The Effects of City-County Mergers on Urban Energy Intensity: Empirical Evidence from Chinese Cities

The adjustment of administrative division is one of the powerful tools used to promote urbanization by the Chinese government in recent decades, and there is little literature to discuss whether the government-led expansion of urban space through city-county mergers can bring about a decline in urban energy intensity. With the multi-period difference-in-differences (DID) method and comprehensive urban datasets, this research investigates the urban energy intensity results of the city-county mergers policy experiment in China from 2000 to 2017. We present evidence that city-county mergers are indeed beneficial in reducing urban energy intensity, and that the energy-saving effect of the policy only starts to become significant in the third year after implementation. We also further adopt a series of robustness tests, such as the counterfactual test, placebo tests and PSM-DID tests to find if this effect still exists. The mechanism test with mediating effects indicates they are potential contributors to the positive effects of mergers with moderate fiscal centralization, population agglomeration and regional integration. We further explore positive effects of mergers, relying on the scientifically design official appraisal system and improve government efficiency.