Modern urbanization and industrial upgrading in China: evidence from panel data

Abstract

We explored the mechanisms of, and relationships between, modern Chinese urbanization and industrial upgrading. To these ends, we used a panel-data, vector autoregression model, a coupling, co-ordination degree model, and a panel threshold model incorporating data from 2003 to 2017. The empirical results suggest that modern urbanization and industrial upgrading are bidirectional in nature, and that the effect of the latter is greater than that of the former. Although the extent of coupling co-ordination has increased annually, significant spatial differences are apparent. The interrelationship between urbanization and industrial structure is complicated, being affected by regional economic levels, material and human capital, market environments, technological progress, foreign direct investment, financial support, and the extent of openness. All factors exhibited threshold effects. Our findings shed new light on the co-ordinated development of modern urbanization and industrial upgrading, and have implications for China’s economic development in the new normality.