Author: Kau, Kin-tak Kevin
Title: Explaining China's regional disparities in development
Degree: M.Sc.
Year: 1999
Subject: China -- Economic conditions -- 1976-2000 -- Regional disparities
Hong Kong Polytechnic University -- Dissertations
Department: Multi-disciplinary Studies
Department of Business Studies
Pages: vi, 63 leaves : ill. ; 30 cm
Language: English
Abstract: Since the 1978 economic reform, China has gradually transferred from a planned economy to a market -oriented economy. It also linked its economy with the global economic system. The reform has not only improved the overall economic performance of China, but also aggravated the regional disparities in terms of GDP level. As the reasons for the regional disparities are varied, this study aims to examine the underlying reasons for the disparities during the period between 1978 to 1997. The reasons for focusing on this period are two folds: the required data are more readily available and accurate and the impacts of the 1978 reform can also be studied. In this study, disparities are defined as the differences in the level of GDP per capita of each province. Based on previous studies, there are six parameters that may have implication on the level of GDP per capita of a province. They are the total investment in fixed capital, the amount of foreign direct investment, the percentage share of secondary and tertiary industry to the total GDP, the enrollment of institutions of higher education and the share of state-owned enterprises to the total industrial output. Their validity is tested in this study. The empirical findings of the study revealed that the investment in the fixed asset, the amount of foreign direct investment, the share of the tertiary industry in a region's GDP and the enrollment of higher education institutions have strong correlation to the level of GDP of a province. The study concluded that the 1978 reform did intensify the regional disparities but it has also raised the GDP level of most of the regions. The findings of the study also supported that the overall economic performance of China has been improved under the market-oriented economy which helps to facilitate a more efficient utilization of the factors of production by removing the bureaucratic controls on them. Deregulation on price control and free flow of factors of production as well as people are some of the examples. Due to limited time and resources, the study has not made any assessments on the well being of the people in each province so as to give a more comprehensive picture on the regional disparities in China. Whether the 1978 reform has improved or eroded the overall well being of the people in each province would be a research topic to be examined by other in future.

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