The unintended economic impact of high-speed rail on China's non-core cities: A spatial-difference-in-differences analysis

Abstract

China's large-scale high-speed rail (HSR) construction has raised heated debates worldwide. Differing from previous research on metropolitan areas, this study examines on the economic impacts on periphery cities connected by HSR lines. Using a unique panel dataset of 237 Chinese non-core cities at the prefecture level spanning from 2002 to 2016, this study adopts a spatial difference-in-differences model to investigate the impact of HSR on service industry output. The estimation results suggest that the operation of HSR has a significant negative impact on service industry output of non-core cities, confirming the existence of a siphoning effect of HSR. Such negative impact varies with the profile of the non-core cities. HSR-connected non-core cities in the relatively well-developed coastal region, medium-sized and located within half-an-hour's travel time to mega cities tended to be associated with the most pronounced reductions. These findings provide important implications to the Chinese government and could be cogent for those planning or constructing HSR lines in other countries, given the numerous ongoing HSR initiatives around the globe.