Relocation and Agglomeration of Chinese Industry

This paper investigates spatial concentration of Chinese manufacturing
using the data collected in both the second and third national industrial censuses. It is
found that many of China’s manufacturing industries were highly geographically
concentrated in several coastal regions in 1995. A historical comparison of the
concentration levels between 1980, 1985 and 1995, suggests that manufacturing
industries have become more geographically concentrated following the economic
reform. Results from production function estimation and further regressions suggest that
the industrial agglomeration in China is driven by both transaction agglomeration and
production agglomeration based on increasing returns to scale effect.