Industrial Upgrading Of China's Financial Development Effect

The upgrading of industry structure is important symbol and reflection of economic development, also important element to influence the further and depth economic development. In the course of China's economic development, the unbalance of industrial structure is the depth reason for the unsteady economic status. It proves to be the necessary route for a healthy economic development and improvement of economic competence to better the industrial structure, prompt the industrial upgrading. The capital is accepted as the direct push and drive for the industrial upgrading. With the integration of China's market economy, the nation's investment has changed into a finance-oriented type from the previous government funding-oriented type. We are now facing the important issue: How to exert the active role of finance to better the resource allocation, push the upgrading of industrial structure and prompt the economic development.The dissertation, focusing on the finance's effects on industrial upgrading, in the spirit of the theory of industrial structure, theory of capital, theory of investment and the theory of modern financial development, establishes the theory frame of finance's effects on the industrial upgrading. The essay, by following up the main stream of financial development and based on the research of theory of industrial structure and financial development, analyzes the mechanism and effects of finance on the industrial upgrading. Moreover, it gives case-study and analysis on the above issue and comes into the following conclusions:1. Financial development affects the industrial upgrading greatly. The effects vary according to different financial development stage and different financial model in different countries. One country should seek its own suitable model of financial supporting.2.The financial intermediary, which is centered on the banking credit market, used to push the industrial upgrading, especially in the banking-dominant countries. The adjustment of industrial structure is directly influenced by the credit& lone structure. The case studies show that the credit& loan system used to influence the shift of industrial structure. On one side, it quickened the industrialization; on the other side,it led to the imbalance of industrial structure due to the low efficiency of resources allocation. To further strengthen the effects of financial intermediaries, we should further reform the financial system and build-up a more mature financial market.3. The capital market, esp. stock market is the important access to industrial upgrading, which is influenced by the remaining and increasing parts of stock market. New industry raises money by means of IPO, while the uprising industry realizes its rapid growth and down-sinking industry realizes its retreat by means of M & E. Due to the immaturity of China's stock market, the active effects on industrial upgrading has not yet fully exerted.4. The developing-nature policy finance, as the important means to make up the "market inefficiency", is in direct ratio with industrial upgrading. The cases in Japan and South Korea gave the exact demonstration. In China's adjustment of industrial structure, the developing policy finance has exerted great effects on the industrial upgrading by supporting the back-bone industries and key industries, infrastructure construction and primary industries.5. The technology innovation plays key role in industrial upgrading. The finance support has great influence on the development of hi-tech industry. As the hi-tech industry grows in different ways in different countries, the supporting model from finance varies accordingly. Many problems occur in the course of hi-tech industry.' The financial support is more outstanding. It becomes the great urgency to establish a multi-grade financial market, encourage the venture capital and integrate the financial support to hi-tech industry for the improvement of China's capacity of technology innovation.