Research On The Distortions In The Economic Development Of China

The government has great function in the economic development process, most scholars agree with this. The policy has made great distribution in our industry system's foundation. The marketization process of China commenced form planned economy, there must be distortions existing in it. Based on literature review, market is the most efficiency method in production, so we should perform research on the distortions induced by policy. The present research shows that distortions exist in the market of production factors of China during the transition period. Based on literature review, this paper firstly analyzes the formation mechanism of the factors market distortion by applying economic principle. Secondly estimates the distortion by using the production function. Thirdly,analyzes the economic effects caused by the distortion, employment and regional disparity. Lastly, draws the conclusions and revelation.