Research and Reflections on Cross-Border Periphery-Core Industrial Linkages in Urban Regions: The Case of Three Cities Adjacent to Shanghai, China

Abstract

Modern urban regions’ development has seen a new stage of the deepening and restructuring of the spatial division of labor -  functions at the two ends of the value chain have become more concentrated in high-level cities, while manufacturing has been gradually dispersed and relocated to surrounding small(medium)-sized cities, which, in turn, will influence the central cities after the formation of new agglomerations on the periphery. Yet this is not necessarily a spatial gradient of dispersion, as periphery-core linkages across geographical and administrative boundaries may be formed. This phenomenon can be explained by the "urban network externalities" theory - the agglomeration externality from the central city extends outward, while peripheral cities "borrow size" from it, jointly generating externalities through the city network. In this context, small(medium)-sized cities on the periphery of megacities face enormous opportunities and challenges, not only as carriers of their economic activities but also in their important positions in the industrial networks of the larger region.

This study takes the three county-level cities of Kunshan, Taicang, and Jiashan, which are adjacent to Shanghai, as cases. Firstly, it applies the enterprise headquarter-branch data of 2008 and 2018 to build city networks of the Shanghai metropolitan area, and compares the whole picture of the linkages between the central city Shanghai and its surrounding cities; secondly, based on the 144 enterprise questionnaires distributed in October 2018 within the three cities, it explores the specific performance of the industrial connections between the three cities and Shanghai through the statistical analysis; finally, it explains the causes qualitatively, and puts forward the planning advice.

It is found that: a. The links in the city networks between Shanghai and its neighboring county-level cities have increased significantly, especially for the three case cities, whose links to Shanghai are equal to (or even beyond) those to the central cities of each prefecture-level city they belong to and to the capital cities of each province they belong to. b. From the questionnaire data, it can be seen that Shanghai is second only to the cities in the provinces to which the three cities belong in terms of the cities in which they invested in the enterprises surveyed, the cities where the upstream and downstream enterprises are located, and the cities to where they provide productive services, which means that the market forces in the links surpass the geographic and administrative barriers. c. The top reason for enterprises to choose their location is "proximity to Shanghai", followed by "investment promotion preferential policies", meaning that the formation of cross-city industrial linkages is the result of enterprises “voting with their feet” actively. To summarize, although these three cities are relatively low in rank, they have "captured" the flowing resources in the regional city network, developed industrial interactions with Shanghai across boundaries, and realized their elevated economic status in the region.

The main contributions of this study are twofold: a. To provide a reference for the industrial spatial planning and inter-city cooperation in urban regions. b. To guide the industrial development of small(medium)-sized cities on the periphery of megacities.