Trends and Features of China’s Inter-Provincial Trade: 1987-2007

Zhang Shaojun 1 and Li Shantong 2

1 Department of International Economics and Trade, School of Economics, Xiamen University, Xiamen, China
2 Department of Development Strategy and Regional Economy, the State Council Development Research Center, Beijing, China

Abstract:  With today’s economic globalization, inter-provincial trade plays an important role in a country’s economy. This paper is the first to adopt the input-output tables of 30 Chinese provinces and to summarize the evolution of China’s inter-provincial trade from 1987 to 2007. This paper reaches the following conclusions. First, China’s inter-provincial trade has sustained a period of rapid growth. In 2007, the total volume of inter-provincial trade was twice the amount of international trade, with the eastern region accounting for the majority of the inter-provincial trade volume. GDP may have a greater effect on inter-provincial trade than geographic distance does. Second, inter-provincial trade maintains a high level of concentration and overlaps with the high concentration of GDP. Third, the inter-provincial trade dependence of Chinese provinces tends to increase, an indication of the growing domestic market integration. Moreover, the eastern region’s dependence on inter-provincial trade is higher than the central and western regions’. Fourth, the share of inter-provincial trade in the overall external trade of Chinese provinces has a declining tendency, which indicates a slower process of China’s domestic market integration compared with international market integration. However, in terms of proportion, the external trade of most Chinese provinces is still dominated by inter-provincial trade. Fifth, most provinces with longstanding inter-provincial trade deficits are in the central and western regions.
Keywords: inter-provincial trade, provincial input-output tables, trade inflows and outflows, market integration, gravity model of trade.

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