Exploring the impact of China-Europe Railway Express on the urban-rural income gap

The China-Europe Railway Express (CRexpress) has established a new land transportation route between Asia and Europe as part of China’s westward expansion. The resulting trade promotion effect has the potential to improve industrial development and factor flows, ultimately leading to a reduction in the income disparity between urban and rural areas in cities that use the CRexpress. The impact of the CRexpress on income disparities between urban and rural areas in cities that use the service is of particular interest, as the empirical evidence on the relationship between international trade and these disparities is inconsistent. Using a difference-in-differences model and macro panel data, this study found that the CRexpress significantly narrowed the urban-rural income gap in cities where it was operational, and that this effect had a spillover effect on nearby cities. However, the magnitude of this effect decreased with distance. The mechanism analysis indicated that the CRexpress narrowed the income gap by promoting secondary industry development, but this effect varied significantly by region, with pronounced effects in eastern coastal cities and less pronounced effects in inland cities in the central and western region. The study suggests that local governments in these regions should focus on improving the institutional environment and providing industrial support to promote industrial transfer in order to narrow the urban-rural income gap and promote overall economic development.