Has the Belt and Road Initiative improved the quality of economic growth in China's cities?

Abstract

Reform and opening up in China has produced high levels of economic growth but there have been problems concerning its quality. We investigate the effects of the Belt and Road Initiative (BRI) on the quality of urban economic growth using the difference-in-difference model with microdata of 285 prefecture-level cities in China from 2004-2018. We find this impact is positive and significant and occurs through three mechanisms: technological innovation, industrial structure upgrading and resource allocation optimization. Heterogeneity analysis shows significant differences in impact across city levels, spatial structures and location conditions. The effect of the BRI is most obvious in first- and second-tier cities and non-capital cities and is greater for cities with high sprawl and polycentric clusters. The quality of economic growth is most improved in Silk Belt pioneer area, followed by the open core area, strategic pivot and external-window area.