Environmental Science & Technology POLICY ANALYSIS Figure 4. Average annual growth of GDP per capita, built-up area, and population of 135 Chinese cities during 1997 2006. ’ RESULTS Growth Pattern of Chinese urbanization. China is experi- encing unprecedented, rapid urbanization.2,23,41 Rapid urban expansion is a spatial manifestation of this process, and has become the most significant characteristic of land-use change in China.42 Urban land conversion is regarded as one of the primary reasons for agricultural land loss.43 During 1997 to 2006 in China, a total of 12 869 km2 of land was converted into built-up area.40 In the same period, the average annual growth of built-up area in 135 cities was 5.7 km2 every year. This figure is much higher in larger cities. For example, during this period, Shenzhen city added 66 km2 of built-up area each year on average. Based on remote sensing image interpretation, growth in urban built- up area of Shenzhen City from 2000 to 2007 was dramatic (Figure 3). In order to achieve a better understanding of growth pattern across different cities, we have examined the growth of 135 cities in panel U2 during 1997 2006 according to cities’ initial size in 1997. The average annual growth of GDP per capita, built-up area, and population increase are significantly positively correlated with initial GDP per capita, built-up area, and popula- tion size—in other words, richer cities, in terms of GDP per capita, and larger cities, in terms of demographic size and landscape size, also gain more income, have larger built-up area expansion, and attract more population—than poorer and smaller cities (Figure 4). It is important to note the cross-effect here, for example, larger cities are gaining more per capita income, and grow faster in terms of total GDP; while richer cities are expanding more in terms of size. We have also examined whether this tendency in total amount translates into difference in normalized or marginal growth rate in all measured indica- tors according to city size. Our results indicate no significant correlation in either case, suggesting that overall, there is no general trend that either smaller cities or larger cities grow faster in terms of growth rate (see Supporting Information for the analysis results). Causal Effects between Built-up Area and Income Growth in China. We perform Granger causality test to further verify the existence and direction of causality between built-up area and GDP per capita in China. The results of heterogeneous panel unit root tests indicate that built-up area and GDP per capita in provincial panel and three urban panels are all integrated at order one. The results from Pedroni’s method indicate the existence of cointegration between GDP per capita and built-up area in all panels, meaning there is a long-run equilibrium relationship between GDP per capita and built-up area. Once we established that the two variables are cointegrated, we use a panel-based VECM to conduct Granger causality tests. The results indicate that there are long-run bidirectional causalities between GDP per capita and built-up area in all panels (Table 1). In the short-run, provincial panel has bidirectional causality between built-up area and GDP per capita, namely the growth in built-up area cause growth in GDP per capita, and vice versa. To further verify the short-run causal linkages, we perform Hurlin’s heterogeneous panel Granger causality test. The results suggest bidirectional causality between built-up area and GDP per capita for the provincial panel. Panel U1 is too short to apply 135 dx.doi.org/10.1021/es202329f |Environ. Sci. Technol. 2012, 46, 132–139