Does the Market Access Negative List Ease Interprovincial Expansion Frictions? Evidence from Firms’ Cross-Province Expansion and Supply-Chain Reallocation in China

Abstract

This study examines whether China’s Market Access Negative List (MANL) reform is associated with lower interprovincial expansion frictions, as reflected in firms’ cross-province expansion and supply-chain reallocation. Using a large firm-year panel around the MANL rollout, we exploit variation in pilot timing across provinces and in industry exposure to market-access restrictions. The main analyses focus on two firm-level proxies for reduced interprovincial frictions: cross-province entry through the establishment of out-of-province affiliates and the outside-province share of suppliers. Baseline models include firm- and year-fixed effects, and more saturated specifications add province-by-year fixed effects to absorb time-varying local shocks and policy environments. The results show that the reform is associated with a 1.0 percentage-point increase in cross-province entry from a baseline mean of 7.6 percent, and a 1.5–1.6 percentage-point increase in the outside-province supplier ratio from a baseline mean of 41.2 percent. The estimated effects are stronger in industries more exposed to access restrictions and in provinces with higher pre-reform segmentation. Event-time evidence shows no differential pre-trends and indicates that effects accumulate gradually after exposure, consistent with adjustment costs in affiliate establishment and supplier switching. Spillover tests further show that responses diffuse across nearby provinces and propagate through upstream and downstream supply-chain connections. Taken together, the findings provide micro-level evidence that a more unified, rules-based access framework is associated with broader cross-regional firm reallocation and supply-chain restructuring. However, the interpretation remains tied to firm-level spatial responses rather than to direct administrative measures of barriers.