Cage Builders and Bird Catchers: Examining the Influence of China’s Industrial Relocation Policies through Guangdong’s “Double Transfer” Program

ABSTRACT

While media often highlights the relocation of industry within or away from China for reasons of factor cost or, more recently, supply chain security, the complex web of policies developed by the Chinese state to guide internal industrial relocation are rarely mentioned and poorly understood. There are very few studies that systematically explore either the contents or effectiveness of China’s industrial relocation policies, despite the implications that this may have for understanding how the workshop of the world is being rearranged. This dissertation attempts to bring attention to such policies using the case study of Guangdong province’s “double transfer” program.

This study first asks what types of policy tools have been employed by the Guangdong government to direct industrial relocation, to shed light on policies that are significantly different than those more common in liberal market economies. Secondly, it asks whether these policies have led to a different arrangement of industry than would otherwise have been the case. A review of relevant policy documents is conducted. This reveals a core strategy revolving around inter-jurisdictional partnerships and collaboratively run industrial relocation parks, which form the foundation for a wide variety of measures to promote industrial relocation. Fixed-effects and lagged dependent variable regression adjustment models are applied to statistical yearbook data to estimate their impact on county-level industrial output. A 5%-18% increase in county-level gross industrial output is estimated as a result of industrial relocation parks, but the effect appears to vary over time.

The results suggest that state policy beyond infrastructure investment, taxation, and other fiscal incentives should be considered in future analyses of industrial relocation in China. They have relevance for examining industrial relocation at the national level, given numerous similar programs launched by the national and provincial governments.