Distance Penalties and Human Capital Returns: A Spatial Analysis of Chinese Cities

<title>Abstract</title> <p> China's coastal cities enjoy per capita GDP ten times higher than western interior cities despite decades of spatial integration policies. We examine three representative cities, Lanzhou, Guiyang, and Beijing, exemplifying 127 resource-dependent, 89 transitioning, and 31 advanced urban economies respectively from 1995-2015. Using coefficient of variation weighting and Vector Error Correction Models, we identify education returns of 1.23 in resource-dependent Lanzhou versus 0.61 in advanced Beijing, demonstrating 100% spatial differentials. Health investments show threshold effects only where mortality exceeds 6 per 1,000. Population effects vary from -8.33 in isolated western cities to +6.20 in accessible transitional economies. While our three-city analysis cannot capture spatial spillovers between cities, city-specific parameters reveal how location fundamentally shapes development relationships. These baseline findings provide quantitative benchmarks for evaluating contemporary spatial policies under China's Common Prosperity initiative. <bold>JEL Classification:</bold> R11, C31, O15, R23 </p>