“Local versus Nonlocal” Enterprise Linkages of Global Cities: A Comparison between Beijing and Shanghai, China

Abstract

Two global cities of China, Beijing and Shanghai, have completely different development statuses with their hinterlands. There is a large economic development gap between Beijing and its hinterland, Hebei Province, while Shanghai has formed a highly integrated region with its hinterland, the Yangtze River Delta. According to the Outline of Collaborative Development of Beijing, Tianjin, and Hebei Province, enterprise linkages between Beijing and Hebei should be strengthened in order to narrow the economic gap between the center and the hinterland. On this basis, this paper proposes two hypotheses. (1) The economic gap between Beijing and Hebei has not really changed, because more enterprise linkages of Beijing are nonlocal. (2) The gradual narrowing of the economic gap between Shanghai and Jiangsu as well as Zhejiang is due to the fact that more enterprise linkages of Shanghai are local. We have used enterprise data on business registration from the State Administration for Industry and Commerce of China and have selected two indicators, namely, the number of headquarters-branches offices and the amount of enterprise investment, to examine the enterprise linkages between Beijing/Shanghai and their hinterlands as well as the hinterworld, and have verified these two hypotheses. The results show that nonlocal enterprise linkages based on the hinterworld are the main form in Beijing, while local enterprise linkages based on the hinterland are the main form in Shanghai. In addition, we have analyzed the mechanisms of formation of the enterprises linkages of the two cities and have put forward some policy suggestions.