Population Mobility Reshapes the Industrial Landscape: Global Supply Chain Insights from China's Urban Industrial Agglomeration

Introduction

The relationship between human production activities and the distribution of human settlements has long been a core issue in regional economics and industrial geography. For manufacturing, labor supply has never been evenly distributed. In China, cross-provincial population movement, symbolized in the past by the "peacocks flying southeast" trend, shaped the rise of the eastern coastal manufacturing corridor. Today, as the total population approaches its peak and urbanization enters the middle-to-late stage, does population flow still follow the logic of "following the factories," or has it begun to reverse and drive factory location choices? A study published in *Scientific Reports* (article number s41598-023-43376-4), using POI data covering 352 prefecture-level and above administrative regions in China and LandScan population grid data, reveals the complex relationship between population distribution and the agglomeration of urban industrial facilities during 2015–2021.

Relevance to Global Manufacturing

From multinational manufacturers to supply chain planners, the core decision-making framework for setting up factories in China over the past 20 years has essentially been: find cost lowlands, connect to port hubs, and stay close to policy highlands. However, this study shows that the relationship between urban population growth and industrial facility agglomeration is not static; rather, it exhibits clear divergence across industrial function types and geographic regions. For a manufacturing system that is simultaneously experiencing "AI proliferation" and "working-age population contraction," this divergent relationship may explain the future evolution of industrial clusters better than any single cost indicator.

Key Finding 1: Public service facilities have replaced traditional manufacturing as the new engine of urban population growth

The research shows that the types of facilities affecting urban population growth rates are changing. Among them, the agglomeration effect of facilities in the category of "Party and government organs and social organizations" has increased, while the influence of "science, education, and cultural services" has remained stable. This finding reflects that the source of population attraction in Chinese cities has shifted from purely factory employment opportunities to a combination of administrative resources, public services, education, healthcare, and innovation spaces. If manufacturing enterprises still regard a "low-cost labor pool" as the primary condition for site selection, they may underestimate the decisive role of the public service ecosystem in long-term employment stability and talent attraction. In regions where population growth is slowing, whether industrial parks can embed themselves into a high-level urban service network will directly affect their ability to withstand population outflow.

Key Finding 2: The linear relationship between industrial agglomeration and population growth has undergone a directional shift The paper points out that in 2015 and 2021, there was a linear relationship between industrial facility agglomeration and population growth rates, but its strength and direction have shifted. This means that the previous simple incremental logic of “more factories = more population” has been broken. In some cities, industrial agglomeration can no longer effectively drive population growth; while in other areas still at a rapid agglomeration stage, the expansion of industrial facilities and population inflow continue to maintain a positive feedback loop. Behind this asynchronous change lie differences in the industrialization stages of different cities. For those positioning global supply chain segments such as automobiles, electronics, and equipment manufacturing, identifying which cities have already crossed the inflection point of “agglomeration–population growth” is more valuable than observing aggregate population data.The site-selection logic of labor-intensive industries is shifting from “seeking a floating population” to “retaining a permanent resident population,” which requires cities to provide well-developed daily-life service facilities rather than merely dormitories and canteens. A possible breakthrough path for technology-intensive industries in regions with low population growth is to rely on scientific, educational, and cultural services and the building of urban innovation living circles—using a “soft environment” to gain the stickiness of “hard manufacturing.” When governments decide on industrial infrastructure, they need to treat demographic structural change as an upfront variable rather than as something to be passively absorbed years later. These observations are not unique to China. From the American “Rust Belt” to the Central European automotive industry belt, slowing population growth and the spatial restructuring of industry are occurring in tandem. The planning principle of “population density first, then factory density” may reshape the logic of global site selection for new factories in the future.

Long-Term Trends: Automation, Aging, and Industrial Re-agglomeration

Population aging is not an external variable in this story but an endogenous one. The pace of aging in Chinese cities is changing the definition of industrial agglomeration. The paper’s observation period ends in 2021, but divergence thereafter is likely to be even more pronounced. As the working-age population continues to shrink, each new factory’s additional demand for labor will place greater pressure on urban public services and housing capacity. In the medium term, industrial facilities agglomerating on the outskirts of large cities will have to be planned in coordination with elderly-care facilities and retraining systems; in the long term, automation will replace part of the population-driven agglomeration effect, but it cannot fully replace innovation spillovers—which still depend on dense interaction among highly skilled talent. Therefore, the interaction between industrial location and population geography will not disappear; only its composition will change.

Conclusion

The study of Chinese cities provides a realistic slice of global industrial-geographic change. It reminds us that manufacturing upgrading is not merely a matter of investment in technology and equipment; it is also a process of two-way adaptation between population distribution and industrial facilities. For policymakers and multinational corporations, understanding this adaptation may need to be incorporated into every global supply chain planning map, much like tariffs, energy costs, and logistics distances.

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*Peer-reviewed research referenced in this article:* *Research on the relationship between population distribution pattern and urban industrial facility agglomeration in China*