1. Introduction
In recent decades, the prices of production factors such as land, labour, and raw materials in coastal areas have continued to rise, increasing the pressure on industrial development [
1]. Because the central and western regions are rich in resources at a low cost, the region urgently requires industrial investment-driven development with increased infrastructural upgrading [
2,
3]. To address the imbalance in regional growth, the government should actively encourage industrial firms to relocate to underdeveloped regions [
4,
5,
6]. In order to promote the economic development of the central and western regions and alleviate the problem of unbalanced regional economic development, China has put forward the strategies of Western Development and Central Rise since 1999 [
7]. The National Industrial Relocation Demonstration Zones (NIRDZs) attempt to explore a new path to scientifically undertake industrial transfer and balance the spatial structure of the domestic economy [
8]. The Wanjiang River City Belt Demonstration Zone, the first national demonstration zone for industrial transfer, was authorized and established in 2010. As of July 2019, 11 demonstration zones have been established in China, covering 31 cities (autonomous regions) in 12 provinces (municipalities and autonomous regions).
As a spatial carrier to undertake industrial transfer, industrial land is also an essential element to support and guarantee the coordinated development of the region [
9]. This element plays a pivotal role in the adjustment of industrial structure and the development of regional economy [
10,
11]. However, unlike commercial and residential land, the market for industrial land is characterized by “high volume and low price”, and the value of industrial land resources cannot be fully realized through market prices [
12]. According to the data from China Land Market Network, from 2007 to 2019, the area and premium of industrial land concessions in China accounted for 27.01% and 8.66%, respectively, while the area and premium of commercial and residential land concessions accounted for 16.18% and 66.94% respectively. Local governments have been enticing investors by offering industrial land for cheap, zero, or even negative (including infrastructure support subsidies) land prices while leasing commercial and residential land at high prices to collect land value [
13,
14,
15].
NIRDZs are established to optimise the layout of regional industrial chains, the essence of which is to promote the optimal reallocation of production factors [
16,
17,
18]. However, the scarcity of land elements cannot serve as a price signal to reasonably regulate the allocation of industrial land elements, leading to an over-reliance on “cheap” industrial land resources for regional development [
13,
19]. This situation violates the market economy’s laws and tends to cause industrial homogenisation in many cities, leading to generally low industrial land use efficiency [
9,
19,
20]. Therefore, the market should be allowed to play a decisive role in the allocation of industrial land in order to better leverage the role of the government and achieve maximum effectiveness and optimal efficiency in allocating industrial land resources [
21]. Promoting the market-oriented allocation of industrial land elements is one of the most urgent issues [
22]. We are interested in whether the establishment of NIRDZs can facilitate the market allocation of factors for industrial land. What are the channels and mechanisms that can promote the marketisation of industrial land? Are NIRDZs at different economic levels consistent in terms of the impact of marketisation? Answering this question has practical implications for promoting the optimization of national industrial transfer and coordinated regional development.
The research on industrial transfer has attracted the attention of many scholars, and many theories have been derived, such as the flying geese paradigm [
23], the product life cycle [
24], and the marginal industrial expansion [
25]. This paper scours the pertinent literature for an assessment of the impacts of industrial transfer. More studies have focused on the economic growth effects, energy and environmental effects, and industrial upgrading effects of industrial transfer. Some scholars argue that industrial transfer can promote economic and employment growth [
26]; promote industrial upgrading [
8]; reduce energy consumption intensity [
27]; improve air quality [
28], etc. However, according to some academics, industrial transfer will also have gradient trapping and industrial upgrading delaying effects [
29], exacerbating regional environmental pollution [
30] and lowering the overall factor productivity of the undertaking regions [
2].
Regarding the factors affecting the market allocation of industrial land factors, scholars have mainly examined their influence on the market allocation of industrial land factors from the perspective of promotion incentives and the financial pressure of local officials [
31,
32]. In contrast, the literature has shown that the level of infrastructure construction, population growth, economic development, and land resource endowment has an essential influence on the market allocation of industrial land factors [
33,
34,
35,
36]. Unlike developed countries’ market-based land distribution systems, China implements the land public ownership system [
37]. Local governments monopolise the primary land market and can selectively implement land management policies authorised by the central government and make land transfer decisions based on their interests [
38,
39,
40,
41]. According to some academics, local governments’ promotion of urbanisation and industrialisation has resulted in a massive, low-priced industrial land supply [
10,
42,
43]. This conduct violates the laws of the market economy and tends to contribute to industrial homogenisation in many cities, resulting in generally inefficient industrial land use [
20,
44]. As China’s economy develops, local governments must decide how to use government intervention and market forces to effectively ease fiscal pressures [
45].
Due to the short period since the establishment of NIRDZs, the existing literature still lacks a direct policy evaluation of the impact of the establishment of demonstration zones on the market-oriented allocation of industrial land. This paper’s main possible marginal contributions are a more comprehensive investigation of the impact and mechanism of establishing NIRDZs on the marketisation of industrial land factors. For the first time, the “active government” and “efficient market” of a market economy with Chinese characteristics are included in the analysis framework of the impact of NIRDZs on the marketisation of industrial land. Secondly, using micro-transaction plot data from the Urban Land Market Network makes this study more intuitive and precise. As micro-land transaction prices are variables that can be directly incorporated into firms’ cost functions and influence their business decisions, these data can most directly reflect market signals. Thirdly, the potential endogeneity is overcome by using a multi-temporal double-difference method, and thus the policy effects of NIRDZs can be assessed. To a certain extent, it compensates for the lack of research on the policy due to the relatively short period since the establishment of NIRDZs. Fourthly, the policy effects of NIRDZs are decomposed into the takeover and activation effects, and the dominant effect is discussed in detail. Given the activation effect, it is essential to explore the mechanism of the role of demonstration zones and the regional heterogeneity of this role, which will have important implications for the national transformation of the development orientation of NIRDZs and the local adjustment of development thinking.
4. Empirical Analysis
4.1. Basic Regression Analysis
This paper explores the real-world impacts of NIRDZs on the marketisation of urban industrial land. The impact estimates without and with the inclusion of control variables are presented in columns (1) and (2) of
Table 3 without controlling for city and time fixed effects. Columns (3) and (4) of
Table 3 show the impact estimates after controlling for city and time-fixed effects. The coefficients of the NIRDZs are significantly negative and significant at the 1% level regardless of the inclusion of control variables, suggesting that the implementation of NIRDZs can significantly reduce the marketability of industrial land in the city, testing Hypothesis 1. The possible reason for this is that local governments tend to supply industrial land at low prices and high scales to attract corporate projects and undertake industrial relocation.
This is because local governments tend to supply industrial land at low prices and high scales to attract projects. The increased intervention of the local government in the market for industrial land supply has led to a limited degree of market-determined allocation of industrial land factors.
The estimation results of the control variables based on column (4) found that the estimated coefficients of the level of economic development, industrial structure, fiscal pressure, and the financing environment were all significantly positive. This shows that the higher the level of economic development, the faster the transformation and upgrading of the industrial structure, the greater the financial pressure on the government. The better the financing environment, the more favourable the role of market mechanisms in the market allocation of industrial land factors and the higher the degree of industrial land factors market allocation.
The estimated coefficients of infrastructure construction strength, land resource endowment, and employee salary level are all negative, indicating that they have a certain inhibitory effect on the market-oriented allocation of industrial land factors. The reason for the above may be that the government does not hesitate to borrow money to build infrastructure for the construction of demonstration zones; the increase in the scale of debt will stimulate local governments to increase their intervention in the industrial land transfer market, which will limit the extent to which the market determines the allocation of industrial land elements. However, the estimated coefficient of land resource endowment failed to pass the significance test, indicating that this negative effect was weak during the study period.
4.2. Identification Condition Test
The main purpose of using the double difference method for policy evaluation is to remove the interference of factors other than the establishment of demonstration zones and to better address the endogeneity problem in policy evaluation. However, this must be based on two key assumptions. One is to confirm that there is no direct correlation between demonstration zones and regional industrial land market allocation, i.e., the “exogeneity test”. That is, if the degree of marketisation of industrial land in a certain region is an important consideration for the State Council or the National Development and Reform Commission to approve the establishment of demonstration zones in that region, then the non-demonstration areas cannot be a control group for the establishment of demonstration zones. Second, it is confirmed that there is no time trend difference in the degree of market allocation of industrial land factors between the control group and the treatment group before the establishment of the industrial transfer demonstration zone. The article wants to ensure that the two groups of samples are comparable before the establishment of the demonstration zone, i.e., “parallel trend test”. This paper discusses these two hypotheses separately.
4.2.1. Exogeneity Test
If the original degree of marketisation of industrial land in the city will affect the construction of NIRDZs, then this paper will face a serious endogenous problem. From the approval of the National Development and Reform Commission, the approval of the central government for the establishment of the demonstration zone is based on a comprehensive consideration of a series of factors, such as the endowment of resource factors and the complementary industries and transportation location advantages of the area to be achieved. Additionally, the degree of market-based allocation of industrial land elements is not the main consideration in the national selection of construction demonstration zones, thus initially satisfying the exogeneity test. Given the phased establishment of NIRDZs, this paper uses a logit model to empirically test the criteria for establishing NIRDZs [
73].
The different regions of NIRDZs were established in 2010, 2011, 2012, and 2013, respectively. In this paper, the regions that were not established as demonstration zones in 2011 and later were used as a control group for the regions established as demonstration zones in 2010 to test the criteria for the establishment of demonstration zones in 2010, and so on. Specifically, this paper uses whether or not a demonstration zone was established as the explanatory variable and the one-period lagged regional economic characteristics variable as the control variable to examine whether the degree of marketisation of regional industrial land influenced the establishment of a demonstration zone. The estimated results of the logit model are shown in
Table 4.
Table 4 shows that the degree of regional industrial land marketisation is not the main influencing factor for the establishment of NIRDZs, so we can tentatively judge that the establishment of NIRDZs is random in relation to the regional industrial land marketisation. Moreover, from other influencing factors, the establishment of NIRDZs is significantly correlated with the level of regional economic development, the strength of infrastructure development, resource endowment, and the financing environment. Cities with lower levels of economic development, poorer infrastructure development efforts, and higher resource endowments are more likely to build NIRDZs.
4.2.2. Parallel Trend Test
Another important prerequisite for the use of double difference models is the parallel trend assumption, which requires that the dependent variables in the experimental and control groups do not differ systematically before the NIRDZs are set up, or if they do, the variability should be fixed and follow the same trend. Referring to the studies of related scholars, the interaction term (
Pre) between the dummy variable for the year k (where, k = 3, 2, 1) prior to the establishment of NIRDZs and the dummy variable for the establishment of NIRDZs is constructed and included in the benchmark model for testing [
74,
75]. If the coefficient on the time dummy variable for each year prior to the onset of the policy is not significant with the experimental group control group cross product term, then the common trend is satisfied. The baseline regression results report the average policy effects of the establishment of NIRDZs on the market-based allocation of industrial land factors. The establishment of NIRDZs is a systematic project, and there is a time lag in the effect of policy implementation, so further dynamic evaluation of the policy effect is needed. In this paper, after constructing the interaction term (
TPyear) between the dummy variable and the dummy variable for the year after the introduction of the industrial transfer demonstration zone policy, the following model is set for estimation [
75].
The regression results in column (1) of
Table 5 show that the inhibitory effect of the establishment of NIRDZs on the market-based allocation of industrial land factors still exists significantly after the establishment of NIRDZs, while the year effects before the establishment of NIRDZs are insignificant, indicating that the sample satisfies the parallel trend hypothesis and further verifies the inhibitory effect of the establishment of NIRDZs on the market-based allocation of industrial land factors.
As shown in column (2) of
Table 5, the estimated coefficients of the interaction terms did not pass the negative significance test in 2011 and before, indicating that the initial effect of the policy on the market allocation of industrial land factors was not significant due to various objective constraints in the early stage of the establishment of the NIRDZs. The reason for this is that the policy of the NIRDZs has been a major factor in the development of industrial land. The reason for this is that the policy effect of the industrial transfer NIRDZs has gradually fermented and the impact on the market allocation of industrial land factors has gradually strengthened. In recent years, as the downward pressure on the economy continues to intensify and the competition among regions receiving industrial transfer becomes increasingly fierce, local governments tend to intervene more in the market for industrial land factors to attract enterprises to move in, resulting in the weakening of the role of market mechanisms in the process of resource allocation.
4.2.3. Robustness Tests
To further verify the credibility of the regression results of the previous Model (1), robustness tests were conducted in the following manner.
Estimation based on PSM-DID method: logit regressions were conducted on the control variables using city-level control variables as covariates and NIRDZs as dummy variables, using nearest neighbour one-to-one matching and double differencing after PSM using samples within the common support range. The estimation results are presented in column (1) of
Table 6, and the final coefficients and signs obtained did not change significantly, indicating that the findings remain robust.
Different city levels and sectors: considering that the degree of urbanisation increases the level of industrial allocation of factors; there are differences in the implementation of government strategies and differences in the effects of pilot policies, and the degree of impact on local market allocation of factors. In summary, the results of the double-difference estimation of the clustering of cities to the province level, the fixed effects of fixed provinces over time and the exclusion of municipalities directly under the central government and sub-provincial cities in three cases are shown in columns (2)–(4) of
Table 6, respectively, and the results indicate that the conclusion that the industrial transfer city pilot is still robust to the suppression of urban industrial land use.
Other results: (i) balanced panel data were selected and (ii) the continuous variables were separately scaled up and down by 1%. The results are presented in columns (5)–(6) of
Table 6, respectively, and the conclusions remain the same.
4.2.4. Excluding the Impact of Other Policies
This paper examines the impact of the establishment of NIRDZs on the marketisation of industrial land, but the estimates may be biased if the marketisation of industrial land is disturbed by other policies during the same period. Of these, the One Belt and One Road (OBOR) initiative [
76], the Low Carbon City Pilot (LCC) policy [
77], the Carbon Emission Trading (CET) policy [
78], and the Smart City (SC) policy [
79] were proposed and implemented, which also have an impact on the allocation of land factors. Therefore, this paper constructs these four policies.
Table 7 shows that the estimated coefficients of
TREAT ×
POST still pass the negative significance test at the 1% level after re-estimation by adding the four-policy time dummy variables mentioned above. These results indicate that these four concurrent events did not affect our baseline estimates. The establishment of NIRDZs did have a dampening effect on the market allocation of industrial land elements.
6. Discussion of Results and Policy Recommendations
As an important basic element for NIRDZs to undertake industrial transfer, optimize regional productivity layout, and promote coordinated regional development, industrial land is characterized by immovability and its high reconfiguration cost. Therefore, examining the degree of marketisation of industrial land in demonstration zones is an important element in assessing the policy effects of NIRDZs. Based on a quasi-natural experiment of establishing NIRDZs, this paper constructs a multi-period DID model to accurately and efficiently estimate the causal impact of establishing NIRDZs on the marketisation of urban industrial land. The establishment of NIRDZs has a significant inhibitory effect on the marketized allocation of industrial land elements. The reason may be that in order to build NIRDZs, local governments tend to raise debt to build infrastructure, and the increase in debt size will stimulate local governments to increase their intervention in the market for industrial land concessions, resulting in a limited degree of market-determined allocation of industrial land factors [
2,
60]. Moreover, the higher the degree of the vertical fiscal asymmetry of cities, the more fragmented the fiscal revenues, and the higher the level of economic development of cities, the stronger the inhibitory effect of NIRDZs on the marketisation of urban industrial land.
The effect of NIRDZs on the marketisation of industrial land is the result of the combined effect of the acceptance effect and the activation effect [
51]. Some demonstration zones do not hesitate to lower industry acceptance standards in order to accelerate local economic development, leading to low-end takeover industries that interfere with normal market signals [
2]. Excessive government intervention leads to distorted factor prices and ineffective resource allocation, which negatively affects energy efficiency. At the same time, NIRDZs also activate the “efficient market” in cities to promote market-based allocation of industrial land factors, probably because local governments in NIRDZs improve the hard and soft environments, creating a favourable investment climate and enhancing the investment value of cities [
90]. The “Activation effect” promotes the market-based allocation of urban industrial land by activating three aspects: market environment, level of market operation, and level of market access [
85]. This provides reliable evidence for a deep understanding of the relationship between the establishment of industrial transfer demonstration zones and the market-based allocation of industrial land elements and the promotion of market-based reforms in the allocation of industrial land elements [
91].
This paper has several limitations that require more work for future research. First, although the establishment of demonstration zones in the observation interval has an obvious inhibiting effect on the market-oriented allocation of industrial land factors. However, with the gradual completion of the investment and construction cycle in the demonstration zones, the investment in various factors has returned to normal and the market mechanism has been gradually improved, it is possible that the degree of marketisation of industrial land will gradually mature and improve in the future; therefore, analysing the long-term trend of marketisation of industrial land factors in these regions becomes an element of further research. Second, the marketisation of industrial land elements is the result of various factors. This paper only investigates the mechanism of action on industrial land promotion under the activation effect of NIRDZ. Further studies should examine the interactions of multiple factors more comprehensively.
In order to give full play to the national industrial transfer strategy, regulate the development of industrial land market and promote high-quality economic development, the following suggestions are made: (1) Local governments in the areas undertaking industrial transfer should follow market laws, give full play to the decisive role of the market in allocating factors, avoid blind investment and vicious competition, and prevent low-level repetitive construction. NIRDZs cities should improve industrial land grant procedures, strengthen supervision of the use of land grant funds, clarify the scope of expenditure, and reduce local governments’ over-reliance on land finance. (2) Demonstration zones should build industrial clusters with clear division of labour and positive interaction to provide a solid environmental foundation for involved industries. It is also necessary to further improve the level of rule of law and strengthen the hard and soft environments of local governments. Efforts should be made to improve the level of public services, innovate government management tools and management systems, and reduce administrative intervention. (3) The economic and social development of each region in China varies greatly, and efforts should be made to realize a differentiated path for the construction of demonstration zones in each region, taking into account the characteristics of different regions. Industries should be encouraged and guided to the central and western regions and settled areas with appropriate inclination to guide the construction of market environment in these regions. The fierce competitive environment has prompted local governments to better respect the market laws in the industrial land market and seriously implement relevant policies in the industrial land market, which is more conducive to the decisive role of the market-based price mechanism in the allocation of industrial land elements, and promote the market-based allocation of industrial land elements.