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Resource and policy complementation key to coordinated regional development

DAI YIXIN and LI XING | 2023-02-09 | Hits:
Chinese Social Sciences Today

The first D6601 train, one of two intercity high-speed railways connecting cities in north China’s Beijing-Tianjin-Hebei region, arrives at Baodi Station in Tianjin on Dec. 30, 2022. Intercity railways are believed to further promote the region’s coordinated development. Photo: CFP

Coordinated regional development is vital to China’s push to accelerate the creation of a new development pattern and pursue high-quality development. It is also a key measure for the country to embark upon the new journey of building a modern socialist country in all respects. Traditional coordinated regional development aims to direct economic resources to certain areas. Preferential policies represented by the large-scale development of the western region, revitalization of old industrial bases in the Northeast, and the rise of the central region have played a crucial role in narrowing regional development gaps across the nation. 

Since the 18th CPC National Congress, as the driving force of regional development shifts from factors and investments to innovation, the spatial system has been continuously reconstructed amid dynamic resource allocation. In this context, it has been inadequate to simply rely on policy support for certain regions in order to achieve coordinated regional development. Efforts are needed to reasonably share regional resources and reach a dynamic equilibrium, thereby leading regions to depend on each other, complement each other’s strengths, and develop jointly. 

On this basis, adjustments should be made to the previous static policy orientation for more coordinated regional development, turning to enhancing the complementarity of strengths, coordination, and linkage between regions. 

Path dependence

Currently, development of most regions in China still follows a path based on the “space of places,” with heavy reliance on regions’ own location and geographic space. In the long term, the limitations of geography, location, and factor endowments will make it difficult for lesser-developed regions to realize leapfrog transformation and development by leveraging other regions’ high-quality factors. 

With the development of transportation, information, and professional labor division networks, spatial dependence is weakening for new technologies and new industries. The flow of various factors has accelerated across regions. Regional development will certainly be rid of spatial constraints and turn to a network-based “space of flows.” 

In the space of flows, regional development can break the core-periphery limits of geographic spaces and the boundaries of administrative spaces, transforming regional spatial structures from a point-axis model to interactive networks. From this perspective, resisting spatial constraints is foundational to intensifying the complementarity of functions, coordination, and linkage between regions and also the premise for achieving coordinated regional development. 

For the sake of reducing dependence on geography and location to effectively forge a development path which transcends geographic or administrative boundaries, we can first harness digital technologies to increase regional interconnectivity. The development of digital technologies can overcome geographic limitations, improve regional interconnectivity, and facilitate factor flows, thus substantively lowering costs from friction in regional cooperation and other trading costs, particularly creating opportunities for underdeveloped regions. 

Second, it is advisable to explore an integrated regional development model that goes beyond provincial-level administrative regions. Policymakers should move past development strategies that focus on provincial administrative regions, and commit to innovating synergistic mechanisms across provinces, such as building “enclave economy” cooperative mechanisms and cross-provincial special cooperative zones, to construct an all-round, multilevel, and more open inter-provincial regional development system. 

Network of strength complementation

Complementary regional networks are complicated systems based on the complementation of regions’ functions and resultant synergistic effects. With knowledge and information as the basis, the networks are inherent to regions’ technological capacities and inter-regional division of labor based on each region’s comparative advantages. 

Through inter-regional innovative networks, complementary regional networks can guide factor flows across regions, which can not only guarantee comprehensive industrial development within each region, but also optimize resource allocation on the national level. 

At present, there are marked spatial differences in factor endowments for high-quality innovation. Each region produces and brings together products of different technological levels and fosters their own comparative advantages. Suitable factor endowments are needed to fully exploit these comparative advantages. 

Networks of technological complementation can bolster a space for factor flows, and realize the factors’ full flow, match, and a dynamic equilibrium between regions, thereby ensuring the adequate development of each region’s competitive industries. In addition, strengthening regional connections with technological complementarity can help make national resource allocation more efficient. 

On the innovation-driven development path, regional networks with the complementation of technological strengths at the core can be built, first, by fully exploring each region’s embedded comparative advantages. To this end, it is essential to poll their unique strengths, support competitive industries in a targeted fashion, and moderately guide regions to foster new comparative strengths by expanding new technological areas centering on competitive industries, to contribute to the formation of endogenous growth drivers within regions. 

Second, we can optimize regional strength complementation mechanisms by encouraging multilevel, wide-ranging, and all-encompassing open innovation within regions, improving cooperative mechanisms for innovation inside and outside each region, and building a complementary innovation ecosystem. Efforts can be made to continuously enhance city clusters’ innovative capacities and reinforce interaction and division of labor for regional innovation with city clusters as spatial carriers, forming a development layout for regional innovation featuring multidimensional integration, coordination, and linkage. 

Sharing with underdeveloped regions

Coordinated regional development manifests not only as “advanced regions drive underdeveloped regions,” but also as “underdeveloped regions catch up with advanced regions.” As regional imbalances and inadequate development intertwine, coordinated regional development policies should focus on coordination, but must especially enhance development, offering more development opportunities to underdeveloped regions. 

Previous policies paid more attention to interactions between developed regions as well as advanced regions’ unidirectional influence on underdeveloped regions. Consequently, some underdeveloped regions’ opportunities for differentiation and appeals for proactive development were often overlooked. 

The policy system which is dominated by developed regions confines underdeveloped regions to the mid-low end of the labor division system. It can easily result in underdeveloped regions’ rigid capacities and path dependence in the development process, causing cyclical cumulative effects in regional development. 

In the long run, a consequent rigid regional development model will further widen the gap between developed and underdeveloped regions and perpetuate regional development imbalances on the national level. In fact, underdeveloped regions each have their own distinctive comparative advantages. Their development potential is not fully tapped yet. When the complementation of technological strengths is prioritized in regional development, underdeveloped regions can capitalize on their professional comparative advantages to participate in the labor division system that involves developed regions. Moreover, they can constantly benefit from knowledge spillover from interactions with developed regions, upgrading their abilities to derive and innovate local technological types. 

One of the keys to addressing imbalanced regional development is to vigorously promote underdeveloped regions’ participation in regional division of labor and assure them of opportunities for sustained development. In this regard, policymakers should focus on the following three aspects. 

First, preferential policies should further tilt toward underdeveloped regions to break local protection and administrative separation between regions, remove an array of discriminatory and hidden regional barriers, and tailor development policies to underdeveloped regions. Second, we should intensify construction of public services and infrastructure to prop up underdeveloped regions, ensuring that they share benefits from new infrastructure. Particularly, it is important to expedite the building of digitalized information network platforms. Third, efforts should be made to build cost and interest sharing mechanisms that can enhance synergy, and flexibly use policy tools like transfer payments and tax breaks, to effectively drive the development of old revolutionary base areas and border areas. 

Regional policy synergy

Subject to institutional constraints, coordinated regional development has suffered from fragile coordination mechanisms, inconsistent regional policies, and other undesirable characteristics. In the championship-like promotion model, interest barriers are evident between local governments, breeding economic intervention motives, such as local protection and market segmentation. These motives have impeded the normal flow of commodities and production factors, and undermined the foundation for cooperation, division of labor, and fair competition between regions. 

Additionally, the development stage varies from region to region, as do local interests and concerns amid coordinated regional development. This has aggravated asynchrony and asymmetry in regional policy formulation and implementation. 

Coordinated regional development should play the positive role of the facilitating government, which is not absent from top-level design, unified planning, and organization and leadership, and does not interfere with resource allocation and market competition. 

In the short term, we should actively eliminate policy asymmetry to give play to the synergistic effects of regional policies. Within regions, it is vital to, on the precondition of considering each region’s actual conditions, align with regional integration standards and establish norms in line with each region’s interest concerns to ensure a set of standards, rules, and even systems is universally applicable in synergistic governance. This not only requires unified planning, organization, and leadership, but more importantly, calls for efforts to motivate diverse subjects within each region, such as enterprises and social organizations. 

From a long-term perspective, importance should be attached to strengthening regional coordination mechanisms and accelerating the construction of a governance system beyond administrative division. It is advisable to further optimize and reform functions of local governments to shift their focus from economic development to providing regional systems and public services. Against the backdrop of high-quality development, we should downplay local governments’ economic growth targets, and reform achievement assessment and performance evaluation systems that are based on administrative boundaries. 

Dai Yixin and Li Xing (professor) are from the School of International Economics and Trade at Nanjing University of Finance and Economics.