LU Ming, XIANG Kuan-hu, LI Peng-fei, LI Jie-wei, ZHONG Yue-jun《Specialization and Coordination: New Pattern, New Theory and New Path in China’s Regional Development》

The 2023 Annual Papers of the Shanghai Federation of Social Science Associations:

Specialization and Coordination: New Pattern, New Theory and New Path in China’s Regional Development

LU Ming1 , XIANG Kuan-hu2 , LI Peng-fei1, LI Jie-wei3, ZHONG Yue-jun4

(1. Antai College of Economics & Management, Shanghai Jiao Tong University; 2. School of Economics, Shanghai University; 3. School of Economics & Management, Shanghai Maritime University; 4. Faculty of Economics and Management, East China Normal University)

Abstract: With the continuous advancement of globalization and modernization, there is a trend of concentration of economy and population toward a few advantageous regions. Traditional regional development strategies that emphasize the balance of the aggregate economic output  among regions now confront challenges in supporting high-quality economic development. Against this backdrop, the central government has already emphasized core cities and city clusters as main drivers of growth. However, a major question remains: How to form a new pattern of differentiated development with complementary advantages across and within regions, especially between areas of population influx and outflow? This article aims to shed light on this issue .

Based on traditional regional economic theories, this article puts forward a new theory of regional development that is consistent with the Chinese reality. It aims to explain new changes in China’s development pattern in the recent decade and provides guidance for adjusting and improving regional development policies. The article points out that the population distribution and is changing trend in China from 2010 to 2020 can be explained by a “dual core-periphery”model. Under the “dual core-periphery” framework, economic activities and spatial distribution of population have been agglomerating from peripheral areas to central areas, driven by the changing roles of comparative advantages among regions. From a static perspective, this represents a “core-periphery” structure transitioning from coastal to inland China. Within city clusters, there is another “core-periphery” relation between central cities and peripheral areas inside urban agglomerations. From a dynamic perspective, factors such as increasing openness, enhanced factor mobility resulting from deepened reforms, improved transportation infrastructure and information and communication technology, and increasing services’ share in aggregate economy will further enhance advantages of the eastern region and core cities of city clusters.

Policy implications of this paper are that regional development strategies should be based on the “dual core-periphery” framework and adhere to the new theory of “promoting relative balance in development”. On the one hand, policy-making should differentiate between population inflow and outflow areas not only at the larger scale of region but also within city clusters, opening up a new path for differentiated development that emphasizes both regional specialization and coordination. On the other hand, at the national level, it is necessary to deepen the factor marketization reform, and give fuller play to the coordinating role of the central government, so as to improve spatial allocation of resources, and increase institutional dividends brought about by reforms. While achieving economic growth and expanding the overall economy, these reforms are not in conflict with the concept of common prosperity. Some of the low-income individuals can enjoy higher income opportunities through relocating to developed regions or nearby large cities. As for those people and regions which benefit relatively less from economic agglomeration, the incremental fiscal resources generated by agglomeration can be used to provide subsidies. In areas where population flows out, it is necessary to increase per capita income by increasing the scale and promoting modernization of agriculture, tourism and  resource industries, while in areas where population flows in, it is necessary to promote citizenization of migrants and equalization of public services .

This paper presents three primary innovations. Firstly, this paper finds the fact of spatial distribution of population in China characterized by the differentiation of population inflow and outflow areas in the “dual core-periphery” framework, but it is not mentioned in previous literature or government documents. Secondly, in previous literature, the policy differentiation between population inflow and outflow areas has not received sufficient attention and lacks theoretical support from the “dual core-periphery”model, especially at the county level. Thirdly, based on the “dual core-periphery” model, this paper identifies issues requiring central government’s coordination in the regional economic development of the new era, elucidating the underlying economic logic. In particular, we address challenges of excessive investment, duplicative construction, and market fragmentation, all stemming from homogeneous competition among local governments .

Keywords: regional development; “dual core-periphery”; comparative advantage; population mobility