The path to regional coordinated development: The power of administrative division adjustment

State-led administrative consolidations, such as China's City-County Consolidation (CCT), are a critical instrument for addressing uncoordinated regional development. Yet, whether they achieve or exacerbate spatial inequity remains highly contested. This study provides new evidence to resolve this debate. Employing a multi-period difference-in-differences approach with granular township-level nighttime light data, we conduct a multi-scalar assessment of CCT's impact on economic inequality. Our findings reveal that CCT reduces economic inequality at both the prefectural and inter-county levels, while its effects at the intra-county level are more complex. This outcome is driven by key mechanisms, including fiscal consolidation, market integration, industrial upgrading, and enhanced transportation. However, the success of CCT is not unconditional: its inequality-reducing effects are significantly stronger in regions with less pressure for short-term economic growth and higher levels of initial development. Our findings demonstrate that the integration benefits of CCT can outweigh polarization risks, but only at specific scales and within particular institutional contexts, thus providing crucial policy lessons for state-led spatial governance.