China’ Foreign Trade Impacts On The Income Gap Between Urban And Rural Residents

With the development of China’s Export-oriented Economy, the speed of the development about Chinese Foreign Trade is rapider and rapider. Foreign Trade has become the engine of the economic development in China, Foreign Trade promote development at top speed of the economy, but at the same time, we should aware that the dependence on Foreign Trade has increased from34.1%in1998to49.9%in2012,always so high. There was a trend of widening income gap between urban and rural residents, the ratio had expanded from2.46in1997to3.10in2012.The gist of this thesis is to discuss whether there is exist some kind of intrinsic connection between the urban-rural gap and the development of the Foreign Trade, whether the Foreign Trade has affect the urban-rural gap directly or indirectly. The clarification of these problems are so important. From the theoretic angles, this paper based on literature review, proposing five parts which the urban-rural gap will be influenced by trade: the determining mechanism of price, the mechanism of technological progress, the government investment mechanism, the mechanism of foreign investment and educational effect. From the point of the determining mechanism of price, our country is superficially abundant of unskilled labor and lack of capital. The Foreign Trade seems to be good for the rural residents (unskilled Labor).However this situation is undergoing a transformation in fact, the Foreign Trade will be beneficial to the city residents (skilled workers) more as the investment in China is increasing. The city residents (skilled workers) are more advantageous than the unskilled labor(rural residents) by the skill biased technological progress. Generally speaking, Government investment is partial to city much more resources and factor supplies which is more likely to be benefit in the Foreign Trade. Foreign businessmen trend to invest in the city with better infrastructure, logistics and cultural which will also affect the urban-rural gap. From the point of education, city in China have more educational resources and higher degree of education so that it is more likely to be benefit in Foreign Trade with better production skills and skills of labor.Empirically, this paper uses the data of China’s urban-rural income in1997to2012.There have a positive analysis of the influence of the Foreign Trade on the urban-rural gap. This paper investigate the export trade’ impact on the the urban-rural gap as a further clarification in the fifth chapter. Here the period of1997-2012is divided into1997-2001and2002-2012so as to go deep into the influence of the Foreign Trade on the urban-rural gap. We conclude that the Foreign Trade is widening the the urban-rural gap.In conclusion, China’s Foreign Trade will lead to the expansion of the the urban-rural gap. But there are some measures that we can take to solve the problem, which includes promoting Foreign Trade’s effect in improve the income of residents, guiding investment flows, uniting urban and rural factor market, strengthen the education and training of rural residents and strengthening the education and training of rural residents and enhancing support for agriculture. All these measures will effectively narrow the income gap between urban and rural areas.