Networked High-speed Rail and Economic Growth in China: History
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Subjects: Economics
Contributor:
Bingyu Wu
,
Weidong Li
,
Jinyu Chen

In China, an adequate and mature high-speed rail system has come into being, despite a relatively late beginning in the 1990s. The panel threshold model is adopted to investigate whether the economic growth becomes stronger and more equal among China’s cities under the impact of the rapidly expanding high-speed rail network. The result shows that high-speed rail can promote economic growth, while cities with higher pGDP can benefit more from high-speed rail. Another conclusion can be drawn that high-speed rail can intensify regional disparities, yet the marginal economic gap tends to decline as the high-speed rail network gets more optimized.

  • transportation infrastructure
  • regional equity
  • high-speed rail urban agglomeration

1. Introduction

In China, an adequate and mature high-speed rail system has come into being, despite a relatively late beginning in the 1990s. China’s high-speed rail has grown from isolated lines into the wide coverage of the “Eight Vertical and Eight Horizontal” network, deeply affecting society with its advantages of higher levels of efficiency, comfort, and safety, as well as lower labor costs and overall long-term emission reductions. However, there has always been public opinion about boycotting the planning and construction of more high-speed rail lines for two main reasons. First, whether the high cost of building and maintaining the relevant facilities can be covered by the economic and social benefits produced by high-speed rail remains uncertain[1]. Second, it is highly possible for the regional development level to become less balanced for high-speed rail to play a vital role as a corridor between cities. Specifically speaking, high-quality resources tend to flow into core cities along rail routes, leading into negative influences for non-core cities, which are generally less developed[2].

2. High-Speed Rail and Economic Growth

High-speed rail influences the regional economy mainly by two means, direct and indirect. The direct impact is primarily characterized by the tremendous multiplier effect of investment on high-speed rail[3]. Every period of the full life cycle of high-speed rail has vast demand for labor, capital, and technology, which require a large number of investments. Firstly, the construction of high-speed rail fueled the formation of related upstream, medium-stream and downstream industries in node cities in order to lower the cost to exchange goods, labor, and ideas[4]. In detail, building materials industries such as the steel industry, extractive industry, and smelting industry are constantly requisite for every period in the life cycle of high-speed rail, as well as the mechanical parts processing industry and infrastructure equipment industry[5]. Secondly, the benefits of job creation can enhance resident income and furthermore promote demands in consumption, which would stimulate the development of local industries. As a result, the improvement in the diversity and advanced level of the industrial structure can attract more capital investment and continually create more jobs as a virtuous circle, evoking economic growth in the region around the node city[6].
The indirect effect of high-speed rail on economic growth can also be embodied in two aspects. On the one hand, high-speed rail significantly reduces the spatial–temporal cost of traveling and brings about the accessibility gains of cities in the high-speed rail network[7]. Improved accessibility has a positive effect in the flow of production factors, including labor [8], capital,[9] and technology[10], which also makes a great difference for the decision maker of the firm location [11]. Marginal output is generally high in the core cities of the high-speed rail network. Thus, the market potential of core cities, related closely to the level of nominal wages as well as the purchasing and investment demand[12], is about to increase for the geographical concentration of high-quality factors in those cities [13]. Therefore, core cities can earn high-quality developing conditions and momentum for economic growth because of the high-speed rail network. On the other hand, the impact of high-speed rail is beneficial to the entire region around the node city for the existence of the spatial spill-over effect [6], which becomes even more significant as the network gets more optimized. With the radiation effect of networked high-speed rail, the markets centered in the core cities get extended and metropolises act as growth polarities in China. It should be noted that this function of regional integration may not show itself in the short term after the network comes into being because of the possible “corridor effect” [14].

3. Heterogeneity in the Economic Impact of High-Speed Rail

It has been widely acknowledged that the socio-economic impact of high-speed rail varies in cities with different resources endowment, which is reflected by the geographical location. The marginal influence of high-speed rail, a public facility, relies heavily upon local infrastructure condition and policy environment [15]. Take industries as example. The specialization or diversified trend of industrial structure, whether was driven by construction demands or redistribution of premium factors, depends largely on the government policy, monetary support from finance institution and the scale of professionally trained labor force. Yangtze River Delta Urban Agglomeration is typical in the efficient guidance of policy. It is clear that the preferential policies in this region such as local protectionism and environmental regulations can significantly promote regional equity and high-quality development [16]. More developed city can provide more fertile soil for high-speed rail that is, so to speak, the regional economic engine to fuel a new round of economic growth.

4. High-Speed Rail and Regional Equity

It is generally believed that high-speed rail would lead to the spatial redistribution of accessibility, and then result in the change in the relative status of cities in the transportation network[17]. At the beginning of the opening of high-speed rail, non-core cities that are normally less developed tend to suffer from the loss of production factors due to the agglomeration of a high-quality labor force and technology along rail lines in core cities, which can lead to the trend of enlarging the regional economic gap [16]. However, we argue that the distribution pattern of factors would have the tendency to be converted from aggregation to diffusion due to the networked shape of high-speed rail. In consequence, the negative influence of the siphonic effect in non-core cities gradually weakens.
The reasons for this phenomenon lie in the spatial reallocation of labor and industries. In the mid-long term, since the construction of high-speed rail, technology-intensive industries and knowledge-intensive industries will dominate in core cities while labor-intensive and resource-intensive are forced to migrate to surrounding less-developed areas for cheaper production factors [18]. At the same time, lower-skilled workers are inclined to move into regions with lower living costs, non-core cities in other words, as the promotion in location advantage makes it more expensive to live in core cities. Optimizing the matching relationship of labor and industry in these underdeveloped cities is profitable for local lower-end industries. Therefore, the coupling of human capital and job will appear at both core and non-core cities over time, leading to a boost in income, consumption, and investment, and a reduction in regional imbalance. The prominent role of high-speed rail on facilitating urban specialization is expected to promote regional integration as well as fuel the dynamic transition of China’s economic development into a multi-polar pattern.

This entry is adapted from the peer-reviewed paper 10.3390/su14105937

References

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