Spatial rebalancing and industrial convergence in China

- Our study uncovers the ongoing reversal in the geographic imbalances of China's economy
- The rebalancing between the coast and the interior is grounded in the rapid catching up process in manufacturing industries.
- The Chinese case exemplifies the existence of an unconditional convergence in manufacturing industry.

Our study documents the recent narrowing of the coast-inland divide in China. We argue that this rebalancing reflects, with a time lag, the catching up process which has been at work in the industry of the inland region since the end of the 1990s. The pattern is in line with the rapid and unconditional convergence observed in China's manufacturing industry over this period. The convergence of labor productivity suggests that advanced coastal regions have transferred capital and technology to the interior.