Openness, Industrialization and Geographic Concentration of Activities in China

Abstract

Rapid development, a widening regional gap, and growing concentration of activities have characterized the Chinese economy since the economic reforms in the late 1970s. This paper examines the spatial disparities of the economic concentration in different stages of development from a geographic approach in the case of China. The paper aims at offering empirical support on (i) how concentrated the economic activities are; (ii) what factors determine the economic concentration; and (iii) whether this concentration differs in the coastal and inland regions. The results show that the high-tech industries are concentrated highly in the coastal provinces. The limited diffusion of the labor intensive activities within the coastal region does not significantly modify the major trend of the location and specialization of the industries in the inland region, and does not contribute to narrowing the regional disparities.

The paper argues that in order to stimulate the geographic diffusion of economic activities to the inland region, it is important to appropriately alleviate internal migration control, reduce unnecessary state intervention, and further encourage domestic market integration.

Keywords: China, stages of development, specialization, spatial concentration

JEL Classification: F15, L60, O53, R12