Chinese manufacturing on the move: Factor supply or market access?

This paper examines recent trends in the location of manufacturing activities in China using a model that combines forces relating to Heckscher–Ohlin (H-O) and New Economic Geography (NEG). It is found that there are large intercity shifts in industrial employment since 1998 in China, with the overall redistribution being towards coastal cities. Our investigation of the determinants of locational change in Chinese industries suggests that market access based on NEG theories played a key role in industrial location especially in the post-WTO period, while there is evidence of H-O arguments associated with factor supply in previous years.