A Study On Chinese Trade Openness, Economic Growth And Income Gap

Since thirty years of reform and opening up, remarkable foreign trade and economy development has been achieved in china. However, there are some issues to be solved behind a series of brilliant achievements. On the one hand, Chinese economic growth relies heavily on international trade, and plays the role of producing labor and resource intensive products in international division, which is a huge challenge to China's resource environmental bear capacity. On the other hand, the benefits of trade liberalization are not evenly distributed in cities, villages, regions, and industries. Income gap is widening, which is not conducive to the stable development of Chinese society and economy. To address these issues, the Third Plenary Session of the eighteen proposed explicitly to build a new open economic system, narrow income distribution gap, and form an olivary distribution pattern.Economic growth effects and income distribution effects of trade liberalization has always been the focus of attention of scholars. Many scholars from different perspectives analyzed the impact of trade openness on economic growth and income gap theoretically and empirically. However, there is not a unified conclusion due to differences in study objectives, econometric methods, statistics standard. When scholars studied the relationship between trade openness and economic growth, they payed more attention to the positive impact of trade openness on economic growth, and few considered the negative effects. Under the overall growing trend, the income gap between cities and villages, different regions and industries, has their own feature, which should be treated differently. Therefore, this dissertation started from the relationship between trade openness and economic growth, and comprehensively surveyed the change of income gap in cities and villages, different regions and industries. Then explore the impact of trade liberalization on the income gap of different levels theoretically and empirically. At last, verify whether the relationship between China's economic growth and income gap meets Kuznets hypothesis. This dissertation consist of seven chapters as follows.The first chapter is an introduction. Firstly we described the background and significance of the study. We review literatures about trade openness and income gap to clarify the context of related research, and then make some comments respectively. Finally, we present research ideas and specific contents, and propose the innovation of the dissertation and future prospects for further study.The second chapter is theoretical foundation. We firstly introduced related theories about trade openness and economic growth, and detailedly analyzed the mechanisms of trade liberalization promoting economic growth. We clarified some essay about trade openness and income gap from classical trade theory to new-new trade theory. We commented these theories simply at last.The third chapter is trade openness and economic growth. Based on the model of endogenous growth with an expanding variety of products, We mainly studied the output effect and technology spillover effect of trade openness on economic growth, and found that the technology spillover effect is positive, but output effect is negative. So we theoretically demonstrated that there was a non-linear relationship between them. Then we made an empirical analysis on China time series data with smooth transition regression. The results show the relation between trade openness and China's economic growth is obviously non-linear, and the effect of trade openness on economic growth is asymmetric. Trade openness always has a positive effect on economic growth, but the positive effect reduces with increased openness.The fourth chapter is trade openness and residents' income gap:based on the perspective of factor endowments. We firstly sort out related methods of income gap measure, and calculated China provincial residents' gini index with non-group method, and then analyzed the variation and trends of gini index. We built a theoretical model to inspect the impact of trade openness on residents' income gap from the perspective of factor endowments, and empirically analyzed the impact of trade openness and factor endowments on residents'income gap with panel smooth transition regression. The results show human resource and international trade is the main reason of income gap deterioration, effect of different factors on income gap will vary with the changes in trade openness.The fifth chapter is trade openness and industry income gap:based on the perspective of technological progress. We firstly constructed a simple model to analyze the effect of technological progress induced by trade openness on industry income gap. Then we introduced the dynamic variation of Chinese industry income gap from reform and opening up. At last, we built smooth transition model to empirically examine the impact of trade openness on industry income gap. The results show increased trade openness will widen industry income gap, but the effect will gradually weaken with the increase of trade openness. The relative supply of high-kill labor has a greater effect on industry income gap, and the effect will augment with the increase of trade openness in time series data, but the effect will recede with the increase of trade openness in panel data.The sixth chapter is economic growth and income gap:reexamine Kuznets hypothesis in china. According to Chinese data, We chosen five index appraised income gap to construct time series and panel smooth transition regression model to verify whether Kuznets curve exist in China. We found that Kuznets curve only exist between industry income extremes ratio and economic growth.The seventh chapter is the conclusion and policy suggestions. We revise and concluded the theoretical and empirical analysis. Based on conclusion we proposed some policy suggestions about give full play to the positive effect of trade openness and make efforts to reduce income gap.This dissertation found that trade openness is the main factors promoting China economic growth, but the positive effect will decrease with increased trade openness level. Trade openness is also the main factors widening income gap, and the mechanism of which trade openness affect residents and industry income gap is different. The scope of Kuznets curve is narrow in China, it only exists in industry income extremes ratio nationwide. So as to give full play to the positive effect of trade openness and reduce income gap, China should further optimize the layout of opening up, and expand opening level of inland and border areas, and promote the fair distribution of education resources, improve the macroeconomic regulation to form a olivary pattern of income distribution.