Premature Deindustrialization or Reindustrialization in China’s Latecomer Provinces

Abstract

AbstractThis study investigates whether latecomer provinces in China have experienced premature deindustrialization or reindustrialization by examining the positions of the provincial industry-income nexus using the latecomer index. The latecomer index facilitates the identification of the downward (premature deindustrialization) and upward (reindustrialization) positions of the nexus for latecomer provinces. The empirical analysis reveals that, for the nationwide level, the premature deindustrialization effect remains during the total sample period of 1992–2020 reflecting the initial regime prioritizing eastern coastal industrialization, whereas the pace of the premature deindustrialization is slowed down in the periods of 2002–2020 and 2009–2020 due to a series of industrial policies under the subsequent regime. At the regional level, the reindustrialization impact dominates the premature deindustrialization effect in the eastern and central regions, whereas this effect dominates the reindustrialization impact in the western region. The study identifies the existence of reindustrialization in China in the regional analysis, whereas extant literature on reindustrialization focuses only on European cases.Keywords: Industry-income nexusindustrial policieslatecomer indexpremature deindustrializationreindustrialization Disclosure statementNo potential conflict of interest was reported by the author(s).Notes1 See the website: https://datahelpdesk.worldbank.org/knowledgebase/articles/906519.2 See the website: https://spc.jst.go.jp/statistics/stats_index.html. For the regional classification (eastern, central, and western), also see this website and Appendix A.3 The “industry” is not synonymous with manufacturing because it contains mining and construction as well. However, the industry is usually characterized by manufacturing because of its dominant share.4 UNCTAD (Citation2022) originally traced the industrial policy evolution by dividing the four decades (1978–2018) into three phases: 1978–2001, 2002–2008, and 2009–2019. This study focuses on the latter two phases because the first phase corresponds to the Deng Xiaoping’s reform and opening-up regime.5 Beijing’s GRP per capita is chosen as a denominator in computing the latecomer index because it records the highest level of GRP per capita. However, the choice of denominators does not affect the estimation result (only affects the size of the latecomer index and its coefficient), just because the denominator is, once decided, commonly used in computing the latecomer index of each province.6 The turning point of the inverted U-shaped curve, computed by −θ3/−2 θ4 in Column (a) of Table 3 is approximately 5,000 USD, which is in a reasonable level within the sample range, and comparable to those of Thailand (5,000 USD from Lar & Taguchi, Citation2022) and Indonesia (6,285 USD from Islami & Hastiadi, Citation2020).