Does functional urban specialization affect energy efficiency? Evidence from China

In light of China's rapid urbanization and industrialization, adopting a spatial cooperation system that leverages cities' comparative advantages is vital for efficient resource allocation. This paper investigates the impact of functional urban specialization on energy efficiency, considering the moderating role of market integration, using provincial panel data from 2000 to 2019. The findings underscore the importance of energy efficiency in China's development strategy, revealing a U-shaped relationship between functional urban specialization and energy efficiency. This indicates that only a few provinces have currently surpassed the critical threshold. The rationalization of industrial structures and technological innovation are identified as key mechanisms through which functional urban specialization enhances energy efficiency. Furthermore, enhanced market integration significantly amplifies this positive effect. Based on these insights, it is recommended that provinces promote specialized urban development and strengthen regional economic integration to optimize energy usage and facilitate sustainable growth.