Regional determinants of economic growth in selected Chinese provinces: the impact of inequality, consumption and economic structure

This study investigates the structural and distributive determinants of regional economic growth in China using panel data from seven provinces spanning the years 2001 to 2023. The analysis focuses on the interplay between industrial growth, the share of the service sector, urbanization, household consumption, and income inequality. Employing fixed effects panel models, interaction terms, structural break analysis, spatial econometrics, and quantile regression, the study reveals that the impact of key growth drivers varies substantially across provinces and over time. Urbanization consistently emerges as a positive contributor to regional GDP per capita, while the effect of industrial growth depends on the relative size of the service sector. Notably, the interaction between consumption and income inequality indicates that inequality moderates the contractionary impact of consumption on output. These findings emphasize the need for differentiated regional development strategies, particularly in contexts characterized by structural asymmetries and spatial dependencies. The implications extend beyond the Chinese case, offering relevant insights for regional policy design in other large and economically diverse countries.