Regional convergence clubs in China: identification and conditioning factors

This paper investigates club convergence in income per capita of 329 prefecture-level city regions in China over a period of 1990 to 2014. A nonlinear time-varying factor model is adopted to examine convergence trends as the model allows for transitional heterogeneity and divergence from the actual growth path. The study further explores the driving forces of convergence clubs using an ordered response model. Four convergence clubs are identified, showing no geographic regularity in club member locations. The highest income club and the lowest income club tend to converge strongly, whereas two middle-income clubs converge weakly. The findings indicate that initial conditions, sectorial characteristics, preferential development policy, general government spending, network effect, spatial effect, and the role of globalization are the significant factors responsible for the formation of club convergence in China.