Factor Analysis Of China’s Economic Center Of Gravity Shifted Since The Reform And Opening Up

PurposeAfter more than30years of reform, China’s economic development has rapidly increased. But at the same time, due to macro regional policy tilting, population and capital have flowed unevenly between different provinces. Due to various natural geographic conditions and economic foundations, China’s regional economies show great differences in development level. These regional differences are a major focus among experts and scholars. The purpose of this paper is to better understand what drives these regional differences and why.MethodologyIn this article, I quantified the effect of China’s regional economic policies over time. To do so, I gathered data on total yearly GDP, yearly number of residents, as well as the yearly amount of fixed‐asset investments within China between1978and2010, excluding data from Hong Kong, Macao, and Taiwan. I also collected survey data to measure the major regional economic policies released in different periods since the reforming and opening‐up (1978); I then use the survey data to design a regional policy strength index evaluation system. Using the GDP, population, and fixed asset investment data, I employed the center of gravity formula to calculate China’s economic center of gravity, population center of gravity, fixed assets investment center of gravity, and regional policy center of gravity since1978.On this basis, I analyzed the relationship between three sets of factors. I analyzed the relationship between population migration and the shifting of economic center of gravity; between fixed assets investment transfer and the shifting of economic center of gravity; and between regional policies favoring and the shifting of China’s economic center of gravity.I also synthesized three factors of economic development: population, investment in fixed assets, and regional policy. The result is a single ‘integrated factor’ which I believe has a heavy influence on China’s economic center of gravity. I determined the relationship between the integrated factor and the actual economic center of gravity by comparing the changes over time in the integrated factor with the changes over time in the actual economic center of gravity. This process helped me map China’s economic center of gravity between1978and2010. Ultimately, I concluded that population migrations, the transfer of fixed assets investment and regional policy tilt have had a heavy impact on the shift in China’s economic center of gravity.ConclusionsDue to changes in the industrial structure, mainly labor‐intensive industries are gradually weakening while knowledge‐intensive based industries have begun to play a leading role. This has caused intra‐country migration to shift from a "migrant workers boom” to a high‐tech talent boom. These types of migration are quite different in the direction and quantity from each other, thus affecting the distribution of the population center of gravity.Additionally, a change in regional economic policy will support a transfer in fixed asset investments, but local economic bases and industrial structures must be present to support development after such transfers. Therefore, the possibility of rapid and sustainable economic development in a local economy is dependent on the already present economic base and industrial structures. This explains why the effect of the implementation of policies is different between the development in southeast coast cities at the beginning of reformation and the later,"western development", and the "Rise of Central China".