Its a bit more of both I think. The SMEs* on the coast are moving production inland to take advantage of human and natural resources. They haven't gone into villages yet, but definitely into cities like Chongqing, Wuhan, Lanzhou, Urumuqi, the supply chains follow (which are also SMEs).
The big blocker to this movement so far have been coastal export zones, where import tariffs on supplies are waved as long as the production must be exported, which is why we in China pay so much for things "made in China." But as China produces more for its own domestic economy, that becomes much less relevant.
* Small and medium scale enterprises, usually private, compared to the massive SOEs (state-owned enterprises) and JVs (joint ventures).