Regional Price Differences And Calculation Of The Regional Economic Disparity

The problem of the regional economic development has long been one of the key issues that economics researches into. China is a country with a vast territory, large population and unequal distribution of resources. Due to the unbalanced development of regional economy,, great differences lie in regional price levels. However, the current GDP is calculated based on nominal prices, without considering the factors of the price differences, so there are gaps between the current GDP calculated based on the traditional ways and the real GDP. Inspired by the International Purchasing Power Parity Project (ICP), the author thinks that we can use a more reasonable measure that can reject the price differences factor among various regions, thus their economic development and actual differences will be truly reflected. This paper firstly attempts to analyze the price differences among regions, using the purchasing power parity method to measure the purchasing power parity index of all regions,then revises the current GDP calculated based on nominal prices in various regions according to the international experience (ICP)and finally uses the results to compare the regional economic development. By comparison the author found that, disregarding the price differences between among regions, there is the trend that regional economic gap has been narrowed. The author thinks that it is related with the influence of the large capital inflows into the capital market and real estate markets of developed regions in recent years and the Chinese government's macroeconomic policies and national macro-strategic layout. However, conclusively, the economic gap among various regions still exists, thus it is necessary to take measures to stabilize the price level and promote the sustained and sound development of China's economic construction.