Are spatial imbalances in industrial structural change widening the common wealth gap?

ABSTRACT

The evolution of China's industrial structure from 2010 to 2021 is assessed based on the rationalization and sophistication of its industries. The Theil index quantifies spatial variability, while the Quadratic Assignment Procedure (QAP) investigates if changes in industrial structure imbalance will increase wealth disparity. The study's findings indicate a noticeable spatial imbalance in industrial structure change. The overall level of common wealth is low but steadily increasing, following a stepped-down structure of "east-center-west." Additionally, the north and south regions exhibit a pattern of "high in the north and low in the south." There is a pattern of higher values in the north and lower values in the south. In terms of common wealth and its dimensions, there is a ladder-like pattern with high values at the core decreasing towards the west. Between 2010 and 2021, the common wealth development shifted from a lower level to a higher one. Beijing, Jiangsu, and Shanghai constantly ranked in the top echelon, while Guangxi remained in the fifth echelon. The speed and difficulty of transitioning between echelons vary. Moving from the fourth echelon to the third echelon takes longer, while transitioning from the third echelon to higher echelons presents tougher challenges. Spatial imbalances in industrial structure changes widen the gap in common wealth. In particular, the impact of the gap in the advanced industrial structure on the common wealth gap is significantly higher than that of the gap in industrial rationalization. Reducing disparities in advanced industrial structure is more effective in reducing the overall wealth gap.