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China's Regional Disparity and Its Policy Responses

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  • Minjia Chen
  • Yongnian Zheng

Abstract

The fruits of China's rapid economic development over the 3 decades have not been distributed fairly across different regions. Using data from a sample of 815 Chinese listed firms during 1998-2004, our error-correction investment model showes evidence of different financial constraints on firms' investment in different regions. We argue that China's regional development policies have contributed greatly to the regional inequalities. To control the rising inequality, China has shifted its focus from the coast to the interior regions. However, it is becoming increasingly difficult for the government to direct the economy, as market mechanisms now have a far greater influence on the economy than the government does. The people-centered approach of the current leadership has meant that substantial attention has been placed on regional development disparities in an attempt to build a "harmonious society." China needs further extensive reforms if all the measures for reducing regional disparity are to be effective. Copyright (c) 2008 The Authors Journal compilation (c) 2008 Institute of World Economics and Politics, Chinese Academy of Social Sciences.

Suggested Citation

  • Minjia Chen & Yongnian Zheng, 2008. "China's Regional Disparity and Its Policy Responses," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 16(4), pages 16-32.
  • Handle: RePEc:bla:chinae:v:16:y:2008:i:4:p:16-32
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    Cited by:

    1. Liu, Xiaoyun & Wang, Xiuqing & Whalley, John & Xin, Xian, 2011. "Technological change and China's regional disparities -- A calibrated equilibrium analysis," Economic Modelling, Elsevier, vol. 28(1-2), pages 582-588, January.
    2. Tobias Haepp & Carl Lin, 2017. "How Does the Minimum Wage Affect Firm Investments in Fixed and Human Capital? Evidence from China," Review of Development Economics, Wiley Blackwell, vol. 21(4), pages 1057-1080, November.
    3. Wu, Mingqin & Chen, Bin, 2016. "Assignment of provincial officials based on economic performance: Evidence from China," China Economic Review, Elsevier, vol. 38(C), pages 60-75.
    4. repec:eee:ecmode:v:64:y:2017:i:c:p:288-294 is not listed on IDEAS
    5. Iris Claus & Les Oxley & Chen Wang & Guanghua Wan & Dan Yang, 2014. "Income Inequality In The People'S Republic Of China: Trends, Determinants, And Proposed Remedies," Journal of Economic Surveys, Wiley Blackwell, vol. 28(4), pages 686-708, September.
    6. Huaqun Li & Kingsley Haynes, 2012. "Foreign direct investment and China's regional inequality in the era of new regional development strategy," Regional Science Policy & Practice, Wiley Blackwell, vol. 4(3), pages 279-300, August.
    7. Sung Li & Long Zhao, 2015. "The competitiveness and development strategies of provinces in China: a data envelopment analysis approach," Journal of Productivity Analysis, Springer, vol. 44(3), pages 293-307, December.

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