Urban Growth and Aggregate Growth in China

Ning Ma, Yanrui Wu and Jianxin Wu
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Ning Ma: Hainan College of Economics and Business
Jianxin Wu: Jinan University

No 21-03, Economics Discussion / Working Papers from The University of Western Australia, Department of Economics

Abstract: Using a spatial equilibrium model and data of 286 Chinese cities at the prefecture and above- prefecture level from 2002 to 2013, this study estimates the contribution of each of the selected Chinese cities to national GDP growth. The results in this study reveal several interesting patterns. First, what an individual city contributes to aggregate growth is not represented clearly by the city’s GDP based on standard accounting calculation. Despite some of the strongest growth occurring in cities such as Beijing, Tianjin, Shanghai and Chongqing, these cities were only responsible for a small fraction of China’s growth over the period covered. In fact, the analysis shows that it is growth in the cities in the west that has made the greatest contribution to the overall growth of China. Furthermore, the analysis of the results shows that the dispersion of the real wage across Chinese cities increased. This increased wage dispersion lowered aggregate Chinese GDP by 25.41 percent. This represents a loss, which is an effect of the tightening of regulatory constraints to housing supply in high productivity cities like Beijing, Tianjin, Harbin, Shanghai, Wuhan, Changsha, Chongqing, Chengdu, and Xian. Finally, a counterfactual scenario whereby these cities under regulatory constraints are reduced to the same level as the national mean level suggests that Chinese GDP would increase by 20.62 percent.

Keywords: Spatial Equilibrium; Urban Growth; Welfare; China (search for similar items in EconPapers)
JEL-codes: C6 O18 O53 R11 R31 (search for similar items in EconPapers)
Pages: 45
Date: 2021
New Economics Papers: this item is included in nep-cna, nep-geo and nep-ure
Note: MD5 = dc1a68a26f145816a830bb35e8d14e00
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Citations: View citations in EconPapers (2)

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