Huai-River policy and regional economic development: status and prospect

Abstract

This study explores the impact of the Huai River policy on human and economic activities. First, we study the impact of central heating policy on air quality. Second, the impact of the Huai River policy on human migration and FDI is explored. Third, we further explore the impact of the Huai River policy on economic development. This study has both theoretical and empirical parts. It initially explores the role of variables by establishing a theoretical framework. Then, it applies statistical methods to verify the model and propose new explanations for the phenomenon. We use the county-level data near the heating borderline and data of prefecture-level cities to verify the hypotheses. Econometric methods such as discontinuity regression, panel regression, instrumental variable estimation, and synthetic control method are applied.

The conclusions of this study are as follows. First, the air quality in heating areas is significantly worse than in non-heating areas due to central heating. Clean heating projects have played an important role in improving air quality. Second, the population distribution of the non-heating areas has a positive U-shaped distribution with the increasing distance from the heating area. This result considers all the prefecture-level cities south of the heating borderline. Third, the heating areas north of the heating borderline do not attract more population inflows, but the non-heating areas south of the heating borderline attract more population inflows. This result is based on the counties located around the heating borderline. Fourth, central heating areas do not attract more foreign direct investment. Last, the GDP per capita and night light brightness of heating areas along the heating borderline are significantly higher than those of non-heating areas. Population migration is not the decisive factor affecting the difference in economic development between areas with and without central heating. It is the output value brought by the heating industry itself that promotes regional economic development.