China's Urbanization Lag: Theoretical And Empirical Analysis

This paper introduces the service industry to Yang-Rice general equilibrium model of urbanization, which is updated and extended.Thus, this paper sets up a new urbanization model of new classical economics. based on that,three hypothesizes which explains China's urbanization lag are put forward. Then, by using China's time series,this paper analyses that: (1)the relationship of interdependence between the evolution of China's transaction efficiency and industrialization, and the relationship of interdependence between the evolution of China's transaction efficiency and the serving; (2)the causal between China's urbanization and industrialization,and the causal between China's urbanization and the serving,which the hypothesizes are tested by.The results show that: (1) When the division of the industry and the service industry can be deepened, the latter may promote a higher level of urbanization than the former;(2) When the value of transaction efficiency lies between two critical values, the division of a country's industry can be deepened, that is, showing the industrialization, but the service industry's can't,and the urbanization can not arise;(3)The evolution of transaction efficiency which only makes a little contribution to the industrialization because of the low level of evolution promotes the industrialization,but not the serving;(4)Both the industrialization and the serving are not the cause for leading to the urbanization in China.