Regional investment effectiveness and development levels in China

For centuries, it has been taken for granted that social and economic development in China has an east-west spread, or from the coast to the interior. Even though a tremendous effort was made by the socialist government for thirty years (1949-1978) on rectifying ‘this unhealthy imbalance’, most people hold the belief that the spatial patterns of China's development remain the same as they were forty years ago. This deep-rooted concept plays an important role in shaping China's present economic development strategies. Thus, an evaluation of the impact of the goverment's regional balance effort remains critical. Understanding the changes and patterns of China's regional development is central to formulating appropriate policies for future planning. In this paper an overview of regional development is presented from the perspective of history. Regression between the total fixed capital investment and the combined industrial and agricultural output is analyzed, and an effort is made to find out the spatial distribution of regional investment effectiveness. A factor analysis based on twenty socio-economic variables revealed that apart from the traditional E-W regional disparity, the modern socialist dispersal policy has also affected the regional development in China. Though the historical economic factors unbalanced the development from E to W, the economic pratice advocated by Socialist China has reversed the tendency to some extent. A cluster analysis of 21 provinces, five autonomous administrative regions, and three municipalities identified new spatial patterns, and the result strengthened the finding that the effort of regional balance in the period of 1949–1978 is still at work.