Social Trust In China: Relationship With Economic Growth And Its Influencing Factors

Since China’s reform and opening up, we have witnessed a long-term growth of GDP; as well as the great improvement in the living standards of its people. However, some social conflicts have also been intensified, among which the declining of social trust is an important one. Nowadays Chinese people show more skepticism and less trust to others, to corporations, and even to some organizations. Some media and scholars have used the term "trust crisis" to describe such situation.The decline of trust deserves attention, for it is not merely a moral problem. From the economic perspective, trust is a lubricant for economic activities in the society. It can significantly reduce transaction cost, help business deals to reach, lead to innovation and capital accumulation, and thus promote economic development. Trust plays an important role in the sustainable development of China’s economy.Empirical analyses using domestic data to explore the relationship between social trust and economic growth are rarely found in the previous studies. This paper uses Chinese trust data on the province level from multi-period surveys conducted by WVS to examine such relationship. Results show that:China’s provincial level of trust has a significant effect on boosting local economic growth. Besides, social trust and regional investment rate also have significant positive relationship, and with less local government intervention, trust plays a bigger role in promoting investment.This paper then starts to investigate the influence factors on Chinese social trust. Through the study of variables from both micro and macro level, we find that: personal high education level, satisfaction with economic status and confidence in the government all help enhance trust. And so do the rise provincial basic education coverage rate, the development of intermediary organizations, the improvement of legal environment, and the well establishment of traffic facilities. But the income gap does harm to the forming of trust. The marketization process has a rather complex impact. It shows that trust declines with the marketization in China. We think that social trust will first decrease and then increase with the advancement of marketization, and so far our country is still in the first half stage of the U shape.Finally, based on the results and taking practical conditions into account, this paper analyzes the reasons for the decline of social trust in China, and also put forward some suggestions to improve the situation.