Numerical analysis of the impact of national macro-policies on the construction of key projects planned during the “First Five-Year Plan” period in Lanzhou City

After the founding of new China, the country is in need of a lot of work, there is an urgent need to carry out extensive foreign exchanges on the basis of self-reliance, in order to quickly restore the national economy in the old China suffered serious damage, the introduction of coal, electric power, metallurgy, chemical and other raw materials industry and military industry and so on 50 projects, in order to adapt to the restoration and development of the national economy, May 1953, Li Fuchun led a delegation to Moscow to negotiate the USSR committed to aid China in the construction of iron and steel combines, nonferrous metallurgical enterprises, coal mines, oil refineries, machine building plants, automobile manufacturing plants, tractor manufacturing plants and power stations, a total of 91 projects. Together with the 50 projects aided by the agreement signed between China and the Soviet Union in 1950, there were 141 projects in total. On April 12, 1954, the two governments signed the Sino-Soviet Agreement on Scientific and Technological Cooperation and three other agreements, the Soviet Union’s assistance to China’s construction projects amounted to a total of 156, in 1955, the two sides agreed to add another 16, before and after the five times to determine a total of 174 projects. After repeated verification and adjustment, some projects were merged and cancelled, and finally 154 projects were identified, because 156 projects were announced in the first place, so it is still called 156 projects, but in the end, 150 projects were actually constructed, forming a number of more complete categories, the socialist industrialization of the urgently needed modern basic industries.

The “156 projects” established the skeleton of China’s relatively complete basic industrial system and national defense industrial system, and laid the foundation for China’s industrialization. The 156 key construction projects designed and built by the USSR to help China are the backbone of the First Five-Year Plan, and other projects are centered around the “156 projects”. The composition of enterprises involved in the 150 Soviet-aided construction projects in China focused on the coal, metallurgy, and machinery industries.

In the early years of the founding of the People’s Republic of China, for reasons of politics, national defense and industrial development, China implemented a comprehensive and balanced regional development strategy in the area of regional development. The focus of this strategy was to balance the industrial layout of the country, prioritizing the development of heavy industry, focusing on strengthening industrial construction in the central and western regions, and implementing a policy of tilting the State’s investment in the central and western regions. During the “First Five-Year Plan” period, 156 projects supported by the Soviet Union were mainly built in the three northeastern provinces and the central and western regions such as Shaanxi, Shanxi, Henan and Gansu, and 694 supporting projects were also focused on the construction of the mainland, which accounted for 68% of the total number of projects, and 32% of the total number of projects on the coast. The irrational layout of old China’s industry, which was too concentrated on the coast, was changed. Industrial space, characterized by concentrated, large-scale industrial zones, has gradually become the main body of industrial activity and the core space for national and regional and urban economic competitiveness has taken shape, and the distribution of specific industrial construction projects has focused more on the distribution of their supporting and collaborative projects, sources of raw materials and energy, and zones of supply of products, among other things. The 150 projects built with the aid of the Soviet Union, Lanzhou Refinery, Xigu Thermal Power Plant, Lanzhou Fertilizer Plant (later renamed Nitrogen Fertilizer Plant), Lanzhou Rubber Plant, Petroleum Machinery Plant, Refining and Chemical Equipment Plant in Lanzhou, initially built in Lanzhou Refining, Lan Chemical as the leading petrochemical industry system. According to the key industrial projects selected by the State Joint Factory Selection Group and the industrial zones and industrial layout determined in Lanzhou, factors such as proximity to the Yumen oilfields, convenient transportation, water and energy sources, and the division of labor among production enterprises were taken into account.

The development of heavy industry became the central task of the country’s first five-year plan, establishing the basis for the country’s industrialization and modernization of its national defence, and the country made great progress in industrial production and economic development during the first five-year period, which, measured in terms of economic growth, was a surprising success. The average annual growth rate of national income was 8.9% (at constant prices), and the growth of agricultural and industrial output was about 3.8% and 18.7% per year, respectively. Lanzhou is located in the interior of China, and its economy lags far behind that of the coastal areas. The layout of the national economy’s productive forces during the First Five-Year Plan period, which was oriented to heavy industrial investment, enabled the economy of Lanzhou and even that of the northwestern part of the country to develop relatively fast, and played a role in balancing the economies of the east and the west. The key projects of the “First Five-Year Plan” period not only filled the gap of heavy industry development in Lanzhou, but also made great contributions to the industrial development of the northwest region, making Lanzhou an emerging heavy industry city in the northwest region of China.

During the First Five-Year Plan period, the focus of urban construction work was to support the construction of national key projects and to carry out the corresponding spatial layout of cities and the construction of supporting facilities accordingly. At this time, the urban planning work focused on the engineering requirements of project location and urban land layout for industrial zone planning, as well as the technical tools for national economic development plans. In this context, the idea of establishing regional planning with appropriate scale and regional division of labor has already begun to emerge. During the First Five-Year Plan period, Lanzhou was listed as one of the first heavy industrial cities to be constructed since the founding of New China. With the implementation of large-scale industrial enterprises and corresponding urban construction projects, and the rapid development of urbanization and modernization, the industrial space has become an important type of urban space in Lanzhou, and the city has also shown the embryonic form of the modern urban structure. The emergence of modern industry has completely changed the connotation and characteristics of Lanzhou city. The size of the city has expanded rapidly, and Lanzhou’s original urban functional structure and urban morphology have also undergone drastic changes.

In order to evaluate the net effect of national macro-policies on Lanzhou, this paper uses data from Lanzhou city from the beginning of the First Five-Year Plan to 2023, which are obtained from the website of the China Bureau of Statistics (CBS), provincial statistical yearbooks, and the Statistical Compendium of the Sixty Years of New China. Macro-policy timelines and policy divestment timelines are taken from the websites of provincial, municipal, and autonomous governments.

The explanatory variables selected in this paper are economic growth, industrial structure and disposable income, economic growth is characterized by regional real GDP, industrial structure is characterized by tertiary and secondary industries, and disposable income is characterized by per capita disposable income of urban residents.

The explanatory variables in this paper are the national macro policy (Policy), the implementation time during the “First Five-Year Plan” period of Lanzhou’s development infrastructure stage, and the implementation time during the rapid development stage of Lanzhou’s key engineering construction in 2010 (Time2010), and the Lanzhou region is characterized by the key policy support area as 1, otherwise it is 0. The Lanzhou region is characterized by a dummy variable, and the year of implementation of the two phases of policies is determined by reference to the time of the release of documents by each part of the government of the Lanzhou region that formulates policies according to its own situation, and the final core explanatory variables are determined by the product of the policies and the time of the two phases respectively.

The control variables selected in this paper include capital stock, foreign trade, communication, technology, openness, transportation, population, education, employment, and government capacity. The meaning of the variables selected for each indicator is shown in Table 1.

The descriptive statistics of the economic data of Lanzhou city regions during the “First Five-Year Plan” period-2023 are shown in Table 2. National macro policy is a dummy variable for whether or not it belongs to the Lanzhou region, with a value of 0 or 1. The mean values of Time15 and Time2010 are 0.745011 and 0.660534, respectively, the mean value of GDP is 994,646,262,000,000 yuan, the mean value of the capital level K is 2,621,196,000,000 yuan, the mean value of the number of foreign-invested enterprises is 10,419, the mean value of the employment of transportation and communication The mean value of personnel is 60,256, the mean value of technology market turnover is 14,924,650,000,000 yuan, the mean value of population of each province is 38,970,000,000 yuan, the mean value of import and export is 415,700,000,000 yuan, the mean value of the weight of the industrial structure is 13,504, the mean value of the disposable income per capita of the urban residents is 11,364,340,000 yuan, and the mean value of the employed population is 3,846,000,000 yuan.

In the field of policy evaluation, double difference modeling is widely used to identify the causal effects of policy changes [22]. And before applying this model, it is a crucial prerequisite to ensure that the experimental group and the control group maintain the same trend on the explanatory variables. So this study conducted a parallel trend test to verify the robustness of the findings, which is formulated as follows: (3) EC=a+Σk=−8k=7βkPolicyi,t0+k+δXit+vi+μt+εit

Where policy_i,t0+k represents the kth year of the implementation of the national macro-policy, focusing on the coefficient β_k, if the coefficient β_k of the key projects construction in Lanzhou city is not significant before the implementation of the national macro-policy, but is significant after the implementation of the national macro-policy, then it means that the experimental group selected in this study has maintained the same development trend in time with the control group before the implementation of the national macro-policy. Figure 1 shows the results of the trend before and after the policy, and the confidence interval of the regression coefficient is 95% when the regression coefficients are not significant before the implementation of the national macro-policy, which indicates that before the implementation of the national macro-policy, there is no systematic difference between the experimental group and the control group, and there is the same development trend in time. And the regression coefficients start to be significant in the fourth year after the implementation of the policy, indicating that the national macro-policy has a certain time lag on the construction of key projects in Lanzhou City.

Figure 1.

Parallel trend survey

Consider that the heterogeneity of treatment effects in the presence of overlapping DIDs may lead to potential bias in the estimation of the two-way fixed effects model. So in this paper, we first decompose the results of the benchmark regression according to Andrew Goodman-Bacon’s approach. The decomposition results are shown in Table 4, the DD estimate of two-way fixed effects -39.278 is the weighted sum of different groups, of which, the early received treatment for the experimental group and the later received treatment for the control group is a good effect, will not produce bias, its effect accounts for 3.1%; late received treatment for the experimental group and the early received treatment for the control group is actually a bad effect, which will produce a certain amount of bias, its effect accounts for 3.2%; having received the treatment versus never having received the treatment is a good effect at 92.7%. The results of the specific presentation of bacon decomposition are shown in Figure 2.

Figure 2.

The heterogeneity of the impact of policy on the construction of key projects

The IW estimator proposed by Sun and Abraham, i.e. Interaction-Weighted Estimator can also be used in the event study method to check the robustness of the conclusions. In this paper, according to the practice of Sun and Abraham, we use the IW estimator to exclude the “bad control group” and only take the “good control group” as the research object. Following Sun and Abraham, this paper uses the IW estimator, excludes the “bad control group” and takes only the “good control group” as the research object, first calculates the average treatment effect of city-year, and then weights the city and year separately, and finally arrives at the average treatment effect.

The results obtained are shown in Figure 3, and the regression results satisfy the parallel trend test, then it can be proved that the national macro policy can effectively improve the construction level of key projects in Lanzhou City, which is conducive to the realization of the key projects in Lanzhou City, and the conclusion of the key projects in Lanzhou City is robust.

Figure 3.

Event analysis using iw estimator

This study uses the method of fictitious policy pilot cities to conduct placebo tests [23], in order to eliminate the influence of unobserved factors arising due to the city level on the empirical results. The specific operation steps are: firstly, take an equal number of cities from all cities in the country with the benchmark regression as the fictitious experimental group, denoted as treat_wrong, then use treat_wrong×time to construct a new wrong_smartcity cross-multiplier term, bring the wrong_smartcity into the original benchmark model, and observe the coefficients after the regression, and repeat the above operation 500 times. As shown in Figure 4, most of the estimated coefficients of wrong_smartcity are tightly clustered around the value of 0, presenting an approximate normal distribution, which indicates that the national macro policy can effectively improve the construction level of the key projects in Lanzhou City, which is conducive to the realization of the key projects in Lanzhou City, and the conclusion of the key projects in Lanzhou City is robust.

Figure 4.

Placebo test

Considering the unbalanced development of Lanzhou region, especially the eastern part of the city gathers a large amount of labor and industry by virtue of the location advantage, which makes its economic development level far ahead of the central and western regions. The question of whether the national macro-policy on the construction of key projects in Lanzhou City can produce similar effects in different regions needs to be further verified, and the regression results are shown in Table 8. Columns (1) to (3) in the table show the regression results for the eastern, central, and western regional counties of Lanzhou City, respectively. From the regression results, the impact of national macro policies on the key projects construction in Lanzhou City on the eastern and western cities of Lanzhou is significant and positive, in which the impact of national macro policies on the key projects construction in the western region of Lanzhou is much larger than that in the eastern cities. For the central region, the effect is much lower than that of the eastern and western cities and is not statistically significant. This indicates that there is a marginal diminishing effect of the national macro policy on the construction of key projects in Lanzhou City in regions with different degrees of economic development.

The effect of the national macro policy to promote the development of key projects in Lanzhou City depends on the initial endowment of the city, mainly focusing on the heterogeneity of the degree of urban innovation, the heterogeneity of the population size, and the heterogeneity of the economic level. The samples are divided into two groups of “high degree of construction” and “low degree of construction” to investigate the heterogeneous effects of national macro policies on different degrees of construction of key projects in Lanzhou City, and the results are shown in Table 9. Columns (1) and (2) in the table report the corresponding results, the national macro policy has a greater impact on cities with a low degree of construction in Lanzhou City, and the pilot of the policy can play a greater role in areas with a low degree of construction, while the role of the pilot of the policy is relatively diluted in places with a high degree of construction.

Similarly, the research in this paper also considers the heterogeneous effects of initial population size and initial economic level, and the paper is divided into four groups in total according to the population density and GDP per capita of each city, i.e., four groups in total according to the high and low groups, i.e., “high population density” and “low population density”. “High economic level” and “Low economic level”. Columns (5) and (6) in the table report the heterogeneous effects of national macro-policies on Lanzhou City at different initial economic levels, and the results show that national macro-policies have a greater effect on the areas with higher economic levels in Lanzhou, while the effect on the areas with lower economic levels is relatively small, but the coefficients of the regressions of the two groups differ less from each other.