Inter-regional development in China: An assessment

Abstract

China’s regional planning and development has been a key national priority since the start of economic reform and opening up. China’s regional development strategy has constantly evolved and has shifted to prioritizing integrated areas and mega-clusters to promote internal connectivity, increase urbanization and employment, and consequently, domestic consumption. This is distinct from past regional rebalancing initiatives, which were mainly aimed at reducing regional income gaps and relieving pressure from population flows to developed coastal regions. To support regional integration and sustain economic growth, institutional or structural policies to remove factor market distortions are just as necessary as increased investment in physical infrastructure, given that China’s domestic market is huge but highly fragmented. As China faces rising external geopolitical and global economic uncertainties, its regional development strategy will be to emphasize more on “dual circulation” to boost domestic demand and strengthen China’s supply chain resiliency, while still enhancing trade linkages with global markets to spur competition and support its industrial upgrading efforts.