Interregional Trade And Regional Income Disparities Of China

Income distribution differences have always been the important direction in the study of economics. Large income disparity not only relates with the social stability and unity of our country, and also relates with the sustainable and healthy steady development of national economy in our country. This article uses the Theilindex to measure the regional income difference in China. From1985to2011the Theilindex of the three distributions in our country have been showing a rising trend, from-0.07to0.11. Larger and larger regional income disparities have buried a huge hidden trouble to social stability and economic development in our country. After the2008financial crisis, China and many countries in the world have not recovered from the shadow of a recession. China’s foreign trade dependence degree has been dropped from0.63in2007to0.50in2011. The drop in foreign trade makes many enterprises of our country began to look up to the domestic market, and actively explored the domestic market. According to the trade gravity model, we estimated the provincial trade flows of25provinces in our country from1985to2011, the absolute values of the flows show a tendency of rising. But all of the provinces’ provincial trade intensity is on different levels of experiencing a process of decay. This suggests that in our country, there still exist higher trade barriers between regional, under the system of fiscal decentralization. The local protectionism of regional authorities has no benefit for China’s domestic market integration.With the development of China’s domestic trade, interregional trade has become an issue that can not be ignored, but there is no literature researching the impact of inter-regional trade on regional income differences. Based on previous studies about influencing factors on income disparities, this paper study the relationship between the regional income disparities and interregional trade.This paper first reviews the related theory of regional trade and income differences. And we separately use railway data of our country trade, domestic trade data net out of the province, the use of trade gravity model to estimate the intensity of inter-provincial trade to analyze domestic trade pattern. The results show that there is phenomenon of "local preference" among regions in our country, and that there is a very big difference between the trade of various regions in China, such as the central and west mainly are in deficit condition, and there is a minority of eastern provinces in surplus.In addition, this paper used the feasible generalized least square method (FGLS) to do the empirical analysis on the1985-2011economic data of east, central and western regions in China. The empirical results show that there is a significant positive correlation between regional trade and regional income disparities in China. In addition, there exists significant positive correlation of foreign trade on the regional income disparities and the level of urbanization on the regional income disparities. But economic growth can reduce regional income disparities. At the end of the paper, according to the empirical results we give our opinions and the suggestions on the whole area development of our country...