Relationship Between Economic Growth In China Commodity Market Segmentation

Though it is always said that the domestic market segmentation depresses Chinese economic growth, few papers have done this econometric test, so to do such test becomes the biggest contrubition of this paper. Based on a comparison of different methods evaluating domestic market segmentation, the paper chooses the index of interregional market segmentation using regional CPI of consumer goods. With this method, we calculate the market segmentation of each province of China, Chinese Eastern, Central, Western and Chinese overall market. Also with the index as one of independent variables, we establish the econometric model accounting for economic growth. Using panel data from2001-2011of30Chinese provinces, this paper finds that market segmentation has a nonlinear effect to the economic growth. The a lesser degree of market segmentation can promote Chinese economic growth when the development level of China’s economic is low, but with the further economic growth, the market segmentation will hinder economic growth. Then, adding variables stands for inter-influences between the reform, opening and market segmentation, we find the reform and opening policy can mitigate the degree of segmentation, which leads to the total positive effect of market segmentation to economic growth. As a conclusion, we put forward some policy recommendations as follows:Firstly, we must change the government function. Secondly, we should deepen the internal reform, perfecting the Chinese characteristic socialist market economy system. Besides, we should continue to open to the outside world.