population distribution and the living area of mankind including the whole national territory scope. The article provides a good way for these.