High-speed rail and industrial movement: Evidence from China's Greater Bay Area

Abstract

In the context of location choice, firms face a trade-off between the increasing agglomeration benefits and the rising costs of doing business along the high-speed rail (HSR) corridors. This study examines the causal impact of the HSR extension on industrial movement patterns in China's Greater Bay Area (GBA). We analyze two firm-level datasets for the period 2007–2018 using the difference-in-differences method. We find that after the HSR extension, large-scale manufacturing firms exhibit a decentralization trend in the central GBA. We also find that the service sector shows a clustering pattern in the GBA. However, this pattern differs between the GBA and other regions, urban districts, and suburban counties, highlighting the redistribution effect of the HSR extension on industrial growth across regions. These findings have important implications for industrial policymaking, as they help decision-makers reflect on the potential industrial movement trend in relation to the impact of HSR expansion.