Undertaking Industrial Transfer In Hunan Province Under The Background Of "Two-oriented Society": A General Equilibrium Analysis

Following the step of the forth international industrial transfer, undertaking industrial transfer is a strategic initiative for China to coordinate regional development and realize the rise of central and western regions. The developed countries need to adjust industrial structure and achieve global strategic objectives. The eastern region of China is in urgent need of "Teng cage for birds", and then fulfill the target of economic restructuring and industrial upgrading. The interior area is also in demand of the industry shift from developed region, in order to get the best use of local resource, then finish industry upgrading and realize frog-leaped development of economy. To attract industrial transfer, the central and western regions of China launched a number of Preferential Policy. But what about the economic effect of the Preferential Policy? In particular, how to choose suitable industries under the requirement of "two-based society"?Based on the above background, the paper utilizes Hunan province computable general equilibrium model (HNUGE) to analyze Preferential Policy which aims to attract industrial transfer to Hunan in a general equilibrium framework, setting the engineering machinery industry as example. According to the simulation results, Tax preferential policy in the engineering machinery industry make great contribution to introduce of the industry. The more benefits offered, the more investment was attracted. However, there is no obvious connection between the increase of investment in such industry and GDP, together with the capacity of that industry, neither does other machinery industries. In contrast, it improves employment in a great deal and motivates the development of related service industry. Besides, undertaking this industry has a good energy-saving effect, though as well as a negative influence on the environment.Furthermore, the paper pre-evaluate the long run impact of four industries which was carried on in Hunan to the construction of "two-based society", from view of economic growth, industrial structure, energy saving and environmental protection respectively. The result suggests that taken the goal of economic growth into consideration, at present, many key industries ought to be carried forward with the unique advantages of Hunan province——engineering machinery industry can be boosted by the competitive industries in Hunan; farm produce processing industry can be promoted by the agricultural resource advantage in Hunan; textile apparel industry can be developed by the abundant labor advantage in Hunan. However, to achieve the long goal of "two-based society" construction, we should firstly make great efforts to undertaking farm produce processing industry and the information & knowledge industry. Because undertaking farm produce processing industry would stimulate new agriculturalization process, which has a great effect in improving environment. Besides, undertaking the information & knowledge industry would effectively promote the upgrading of industry structure and the development of new industrialization.At last, policy suggestions to investment introduce in Hunan were put forward, basing on the results of research.