Economic Growth, Government Policy, and Regional Economic Inequality in China

Abstract

This study is intended to serve two purposes. The first purpose is to study the tendency of regional economic growth in China during the period from 1978 to 2010, and the second purpose is to analyze how regional inequality is related to national economic growth and government policy. Through the calculation of the Theil Index, this study has found that the regional economic inequality was mild before the beginning of the 1990s and then became severe afterward. The review of literature and correlation analyses revealed that the regional economic inequality is highly associated with national growth and government policy. Regression analysis indicates that the regional economic inequality is positively related to national economic growth and negatively related to government policy. Since the beginning of the 21st century, the Chinese government has been directing more efforts toward reducing regional economic inequality. Diverse government policies are carried out. The result shows a positive relation between economic difference among provinces and the implementation of the Western Development Strategy. Longer time period is required.