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China's transport infrastructure distribution and its economic activities have largely the same pattern of spatial clusters. This paper aims to determine whether causal linkages exist between transport infrastructure investment and economic growth in China at national and regional levels. We examine causality in a panel cointegration and a Granger causality framework using time series data throughout the 1978-2008 period. The empirical findings show that in the long run, at the national level, there is unidirectional Granger causality from economic growth to transport infrastructure; at the regional level, there exists bidirectional causality in the affluent eastern region while the low-income central and western regions exhibit unidirectional Granger causality from economic growth to transport infrastructure. These results imply that an improvement in transport infrastructure alone is not sufficient for stimulating economic growth in the underdeveloped areas of China. To better realize the economic benefits brought by transport infrastructure, the Chinese government should pay serious attention to the development of complementary factors in the central and western provinces.

This study aims to explore the impact of transport capital stock on economic growth in Chinese regions. Using panel data for a sample of 28 provinces and municipalities over the period 1978–2008, the empirical findings show that there is significant spatial variation in the productivity effects of transport infrastructure in China. The highest output elasticity in the connection provinces of the central region means that transport investments there will yield the highest economic returns, which is in line with “the emergence of new economic center” theory. From a policy perspective, China had best give priority to the development of transport facilities in the backland region to realize the rise of Central China.