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Has the Free Trade Zone Enhanced the Regional Economic Resilience? Evidence from China

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  • Henglong Zhang

    (School of Economics, Shanghai University, Shanghai 200444, China
    Institute of Shanghai Cooperation Public Diplomacy Organisation, Shanghai University, Shanghai 200444, China)

  • Congying Tian

    (School of Economics, Shanghai University, Shanghai 200444, China)

Abstract

This study examines the impact of free trade zone (FTZ) establishment on regional economic resilience (RER) in China, using provincial-level panel data spanning from 2010 to 2022 and a multi-period difference-in-differences (DID) approach. The empirical results indicate that FTZ implementation significantly enhances regional economic resilience by 3.46%, with the development of green finance acting as a key moderating mechanism that amplifies this positive effect. Heterogeneity analysis uncovers notable disparities across policy cohorts and geographical regions: the first wave of FTZs demonstrates the most pronounced resilience-enhancing impact, whereas later cohorts exhibit weaker or even adverse effects. Coastal regions experience substantial benefits from FTZ policies, in contrast to statistically insignificant outcomes observed in inland areas. These findings suggest that strategically expanding the FTZ network, when paired with tailored implementation mechanisms and the integration of green finance, could serve as a powerful policy tool for post-COVID economic recovery. Importantly, by strengthening economic resilience through institutional openness and green investment, this study offers valuable insights into balancing economic growth with environmental sustainability. It provides empirical evidence to support the optimization of FTZ spatial governance and institutional innovation pathways, thereby contributing to the pursuit of sustainable regional development.

Suggested Citation

  • Henglong Zhang & Congying Tian, 2025. "Has the Free Trade Zone Enhanced the Regional Economic Resilience? Evidence from China," Sustainability, MDPI, vol. 17(15), pages 1-20, July.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:15:p:6951-:d:1714090
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