Regional Inequality in China: A Case Study in Jiangsu Province

Abstract

The tremendous changes in China's development philosophy and regional economies during the last two decades have carved out selectively new locations of development across the nation. While politicians heatedly debate the acceptable levels of regional inequality, most scholarly studies focus on broad aggregate trends of inequality among provinces and groups of provinces, and pay little attention to identifying and conceptualizing sources and major agents of spatial change. This paper aims at revealing detailed spatial ramifications of the reforms, and at understanding the impacts of the state, local agents, and foreign investors on regional development. To this effect, we conduct a disaggregated and empirical study of Jiangsu, a coastal province experiencing dramatic economic and spatial restructuring. We show that local agents which favor rural industrial enterprises accelerated new growth in selected rural areas, in contrast to slower growth of older cities and state-owned enterprises, resulting in a net decline of intercounty inequality. But the coalescence of state policy, local agents, and foreign investment has widened the historical gap between northern and southern Jiangsu, and is likely to accelerate intercounty inequality in the future. Our study demonstrates the utility of the “developments from above, below and outside” framework for analyzing key forces of regional growth in socialist transitional economies.

Keywords: regional development, regional inequality, China, Jiangsu

JEL Classification: O100, O180