Abstract: As China has carried out a large number of preferential policies aimed at promoting the economic development of backward areas, it is of great significance to evaluate, for further optimization of policy design, the effects of these policies. However, it is difficult to assess the net effect of these policies in reality. The revitalization policies targeted to the counties of the Central Soviet Area, places mainly clustered in southern Jiangxi, western Fujian and northern Guangdong. Such geographical location enables to find a control group, counties with similar conditions, thus providing a research opportunity close to quasi-natural experiments for the evaluation the preferential policies. This paper, based on DID model, finds that the preferential policies have a significant positive effect on the GDP growth rate, the main mechanism of which lies in the promotion of the investment rate and the industrialization in these areas. But the regional biased policy has a negative effect, i.e. higher scale of fiscal gap, lower investment efficiency and higher population outflow rate, on the regional endogenous capacity. The robust test further confirms these two views. The policy implication of this study is that the support for backward areas should shift to enhance the regional endogenous capacity rather than increase investment.

Key words: regional biased policy, economic development, financial transfer payments, endogenous capacity, revitalization policies of the former Central Soviet Area, backward areas