A Study On The Effect Of Financial Development On Trade Structure Optimization In China

Under the background of globalization, China has becomed a trading powerful country.However, the rapid expansion of scale can not bring China huge profits, this is mainly due toChina’s trade structure with seriously problems, which are now restricting the raise of the overalllevel of China’s foreign trade. Therefore, in China during the crucial period of economic transition,optimizing the trade structure is apparently important. The experience of developed countriesshows that the height of trade structure optimization is always accompanied by the rapiddevelopment of the financial industry. Then, is there any relationship between the optimization offoreign trade structure and financial development? If so, how will the influence degree be?From the theories of trade and finance, we can exactly find evidences that financialdevelopment can promote the development of the trade. However, these studies are mostly aboutdeveloped countries or areas on financial development on the scale effect of trade. As a developingcountry, the trade structure problems, financial development level must be different with thesituations of developed country or area. Same to research results, we are not sure whether can theybe applied. Based on the above considerations, this paper with be started with the theoretical andempirical aspects for the study of effect Chinese financial development on the optimization offoreign trade structure. This article is divided into three parts:The theory is elaborated from inside and outside two angles about the effects of financialdevelopment on trade structure optimization of mechanism analysis. The main conclusions are asfollows: Financial Development on technological difference, capital natural endowment and scaleeconomic effect, from the internal positive trade structure optimization; at the same time, thefinancial development on its own, with impact of exchange rate risk and financial policy effect ofextroversion can affect trade structure optimization.In empirical research, this paper from the national level and regional level in the face of Chinafinancial development and trade structure current situation described, after the use of Chinese in1980-2010years of time series data and Chinese30provinces and provincial panel data, empiricalanalysis.The national level the results show that, financial development and optimizing tradestructure exist long-run equilibrium relationship, especially in the financial structure and financialefficiency influences.Regional level shows the positive effect of area of the eastpart part is obvious,and the central and western areas of the effect is not significant and there exists hysteresis.The policy and suggestions are made combined with China’s current financial developmentplanning and optimizing trade structure macroscopical direction. This paper argues that we should increase a country for the financial industry to support trade structure optimization support, whilefocusing on the financial efficiency and financial structure level. At the same time to hold theprocess in the East, western financial development, making good use of their respective advantages.Let the financial development play a supporting role in the trade structure optimization processes.