Does China’s green economic recovery generate a spatial convergence trend: an explanation using agglomeration effects and fiscal instruments

Abstract

China’s urbanization process has entered a period of rapid development, and cities have become key to driving regional economic development. This paper uses data from 286 cities in China in the period 2005–2018 to construct an urban economic growth quality index system and examine the influence of spatial factors on the convergence trend of China’s urban economic growth quality. It is found that there is a β absolute convergence trend of economic growth quality in Chinese cities across the whole country. After controlling for the initial conditions of individual economies, spatial factors strengthen the spatial convergence trend of urban economic growth quality and significantly increase the corresponding convergence rate. Among the areas studied, the western region has the fastest convergence rate, followed by the central and eastern regions, and the convergence rates of both the central and western regions are higher than the national average. Agglomeration economies and fiscal policy tools are important for the promotion of the urban economic growth quality. The agglomeration of productive service industries significantly improves the spatial convergence rate of urban economic growth quality. This effect is mainly due to the spatial spillover of industrial agglomeration. The expansion of government fiscal expenditure also contributes to the spatial convergence trend of urban economic growth quality. Local economic growth quality is also affected by government fiscal expenditure in neighboring cities.