Does the China Railway Express Promote Equitable Regional Development? Evidence from Manufacturing Relocation

An Pan, Wenna Zhang, Yige Du and Xunpeng Shi

China & World Economy, 2024, vol. 32, issue 6, 128-159

Abstract: The China Railway Express (CRE) has improved regional economic integration with external markets and has reshaped regional development by encouraging the relocation of manufacturing activities (“manufacturing transfer”). We analyzed data from 284 prefecture‐level cities in China to evaluate the impact of the CRE on regional manufacturing relocation, using a staggered difference‐in‐differences model with entropy balancing. We found that the launch of the CRE significantly stimulated the relocation of manufacturing industries to node cities – key hubs for transportation and logistics within the CRE network – especially in the central, western, and northeastern regions. Specifically, the CRE significantly increased manufacturing dynamism, firm profitability, openness, and foreign investment in node cities, which attracted more manufacturing industries to relocate in this area. Higher levels of infrastructure development moderated the CRE's effect. Further analysis showed that significant moderating effects of infrastructure development occurred only in the western region. Overall, our conclusions provide useful insights into how to promote equitable regional development through manufacturing development in China.

Date: 2024
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