Opening markets boosts manufacturing diversity, local government investment hinders progress.
Manufacturing structure differences in China are influenced by the opening of international and domestic markets, as well as local government investment. The study found that opening the domestic market positively impacts resource allocation, while local government investment hinders manufacturing structure differences. In the eastern region, market forces are more effective in promoting manufacturing structure differences, while government policies have a stronger impact in the western region. The opening of provincial markets is undermined by local government investment, as they both limit each other's effects.