Research About Effects Of Trade Liberalization On The Regional Income Distribution In China

The disparity of income distribution affects a country's social stability and the healthy development of its economy. Since 1978, from the coastline-opening to the development of the western regions, from the revitalization of the old northeast industrial bases to the rapid rise of the central, we have gained a lot from trade liberalization such as the improvement of life and welfare, the introduction of advanced science and technology and so on. But meanwhile, our society is suffering from the increasing disparity of the income distribution between regions. According to the latest Economic Observer, the Gini coefficient of China reached 0.48 in 2007 because of the rapid warmth of the stock and the property market. If timely measures can not be taken seriously and efficiently to resolve these terrible facts, it is bound to lead to greater social instability.Based on the fact above, this paper, using the traditional H-O theoretical model from the point of view of natural elements, with 15years (1992-2006) and 24 provinces panel data, analyzes the impacts of trade liberalization on regional income gap in China, from which we can draw a conclusion that trade openness will considerably widen China's income gap. We selected the per capita arable land, technology, capital and education as the four element variables to show that interactions between a special endowment and openness have different effects on income distribution: the per capita arable land and capital are conducive to narrowing the income gap between regions, while education and technical elements are widening it. These empirical results precisely reflect China's realities.