A Review of Research on the North-South Divergence of China's Regional Economy

Abstract

The North-South divergence of regional economies has become an important change in China's regional development pattern in recent years. This paper integrates relevant studies from three perspectives: phenomenal characteristics, causal mechanisms, and policy responses. In terms of phenomena, the mainstream observation in the academic community is that the North-South divergence has intensified while the East-West gap has converged. Since 2012, the economic share of the northern region has continued to decline. Although there have been signs of narrowing in recent years, the North-South gap is still widening in most indicators. Existing studies reveal five causal mechanisms: differences in industrial structure, with northern heavy and chemical industries facing transformation pressure; gaps in innovation capacity, with the South showing more evident innovation-driven effects; differences in marketization processes, which explain the North-South wage gap; the nonlinear role of environmental regulation; and the fundamental influence of geographical location and openness. From the perspective of policy thinking, scholars have proposed an approach that combines “place-based” and “people-based” policies. They advocate giving full play to regional comparative advantages, promoting coordinated interaction among metropolitan areas, improving the transfer payment mechanism, and paying attention to the role of new factors such as the digital economy.