Non-equilibrium Analysis, Regional Economic Growth In China Under The Perspective Of Financial Development

Along with the reform of economy system, the reform of finance has partially deepened and developed. The economic growth rate among regions in china was different and appeared disequilibrium due to the disparity in macro policies and the difference in economic environments, opportunities and entitlements in the late 1970s. Especially from the late 1980s to the early 1990s, the gap of economic growth rate between eastern and central and northern China has become wider. Because of the interdependent relations between finance and economy, the disequilibrium of economic growth rate results in the disequilibrium of financial development among regions which furthers widen the gap of the former. The speed and quality of financial development in eastern China are better than that of central and northern China. The same is true to the economic growth rate. From 1978 to the early 1990s, there was gap in economic growth rate between eastern and central and northern, nevertheless it was not obvious enough. But from the late of 1990s to the early 2000s, the gap was gradually extended and distinctness. This trend had continued for almost a decade. Then, the gap has been shortened gradually. These phenomena that changes in the gap of economic growth rate among regions make us to think about whether the financial development theory are appropriate to china and review about the defects of the methods of financial reformation.By applying the economic growth theory, financial development theory, regional economic growth theory and other economic theories, the data from 1978 to 2003, and the analysis methods including the combination of theory and reality, empirical and comparison analysis etc, This dissertation aims to give some reasons to explain why there is a lag in finance development between eastern and central and northern China, and then try to draw some conclusions to the reasons to disequilibrium in economic growth rate which result from the lag of finance development via comparing the developing degree of financial development and economic growth rate between eastern and central and northern China. Finally, in order to narrow the gap among regions and carry out coordinative development between china's regional finance and economic growth, this dissertation give some financial developing suggestions and measures to stimulate the economic growth of central and western China.To express viewpoint clearly and completely, this dissertation are arranged as follows:The first step is to give a brief review of relevant economic theories including economic growth theory, financial development theory, regional economic development theory and others. Then, this thesis concludes a summary that finance is benefit to economic growth from the point of finance function. However, these finance functions cannot always stimulate saving, converting saving to investment, resource allocation, technology renovation and value creation under any circumstances and conditions. The mechanism of finance to economic growth is smooth in a perfect market economy. However, if in an imperfect market economy, the mechanism would be restricted. So, the role of finance to economic growth will beargued dialectically based on the different economy developing phases.The second step aims to illustrate that gaps in financial development and economic growth rate exists between eastern and central and northern by comparing the targets relating to the developing degree to the financial development and economic growth rate.The third step aims to focus on how the gap of the finance development between eastern and central and northern China enlarges the disequilibrium of regional economic growth rate. This part analyzes from the view of finance function. From the view of finance function , it is easy to understand the role of finance development to economic growth. From the point of history, the finance function has been gradually developed and maturity from the lower phases of the intermediaries of dealing, fortune storage and value measure to the higher phase of price finding, resource allocation, credit, risk decentralization, information produce and governing structure of company optimization. As for the function of finance, these functions mentioned above exist commonly. However, the extent of these financial functions is on the various grounds. For finance system have such functions as allocating Financial Resource, scattering risk, optimizing governing structure of company, producing information, discovering price, creating value, promoting trade, insure market liquidity, reducing trade and information cost, valid supervision for external rational investment, transfer saving into capital and information screening, all these will channel investment to the regions and areas with high profits opportunities. Under the action of market mechanism, the finance functions promote or hinder the regional economic growth by saving rate, converting saving to investment and the resource allocation efficiency, this dissertation analyze the saving rate, converting saving to investment and the resource allocation efficiency of different region and draw the relate conclusion. Meanwhile this thesis applies the theoretical models and empirical studies to analyze the relationship between the regional finance development and regional economic growth. On basis of this analysis, the main conclusions deduced from the theoretical models and empirical studies are that : (1)from the point of the overall country's economic growth, the role of finance development to economic growth is obvious. By the development of finance it will be benefit to regional economic development. (2)the initial condition of financial development has an impact on the economic growth later. The better the initial condition of financial development, the favorable to the long terms of economic growth. This part gives some explanations to the trend of rapid expansion of regional gap between the eastern and the central and western China after 1990s.(3)The economy growth in eastern and central regions put less reliance on loans from state-owned banking system owning to enough foreign capital and perfect financial market in these areas. It is not the same to the western region. The economy growth in western region put over reliance on loans from state-owned banking system. The contribution of non state-owned finance institution to promote western economic growth is not obvious at present time.(4)In the early of 21 century, the gap of regional finance development and economic growth rate has been shortened gradually. After theoretical models and empirical analyzed, this dissertation argues that this tread is an abnormal phenomenon and can not last fora long period. This situation that gaps of regional finance development and economic growth rate become narrower did not arisen from the change of the economy but from the macro economy environments. The economic growth drawn by the large amount of investment in short period resulting from scarcity in energy resources can not persist because this kind of economic growth had not resulted from the financial development in central and western China.The forth step aims to put forward some suggestions relating to the financial development of central and western China. In order to make full use of this good opportunity and narrow the gap between the eastern and the central and western China, and to realize the regional coordinated growth, Suggestions and measures are given with regard to the conditions of the central and western China.