the first evidence with a theoretical underpinning on how IO linkages facilitated by HSR connecting exporting firms with their domestic suppliers, enable the substitution of domestic for imported materials, thus pushing up the firm and aggregate DVAR in exports.

The rest of the paper is structured as follows: Section 2 covers the background of HSR development in China. Section 3 introduces the new approach to estimate firm-level DVAR using only customs transaction data, and section 4 details the empirical specifications and variable measurements. Section 5 presents the effects of HSR expansion on firms’ DVAR, along with robustness checks. The model is outlined in section 6, and conclusions are drawn in section 7. The Appendix provides a detailed discussion on the datasets used and the construction of key variables. It also provides additional robustness checks on the city-level impact of HSR connections on firms’ DVAR.

# **2 Background of HSR Development in China**

In the late 20th century, China invested heavily in transportation infrastructure, such as railways and expressways, to promote economic development. However, the previous transportation infrastructure construction mainly focused on freight transport, while passenger travel remained comparatively underdeveloped, suffering from low-quality service and constrained travel speed.

To mitigate the overloaded transportation network at the time and provide significantly improved passenger travel services, the Medium and Long Term Railway Plan (MLTRP) was approved in 2004, initially proposing the construction plan of the HSR network. High-speed rail typically refers to rail systems designed for trains traveling at speeds exceeding 250 km/h.6 The MLTRP proposed four horizontal and four vertical form corridors, linking nearly all major cities in China. Accelerated by the fiscal stimulus aimed at helping the economy recover from the global financial crisis, the construction of the HSR speeded up since 2008. In 2016, the MLTRP was further revised to expand China’s highspeed rail network to eight horizontal and eight vertical corridors. After years of development, China now boasts the largest high-speed rail system worldwide (Lawrence et al., 2019). By the end of 2015, the network spanned 19,000 kilometers and connected 190 cities, solidifying its position as the world’s longest high-speed rail system. This rapid expansion, particularly between 2008 and 2015, provides a unique opportunity to analyze the causal effects of high-speed rail on social and economic outcomes.

**Comparative Analysis of HSR and Other Modes of Transportation** Compared to other modes of transportation, HSR has the following important and unique attributes: _(1) Passenger-dedicated:_ HSR is exclusively used for passenger transportation instead of freight. As a result, HSR expansion

> 6In comparison, the common speed limit of the national trunk highway is 120 km/h. Before the major expansion of the network in 2007, there was only one passenger-dedicated high-speed rail line between Qinhuangdao and Shenyang, introduced in 2003 with a top speed of 200 km/h. Technically speaking, the Qinhuangdao-Shenyang line was not used as an HSR as the carrying speed was below the minimum speed criteria, and it functioned as the pilot railway to test the feasibility of HSR operations.

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