Regional Disparity and Convergence in China: explore Core-Periphery Dynamics and Industrial Policies

Abstract

In the backdrop of a global economic slowdown and heightened geopolitical tensions, China's role in shaping the global economic landscape as the second-largest economy cannot be overstated. However, the persistent challenge of regional development inequality within China remains significant despite its economic progress. This paper investigates the reason why and how the China's regional disparity formed based on Krugman's core-periphery model and analyze the influence of economic policies on regional convergence. The application of the core-periphery model has theoretical guiding significance for the development of China's regional economy, to explain China’s economic differences from a spatial perspective. Through comparative analysis, it identifies the core and peripheral regions and proves that China's economic differences are impacted by industrial agglomeration, economies of scale, transportation costs, and factor mobility. However, China's economic policies evolve over time, it has an important impact on the disparity and integration of regional economies. The latest major national strategies express China’s determination for coordinated regional development. Furthermore, case studies of competitive peripheries find that the dynamic shift from periphery to core. These findings agree with previous scholars’ analysis of the causes of regional differences and opinions on how to improve regional competitiveness. However, these studies are mostly concentrated in developed countries in Europe and the United States, and lack the analysis and discussion of the core-periphery theory in the Chinese case. In summary, this study is a supplement to the theme on regional differences and integration in China, consolidating key insights on regional differentiation and convergence in China, emphasizing the pivotal roles of core-periphery dynamics and industrial policy in shaping regional economic trajectories.