Farmland Protection as a Binding Constraint: How Land Use Regulation Drives Industrial Upgrading in China?

How does state-led farmland protection reshape the industrial structure of cities? While farmland protection is widely understood as an ecological policy, its consequences for industrial transformation remain underexplored. This paper argues that farmland protection in China operates through a quantitative-target system enforced via land use regulation: a binding farmland retention target mechanically tightens the supply of construction land, making land use regulation the operative channel through which farmland protection reshapes urban industries. Drawing on the socio-ecological systems framework, we treat the 2010 incorporation of farmland protection into the bureaucratic performance evaluation system as a governance perturbation and apply a continuous difference-in-differences design to a long-term panel of Chinese prefecture-level cities spanning two decades. The estimates show that intensified regulation moves the industrial structure toward more rational and technology-intensive configurations. Mechanism analysis confirms that the policy operates through two complementary channels: restricting construction land supply and enhancing per-area output. Heterogeneity analysis reveals an asymmetric response: structural gains concentrate in non-eastern cities, where binding farmland protection forces a more decisive break with land-extensive growth, whereas eastern cities absorb the policy on the intensive margin, deepening within-sector productivity rather than reorganizing the cross-sector mix. The findings establish farmland protection as a policy lever for industrial upgrading and offer guidance on calibrating regulatory intensity across regions at different developmental stages.