Theoretical And Empirical Study On Financial Development And Industrial Structure Of China’s Central Region

Research of optimization and adjustment of industrial structure of the China’scentral region in the transition period is not only a cutting-edge theory topic, but alsoan important practical issue to speed up the new industrialization process. Thirtyyears development since the reform and opening up has made our country fromagricultural one to an emerging developing country that processing and manufacturingserve as the mainstay. China was embedded more deeply in the system of global openeconomic after accession to the WTO. Under the support of export-oriented economicdevelopment strategy, with a substantial increase in foreign trade and foreign directinvestment, the industrial development model that the traditional processing andmanufacturing as the mainstay enables the rapid development of China’s economy, ina sense, all kinds of products made in China have been all over the world markets,China is known as the "world factory". However, this low-tech and low value-addedproduction mode can only lock the Chinese economy in the low-end of the globaldivision and the value chain, in terms of industrial structure, there is a big gapbetween China and developed countries, the lag of structure change is the importantcause of China’s industrial development issue. Only by accelerate the pace ofstructural change, reasonably adjust resource allocation in different sectors andchange structure to improve efficiency can we promote industrialization processeffectively. Therefore, from the perspective of the real demand, on the one hand, ourindustry has a significant change in recent years, the system data and more reliabletechnology should be adopted to analyse and reflect the latest trends of industrialstructure changes in the central region.On the other hand, finance is the core ofmodern economy, the adjustment of industrial structure is inseparable from financialsupport, therefore, the study of dynamic link between the two can provide a solidtheoretical support on financial environment optimization for central region and onpolicy making of industrial structure. This paper is organized as follows:Firstly, summed up the meaning of financial development and industrial structureand related theories, respectively introduced the theory of financial structure,financial deepening theory and the theory of financial constraints according to thetheoretical evolution timing and combined with its representative view; thenintroduced the industry structure evolution theory and industrial structure upgrading theory, and their respective segmentation theory or ideology. On this basis, the paperdetailed discuss and analyse the mechanism of financial development support on theindustrial structure upgrading, showed the process that the financial developmentimpact the industrial structure upgrading through schematic, and then detailed discussand analyse the mechanism of financial development support on the industrialstructure upgrading from the six aspects such as capital formation, orientation, creditcatalysis, information revealed, risk prevention and dispersion as well as the financialcombination. By combing the theoretical knowledge in this chapter can provide agood theoretical basis for further research in this article.Secondly, this paper analyse the sophistication and rationalization level ofindustrial structural upgrading in central region through measurement, and throughstatistical analysis of the present situation and characteristics of the financialconstraints faced by industrial structural upgrading in the central region, deeplyexplore the positive impact on the regional TFP improvement by regional industrialstructure upgrading.The results show that, whether from the national or regionalperspective, rationalization and sophistication changes in the industrial structure has apositive effect on upgrading TFP, which requires a close attention on the industrialstructure adjustment and optimization in the economic and environmentalcoordination development process, not only gradually reduce proportion of the sunsetindustries that have low technology level and low economic efficiency throughtraditional industries transformation, but also strive to enhance the proportion ofhigh-tech industries in the industrial structure, so as to enhance the efficiency ofresource utilization and allocation and reduce environmental pollution and greenhousegas emissions, it also means improving the quality of economic growth in the futureneed to find a breakthrough from industrial structure adjustment. Separate regionalresearch shows that there are a lot of differences among the China’s regions, so mustconsider development status and characteristics of each area in terms of policyformulation and promulgation, such as the rationalization level of industrial structureis relatively high in the eastern region, some of the relatively competitivenessindustrial may be transferred to the central and western regions in the futuredevelopment. On the one hand, it can accelerate optimize of the industrial structure inthe eastern region and effectively improve regional environmental quality, on theother hand, it can play a role on undertaking industrial transfer and industrialstructure upgrading in central and western regions.Because of the heavycharacteristics of industrial structure, each area not only require to develop the technical improvement and efficiency potential of the region’s traditional heavyindustry, but also to further enhance the level of agricultural modernization, toenhance the proportion of tertiary industry in the industrial structure, therebypromoting the industrial structure and improving TFP in each region at the same time,to achieve win-win in economic and environmental development.Thirdly, to clarify the mechanism that financial services industry effect onindustrial restructuring and guide the further deepening of the financial system, toprovide useful research reference for the mode shift of country’s economydevelopment, the relevant data of six provinces in the central region were used in thisarticle model, to measure the relevance of financial services industry and theindustrial structure of the central region with empirical comprehensive method. Theresults show that there are significant differences in the regional financedevelopment,which require separate treatment. It also found that China’s banking isdeveloping distorted and the internal structure is irrational and so on, so in order tosuccessfully promote the upgrading of industrial structure, we must vigorously reformthe banking sector, while to broaden the financing channels and strengthen financingsupport to leading force enterprise in industrial structure upgrading from other typesof financial industry, such as securities, trust, insurance and so on. Due to thedistortion development of China’s capital market, long-term imbalance in directfinancing and indirect financing, the increased proportion of direct financing does nothave a certain role in promoting industrial structure upgrading, which is contrary to "the development of capital market enriched financing channels, dispersed corporateinvestment risks and improved efficiency, thus contributing to the transformation andupgrading of enterprises and ultimately promote industrial structure upgrading ".Further, from the perspective of technological progress, the paper analyse theinherent channel financial constraints effect on the industrial structure upgrading. Theresults show that all bank credit/regional GDP and renminbi savings deposits of areafamily residents/regional GDP, the two variables are not significantly in theequation of industrial structure rationalization and industrial structure sophistication,while this financial constraint variable (paid to the non-state sector banks credit/regional GDP) showed a higher significance whether added separately or as a wholein the estimate. From the estimation results of two-way fixed effect and dynamicpanel settings, we found this financial constraint variable has a greater impact onindustrial structure sophistication compared to industrial structure rationalization.Meanwhile, with the upgrading of technical progress indicators, financial constraints relaxation on the rationalization and sophistication of the industrial structure are moreobvious, and even more in the equation of industrial structure sophistication. With theaccumulation of technology, scale expansion of enterprise requires a lot of financialsupport in the growing period, especially in the maturity period.In addition, the paper selected the United States, Germany, Japan and otherWestern countries as a reference object since the1990s, deeply analyse itsexperiences and lessons in industrial structure upgrading under the financialconstraints, take the New Area of Tianjin Binhai and Anhui Wanjiang as examples,discussed and gave appropriate policy recommendations combined with the actualcharacteristics of the development in central China, has a good practical significanceon making scientific and rational strategies for financial development, optimizingfinancial structure, promoting the industrial structure upgrading, and to provide usefulideas for new industrialization process in central China. Finally, combined with theabove analysis, provided financial mode selection for industrial structure adjustmentin the central region based on the summary of internationally accepted financialmodels.