Research On The Effects Of China’s Foreign Trade On Regional Income Gap

Since the reform and opening up, especially after1990s, China’s foreign trade has achieved great improvement and has become a major trading nation in the world. However, the economic growth benefited form trade is not shared by people equally. From the course of China’s foreign trade, the period of the swift increase of China’s foreign trade is China’s regional gap widening period. Due to the limitation of traditional trade theory, it can not explain China’s foreign trade regional income disparity effect very well which is related to the arrangement of China’s foreign trade policy, the sustainable economic development and social stability. For this reason, it is essential to make a study of the disparity effect and cause of China’s foreign trade regional income, and propose some reasonable suggestions of China’s foreign trade policy which is suitable for China’s balanced regional development.This present thesis, by doing a literature review of current studies both abroad and at home, makes an analysis from perspectives of factor endowment, non-balanced developing strategy, and industrial agglomeration along with China’s foreign trade and regional income gap. It is found that, owing to the dominated position of China’s foreign trade which results from the factor endowment and non-balanced developing strategy in the eastern region, the regional income gap in the eastern, central and western part of China has been widening. In addition, this thesis does an empirical test of China’s foreign trade regional income disparity effect by using panel data. It is found that:(1) there is a strong correlation between China’s foreign trade and regional income gap;(2) China’s foreign trade is of great importance for the illustration of the gap between the central, western regions and the provincial-level administrative region with the highest per capita income while it is not in the same situation in most eastern provinces (municipalities). In the end, some reasonable policy suggestions are proposed on the basis of the research in this thesis.