Have the Chinese provinces become integrated under reform?

This paper analyzes the pattern of provincial economic integration in China for the period 1991-1998 by means of an error-components model that decomposes provincial sectoral real value-added growth into common national effects, industry-specific effects, and province-specific effects. We find significant comovements in the long run, although province-specific factors still account for one-third of the variance of real output growth in the short run. The results suggest that although economic integration of the Chinese provinces has progressed under reform, it is by no means complete.