International Trade and the Rise of"Shi"in Modern China:Evidence from the Sustained Impact of World War I
"Shi"is an independent administrative division set up specifically for urban settlements in modern China,the rise of"Shi"is an important research issue of China's economic modernization.Based on the establishment of"Shi"by the Republic of China from 1925 to 1945,this paper explores the impact of international trade on the modern China's urbanization.To deal with the endogeneity problem,this paper constructs an instrumental variable for export by utilizing the ports'shipping data to quantify the"import substitution"effect of World War I.This paper empirically finds that modern China's export significantly promoted the establishment and spread of"Shi".This effect was stronger in treaty ports and their neighborhoods.The findings above remain robust in several robustness checks.The mechanism analysis finds that export promoted the rise of"Shi"mainly by promoting the development of industries,finance and human capital accumulation.This paper further finds that World War I had sustained effects on industrialization and population growth of modern cities,and the prefectures with more"Shi"have higher administrative level and housing prices in present days.This paper enriches the relevant historical studies on modern China's trade openness and the transition of economic geography,and provides historical reference for understanding the impact of international trade on urbanization in contemporary China.
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