Research On Financial Support For China’s Economic Transformation And Upgrading

China’s economy construction has made remarkable achievements over the past30-odd years since the reform and opening-up. But at the same time, some issues are increasingly prominent, such as irrational industrial structure, domestic demand and external demand imbalance, investment-consumption imbalance, unsustainable extensive growth, weak technological innovation capability, In order to achieve a sustainable and stable development, China must make an economic transformation and upgrading. Since the economic transformation and upgrading needs a lot of financial support and optimal resource allocation, which will inevitably require the financial system play a key role. Therefore, it is an important subject that we face to study the financial support for China’s economic transformation and upgrading.Firstly, based on the industrial structure theory, financial development theory and the actuality of China’s economic development, economic transformation and upgrading can be decomposed into three aspects:tertiary industry development, high-tech industry development and urbanization, and financial development understood as expansion of the financial scale, optimization of financial structure and raising of financial efficiency. Then we make a theoretical analysis on the financial support mechanism of China’s economic transformation and upgrading. Second, we use panel data of31provinces which is divided into the whole country, coastal, inland three samples and use co-integration test and error correction model to analyze the long-term and short-term impact of the financial support for China’s economic transformation and upgrading. The results show that:1, the expansion of financial scale is conducive to the tertiary industry development, high-tech industry development and urbanization;2, a raise of the proportion of direct financing in the coastal areas can promote the development of tertiary industry and urbanization, can inhibit the development of high-tech industry; A raise of the proportion of direct financing in inland areas has no correlation with the development of the tertiary industry and high-tech industry, has a positive effect on urbanization but the impact is weak;3, a raise of the proportion of medium and long-term loans, has a negative impact on the tertiary industry development in coastal areas, has a negative impact on the high-tech industry development in the inland areas, has a significant role in urbanization in both two regions;4, an increase in deposit-loan ratio, has a negative impact on the tertiary industry development in both long and short periods, has a promoting effect in long period and short-term no effect in terms of high-tech industry development, can push the urbanization in coastal areas while inhibit in inland in the long term. On the whole, the expansion of financial scale is an important support of economic transformation and upgrading, while the financial structure and financial efficiency both have a certain degree of suppression and distortion. Lastly, we put forward some policy suggestions.