The Relationship Between Financial Development And China’s Industrial Structure Adjustment Under The Opened Conditions

The degree of economic openness continue to improve by30years of reform and opening up. The impact of import and export trade, FDI and QFII on China is also growing significantly. There existing serious problems at the same time of sustained high economic growth. Achieving industrial upgrading will be an important factor in China’s economic stable growth in the long-term future. The rapid development of the financial system are able to provide significant financial support to upgrade the industrial structure optimization, which has played an extremely important role in the optimization and upgrading of industrial structure process. Thus in the post-crisis era, the study on the financial support to the optimization and upgrading of industrial structure under the conditions of open economy is very important.This paper discusses in detail the mechanism of the role of financial development in the industrial structure optimization and upgrading process, studying on concrete reality in-depth, comparing the development experience of American, Japanese and German. Which both from the theoretical and practical aspects to study the financial support for optimizating and upgrading industrial structure. Concluded that at the current stage of development of our country, we does not have to give much thought to bank credit and capital market’s leader problem, but should give full play to the function of two different markets financing, deepen financial market reforms, in order to serve the optimization and upgrading of industrial structure better.In empirical terms, the paper selected the1994-2008panel data of China’s17provinces, estimate by GMM method of panel data model which has been widely used, to better address the need to make clear the problems of model’s random errors specific distribution advance, as well as the endogenous relationship between financial development and upgrading of industrial structure. Explanatory variables selected financing structure (the amount of equity financing/banking credit increasing amount) and the development level of banks (Bank loan at the end of year/GDP), capital-output ratio, the fiscal expenditure proportion to GDP and economic openness (exports and FDI), which make empirical analysis with explanatory variables including industrial structure optimization and industrial structure upgrading respectively. concluded:in the terms of optimizing the industrial structure, the impact of financing structure was not significant, the development degree of the banking industry structure is also not significantly affected. In the terms of the upgrading of industrial structure, the impact of financing methods is not significant, but the impact of the bank’s development degree is more significant. In addition, the more increased economic openness, the more optimization and upgrading of industrial structure.Finally, we put forward policy recommendations based on the conclusions. In the steadily increasing economic openness premise, China should deepen financial reform, establish a sound financial system and capital markets, accelerate the marketing progress of interest rate and broaden the financing channels, develop and coordinate some related industries and financial policies, and give the modern Financial structure an more important role in upgrading the industrial structure.