Military-Civil fusion and optimisation of urban industrial structure—an evidence from China

Abstract

China’s military-civil fusion (MCF) policy has attracted global attention. Since 2010, China has constructed over 30 MCF national demonstration bases (MCFNDBs) to optimise local industrial structure and promote local economic development. However, the evaluation of the actual economic effects of these MCFNDBs has not reached a consensus. We use panel data for 285 cities from 2006–2017 to investigate the economic effect of MCFNDBs by difference-in-difference estimation. We find that constructing MCFNDBs are significantly beneficial to upgrading the urban industrial structure in less developed regions and provincial capital cities; however, it plays an insignificant role in the industrial structure rationalisation.

Keywords:

• military-civil fusion
• industrial structure optimisation
• industrial upgrading
• industrial rationalisation
• difference-in-difference

JEL:

• C23
• O14
• R58

Acknowledgements

We are grateful for the constructive comments from the editor and two anonymous referees. We also wish to thank Ass. Prof. Yu Qi for advice on the instrument variable and Dr Sanpan Chen for advice on the parallel trend analysis.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. Examples of relevant rules include, “The guiding Opinions on Promoting the Shareholding Reform of Military Enterprises” issued in 2007, “Guidelines on the Participation of the Non-Public Economy in the Construction of National Defense Science, Technology and Industry” issued in 2008, “Opinions on Further Promoting the Maintenance and Support Construction of Integrated Military-Civilian Equipment” issued in 2009, “Several Opinions of the Central Military Commission of the State Council on Establishing and Improving the Research and Production System of Military-civilian Integrated Weapons and Equipment” issued in 2010, and “Implementation Opinions on Encouraging and Guiding Private Capital to Enter Defense Science, Technology and Industry” issued in 2012.

Additional information

Funding

The authors received no direct funding for this research.