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Revisiting the Relationship Between Urbanization and Economic Development in China Since the Reform and Opening-up

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The relationship between urbanization and economic development has become a hot topic in the scientific community due to its great practical significance, and economic and social value. However, this relationship continues to change dynamically. In the new stage of urbanization, it is urgent to reveal the causal relationship quantitatively and diagnose the future direction systematically. Based on this, this paper calculates the contribution rate of China’s urbanization to economic development from 1978 to 2019 and uses the panel data cointegration test method to explore the causal relationship between urbanization and economic development in China. The study has three principal results. First, the contribution rate of urbanization to economic growth has maintained the overall growth trend from 1978 to 2019, but the growth rate of urbanization’s contribution to economic growth has been relatively low since 2012. It is an important reason that the real estate sector has moved into a new stage of transformation. Second, the cointegration test shows that economic development is a significant factor in advancing urbanization and the urbanization is the product of economic development. Urbanization has a positive feedback effect on economic development, but this effect does not pass the 5% significance level test. The impulse response function shows that the impact of urbanization on economic development is relatively small and stable, indicating that it is limited that the boost of economic development by land-centered urbanization. Third, China’s urbanization and economic development have both shown rapid growth for some time, but their relationship is still the low level of coordination, which has also led to a downward trend in the contribution of new-type, people-oriented urbanization to economic growth in recent years. In the future, China’s urbanization and economy need to maintain relatively medium-low speed growth in the medium-long term, and we should boost the coordinated development of urbanization and economy from low level to high level.

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Correspondence to Mingxing Chen.

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Foundation item: Under the auspices of National Natural Science Foundation of China (No. 41530634, 41822104, 42171204)

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Liang, L., Chen, M. & Lu, D. Revisiting the Relationship Between Urbanization and Economic Development in China Since the Reform and Opening-up. Chin. Geogr. Sci. 32, 1–15 (2022).

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