The Impact of China’s Traction Battery Recycling Pilot Program on Urban Economic Resilience

Abstract

Amid global economic uncertainty caused by the COVID-19 pandemic and geopolitical conflict, countries worldwide have prioritized urban economic resilience (UER). Using panel data for 283 Chinese cities from 2012 to 2023, this paper applies a difference-in-differences model to estimate the effect of the Pilot Battery Recycling Policy (PBRP) on UER. The results show that: (1) The estimated PBRP coefficient is positive at 0.004 units, equivalent to approximately 4.5% of the sample mean, and the result remains stable across a series of robustness and identification tests. (2) The mechanism and bootstrap mediation analyses provide evidence consistent with three potential city-level transmission channels associated with pilot designation: higher government technology spending, improved energy utilization, and greater total factor productivity. (3) The policy effect is positive and significant in upstream and downstream cities of the Yangtze River Basin, declining resource-based cities, and medium- and small-sized cities; it is negative in regenerative resource-based cities and megacities, while the remaining subgroup estimates are statistically insignificant. The subgroup patterns indicate that industrial foundations, adjustment costs, market capacity, and city scale may help shape policy effectiveness. (4) The Spatial Durbin Model identifies a positive direct effect on pilot cities and a negative indirect effect on neighboring cities under both selected spatial weight matrices. The matrix-specific admissibility and numerical checks confirm the validity of the spatial decomposition. Taken together, the findings point to a positive contribution of pilot designation to local economic resilience. The city-level results point to technological investment, energy-use efficiency, and productivity growth as potential transmission channels, while regional coordination can help manage cross-city competition for recycling resources and capacity.