In recent years, Fengcheng, a county-level city in Jiangxi Province, has been promoting the expansion of modern transportation infrastructure to rural areas, empowering new urbanization. Photo: IC PHOTO

Common prosperity is an important goal of China’s modernization. The people-centered new urbanization strategy plays a crucial role in enhancing the balance, coordination, and inclusiveness of China’s development. It contributes to expanding the middle-income group, increasing the income of urban and rural residents, and enhancing equal access to basic public services, all of which are vital for advancing common prosperity. From 2012 to 2021, China’s urbanization rate rose from 53.10% to 64.72%, with over 160 million people migrating from rural to urban areas. 

Economic activities are influenced by geographical location and spatial structure, and those in one region can exert positive or negative externalities on neighboring areas. Numerous studies in spatial economics and new economic geography have confirmed that positive spillover effects of economic growth from neighboring regions act as strong external drivers for local economic growth. Regions with higher levels of common prosperity can help other regions achieve common prosperity through this mechanism. 

Research indicates that urbanization and income inequality follow an inverted U-shaped curve. Since the reform and opening-up, China’s urbanization process has driven a large migration of rural workers to cities, where they work in construction, manufacturing, and service industries. These workers typically earn lower wages and receive fewer social security benefits than their urban counterparts, exacerbating the urban-rural income gap. However, with the government’s increasing focus on agriculture, rural issues, and farmers, as well as the implementation of laws such as those establishing minimum wage standards, labor contracts, and social insurance, the urban-rural income gap has begun to narrow, and urbanization levels have increased rapidly. 

In Western economic growth models, human capital, whether viewed as an endogenous or exogenous variable, is a decisive factor in economic growth. Many studies in China have similarly confirmed that urbanization primarily promotes economic development by enhancing human capital. Urbanization provides rural migrant workers with more learning and training opportunities, improving their professional skills and increasing their earning potential. At the heart of new urbanization lies “people,” with its main objective being the urbanization of rural migrants, where employment is instrumental. The quality of the labor force is a key variable in employment, and enhancing the skills of migrant workers helps them integrate into urban society culturally and psychologically. 

To assess the development of China’s new urbanization and its impact on common prosperity, the authors constructed a comprehensive evaluation system based on spatial panel data from 30 provincial-level administrative divisions. The results show that from 2012 to 2021, both the level of common prosperity and the quality of new urbanization significantly improved nationwide, with an accelerating trend. This indicates that the new urbanization strategy is both scientifically sound and effective. 

Tests using Moran’s I index confirm the positive spatial spillover effect of common prosperity, which remains robust even after altering the spatial weight matrix. Fixed effects SDM regression analysis reveals that new urbanization significantly contributes to common prosperity, with provincial-level new urbanization exerting positive spatial spillovers on common prosperity. This suggests that new urbanization has transformed the development model of traditional urbanization and effectively facilitated coordinated regional development. 

Finally, a causal stepwise regression test was applied to examine two mechanisms: “advancing new urbanization → improving government governance → promoting common prosperity” and “advancing new urbanization → improving labor force quality → promoting common prosperity.” Both mechanisms were found to be valid and remain robust when verified through the Sobel test. Therefore, we must continue to prioritize new urbanization, actively focusing on the challenges of uneven development and pursuing common prosperity on a solid basis. 

Zhu Penghua is from the School of Economics at Shandong University. Zheng Yuanzhen is from the School of Management at Fudan University. 

Edited by WANG YOURAN