Internal circulation in China: Analyzing market segmentation and integration using big data for truck traffic flow

For many years, China has emphasized establishing a unified domestic market. However, market segmentation still exists across regions. Using big data for truck traffic flow, this study constructs city-pair economic linkages in China in 2018 and analyzes the effects of administrative forces as well as noninstitutional factors, such as geographic barriers and cultural differences. Geographic barriers and cultural differences weaken intercity economic connections. However, after controlling for these two factors, stronger connections are still observed between cities in the same province. Provincial administrative forces are responsible for the remaining border effects. Furthermore, they can reduce the negative effects of noninstitutional factors on economic connections and are therefore conducive to market integration and internal circulation. The results also hold for city clusters and for different samples. To take advantage of economies of scale in a national unified market, the existing market segmentation resulting from institutional factors needs to be further eliminated.