Exploring the impact of unequal economic development in different regions of China

Exploring the Impact of Unequal Economic Development in Different Regions of China

Zha Gaoxiang^* and Doris Padmini Selvaratnam

Universiti Kebangsaan Malaysia

^*Correspondent author

DOI: https://dx.doi.org/10.47772/IJRISS.2025.9020128

Received: 29 January 2025; Accepted: 03 February 2025; Published: 06 March 2025

ABSTRACT

This study examines the uneven economic development across China’s three major regions: the eastern, intermediate, and western areas. It highlights the rapid growth of the eastern coastal regions, fueled by geographical advantages, favorable policies, and foreign investment, while the central and western regions lag due to various constraints. This study aims to explore the actual situation of unequal economic development in the three major regions of China, assess the impacts of these inequalities on living standards, educational opportunities, and employment environments, and analyze the differences in policy formulation across regions. By utilizing a combination of qualitative and quantitative methods, including data collection, statistical analysis, and case studies, the study seeks to provide insights that could inform government policies for achieving balanced regional development and enhancing overall social welfare in China.

Keywords: Economic Development, Regional Disparities, Eastern Region, Intermediate Region, Western Region, Policy Formulation, Social Welfare, Infrastructure, Globalization

INTRODUCTION

Background: China’s economic landscape is characterized by a significant disparity between its eastern, intermediate, and western regions, driven by a combination of favorable geographical locations, supportive policies, and the influx of foreign investment. The eastern region, comprising economically advanced provinces such as Beijing, Shanghai, Guangdong, and Zhejiang, has benefited from a robust industrial structure, substantial foreign investment, and rapid development in high-tech sectors. However, this growth has also led to issues like skyrocketing real estate prices and unequal distribution of educational resources.

Conversely, the intermediate and western regions have experienced slower economic development, hindered by a multitude of factors including challenging geographical conditions, limited natural resources, inadequate infrastructure, and policy constraints. These regions, encompassing provinces such as Hunan, Hubei, Anhui, Jiangxi, Sichuan, Chongqing, Guizhou, and Yunnan, face unique challenges and opportunities in the development of emerging industries, infrastructure construction, and labor mobility. Their long-term economic sustainability and growth potential are under scrutiny.

The western region, in particular, grapples with difficulties in natural resource development and industrial transformation, alongside social security concerns and the imperative of ecological protection. These factors have a profound impact not only on the overall economic growth of these regions but also on broader issues of social stability, equitable resource allocation, and environmental conservation.

To gain a comprehensive understanding of these regional disparities and their implications, this study delves into the characteristics, issues, and challenges of economic development across China’s three major regions. By analyzing the eastern region’s industrial structure, foreign investment trends, high-tech advancements, and social inequalities, we can better comprehend the drivers and consequences of its economic prosperity. Similarly, examining the intermediate region’s potential in emerging industries, infrastructure progress, and labor dynamics sheds light on its prospects for sustainable growth. For the western region, a focus on natural resource management, industrial evolution, social welfare, and ecological preservation is crucial to assessing its contributions to regional economic and social development.

In summary, this research aims to explore the multifaceted impacts of uneven economic development across China’s eastern, intermediate, and western regions, highlighting the need for tailored strategies to address the specific challenges and leverage the unique opportunities of each area for balanced and harmonious growth.

Research scope: This study divides China into three regions: the eastern, intermediate, and western regions, analyzing their differences and characteristics in economic development, and exploring the impact of this uneven development on the social economy of each region.

1. Eastern region: including economically developed provinces such as Beijing, Shanghai, Guangdong, and Zhejiang, with a focus on analyzing their industrial structure, foreign investment introduction, high-tech development, and inequality phenomena such as real estate prices and education resource allocation.
2. Intermediate region: including provinces such as Hunan, Hubei, Anhui, Jiangxi, etc., pay attention to their opportunities and challenges in the development of emerging industries, infrastructure construction, labor mobility, etc., and analyze the long-term sustainability of their economic growth.
3. Western region: covering provinces such as Sichuan, Chongqing, Guizhou, and Yunnan, studying their difficulties in natural resource development, industrial transformation, social security, and ecological protection, as well as their impact on regional economic and social development.

LITERATURE REVIEW

Professor Yang Kaizhong from Peking University was the first to conduct research on regional economic disparities in China. He was there for the first time. In his doctoral thesis, he used the coefficient of variation to calculate the number of people from 1952 to 1985. The relative differences in per capita national income indicate that the regional differences at the provincial level are generally. Inverted U-shaped changes, North China, Northeast China, East China, Central South, Southwest China, and Northwest China. The differences in large regions generally manifest as an inverted “S” shape; East, Central, West, and Three. The changes in the large economic belt are generally showing an increasing trend, and the overall trend is favorable. U-shaped transformation. Later, the use of coefficient of variation, weighted coefficient of variation, and Calculation of Weighted Deviation Coefficient for Per Capita Nationals between 1952 and 1989. Income, indicating a “V” – shaped or similar economic difference between coastal and inland areas. U-shaped variation.

Wei Houkai’s average per capita from 1949 to 1990. Based on national income, use relative difference coefficient and mean deviation coefficient. Using factors such as the coefficient of variation to measure regional income inequality yields completely different results. The same conclusion: income disparities between provinces (cities, districts) in China since 1949. The overall pattern of changes is in an inverted “U” shape; Coastal and inland areas, as well as the eastern and central regions .The pattern of changes in income differences between different regions and between the east and the west is roughly “S” Type; Among the six major regions (North China, Northeast China, Central China, Central South, Southwest, and Northwest)The change in income gap between individuals roughly follows an “S” shape.

Chen Xiushan and others use the base. The Ni coefficient, coefficient of variation, and Seer index were analyzed from 1970 to 2002. The changes in regional differences in China indicate the Gini coefficient and coefficient of variation. The overall process of changes in numbers and the Seer index is quite similar, roughly in a “V” shape.

Qu Luning calculated the Theil index and human development index of GDP and population from 1985 to 2005 and believed that the overall trend of regional disparities in China was weak, similar to a “V” shape, with eight major comprehensive economies. The overall trend of regional disparities also presents a similar “V” shape, with differences within the region. The distance is showing a trend of continuously shrinking.

Examining the Impact of Infrastructure Financialization on Uneven Regional Development: Evidence from China,

The study used the Tobit model to analyze panel data at the provincial level in China from 2006 to 2019. The study constructed an evaluation index system for Uneven Regional Development (URD) and infrastructure financialization, and evaluated the impact of infrastructure financialization on URD through the Tobit model.

Main findings

1. The impact of infrastructure financialization on URD: While infrastructure financialization promotes infrastructure construction, there is also a risk of excessive financialization, which may lead to local government debt crises. Research has found that the financialization of infrastructure has a significant impact on URD, and low-level infrastructure financialization limits economic growth and urbanization in underdeveloped areas.
2. Characteristics of URD: The economic development level in the eastern, central, western, and northeastern regions of China shows a decreasing trend from east to west. The study measured URD through the range, relative range, and weighted coefficient of variation of per capita GDP, and found that the absolute gap has been increasing year by year, while the relative gap and overall gap have shown a downward trend.
3. Policy recommendations: Research suggests that the government should use policy tools cautiously in the process of infrastructure financialization and clarify the government’s responsibilities in infrastructure financialization. At the same time, differentiated financial policies should be formulated based on the economic development status of each region to avoid excessive financialization.

Problem statement

Exacerbating Disparities: The phenomenon of economic disparities becoming more pronounced is a significant concern in today’s globalized world. As some regions thrive, others fall behind, creating a widening gap between the haves and have-nots. This trend is not only detrimental to those living in less fortunate areas but also poses a challenge to the overall stability and prosperity of society.

Community Engagement: Regions that actively engage with their communities may develop more effective, localized policies compared to areas where policy decisions are made without stakeholder input. When communities are involved in the decision-making process, policies are more likely to reflect the actual needs and desires of the people they are meant to serve. This collaborative approach can lead to more innovative and sustainable solutions that have the support of the local population.

How can regions transform to narrow economic disparities in the context of globalization and expanding domestic demand? Addressing economic disparities in the context of globalization and expanding domestic demand is a complex challenge that requires a multifaceted approach. Regions must find ways to adapt and thrive in an increasingly interconnected world while also ensuring that the benefits of economic growth are shared more equitably among their populations.

To address economic disparities in the context of globalization and expanding domestic demand, regions can adopt several strategies:

Investment in Education and Skill Development: Enhancing human capital through education and vocational training can equip individuals for better employment opportunities. By focusing on education, regions can create a more skilled workforce capable of competing in the global job market. This not only benefits individuals by providing them with better career prospects but also strengthens the regional economy by attracting high-value industries.

Infrastructure Development: Improving transportation, internet access, and utilities can attract businesses and facilitate trade, benefiting local economies. Robust infrastructure is the backbone of any thriving economy. It enables the efficient movement of goods and services and supports the technological advancements necessary for modern commerce. Regions that invest in infrastructure development signal to businesses that they are open for investment and growth.

Encouraging Entrepreneurship: Providing support for startups and small businesses through funding, mentorship, and infrastructure can stimulate local economies. Entrepreneurship is a powerful driver of economic growth and job creation. By fostering a supportive environment for new businesses, regions can tap into the innovative potential of their populations and create a more dynamic economic landscape.

Tailored Economic Policies: Creating inclusive policies that consider the unique challenges of disadvantaged regions can ensure more equitable growth. One-size-fits-all solutions rarely work in complex economic systems. Regions must develop policies that are tailored to their specific circumstances, taking into account factors such as local industry strengths, demographic trends, and historical economic performance.

Public-Private Partnerships: Collaborations between the government and private sector can mobilize resources for development projects that address local needs. These partnerships can leverage the strengths of both sectors to achieve common goals. Governments can provide regulatory support and public funding, while the private sector can bring in innovation, efficiency, and investment capital.

Leveraging Technology: Promoting the use of technology can enhance productivity and create new economic opportunities, particularly in regions lagging in traditional industries. Technology has the power to transform economies by enabling new business models, improving efficiency, and opening global markets. Regions that embrace technological advancements can leapfrog traditional development stages and compete on a global scale.

Regional Equity Initiatives: Implementing targeted programs that focus on reducing disparities, such as job creation in underdeveloped areas, can help balance economic growth across regions. By specifically addressing the needs of disadvantaged areas, regions can ensure that no community is left behind. These initiatives can include infrastructure projects, educational programs, and incentives for businesses to operate in underserved areas.

By focusing on these strategies, regions can work towards narrowing economic disparities and fostering more inclusive, sustainable economic development. Through a combination of education, infrastructure, entrepreneurship support, tailored policies, public-private partnerships, technological advancement, and regional equity initiatives, regions can create a more balanced and prosperous economic landscape. This approach not only benefits individual regions but also contributes to the overall health and stability of the global economy.

RESEARCH METHOD

This study will use a combination of qualitative and quantitative methods to conduct:

This section uses a linear regression model to analyze the relationship between population growth and years. The formula for the linear regression model is:

Y = mX + b

Among them:

Y represents the population growth rate (or the absolute quantity of population growth, depending on how the model is constructed and interpreted)

M represents the slope of population growth, which is the amount of population growth per year (the slope in the eastern region is 735.82, the slope in the western region is 150.71, and the slope in the middle region is 27.18)

X represents the year

B represents the intercept term, which is calculated during linear regression analysis to minimize the difference between predicted and actual values

1. Data Collection: Obtain economic, social, environmental, and other statistical data from various regions through the National Bureau of Statistics, local governments, and relevant research institutions.

Annual Gross Domestic Product of the Three Major Regions

Results of the regression analysis reveal the following insights:

For the eastern region, the regression equation has been determined to be: GDP = 31415.24 * year – 62893162.75. This equation suggests that the economy of the eastern region is experiencing an annual growth rate of approximately 314.1524 billion yuan. In other words, with each passing year, the eastern region’s GDP is expected to rise by this substantial amount, indicating a robust and steady economic expansion in this part of the country.

Turning our attention to the western region, the regression equation calculated is: GDP = 13003.38 * year – 26048984.55. This indicates that the economic growth in the western region is on an upward trajectory, with an annual increase of around 1300.338 billion yuan. This figure underscores a significant and positive trend in the economic development of the western region, showcasing its potential for future growth and prosperity.

Lastly, focusing on the middle region, the regression equation derived is: GDP = 14386.48 * year – 28807135.66. This equation implies that the economic growth in the middle region is also experiencing a healthy annual increase of approximately 1438.648 billion yuan. This consistent annual growth suggests a stable and promising economic outlook for the middle region, contributing to the overall economic health of the nation.

Annual Resident Population Statistics of Three Major Regions

The chart depicted above illustrates the progression of annual Gross Regional Product (GRP) actual figures and the corresponding predictions generated by linear regression models for three distinct regions: the eastern, western, and intermediate areas. By employing regression analysis techniques, we are able to discern and examine the temporal evolution of economic trends within these various regions. The R² values, which serve as indicators of the goodness-of-fit for the regression models, are as follows:

For the eastern region, the R² value stands at an impressive 0.991. This figure suggests that the regression model exhibits an exceptionally high level of accuracy and a very good fit when applied to the data from the eastern region. It implies that the model can reliably predict the GRP trends in this area with a high degree of confidence.

Turning our attention to the western region, the R² value is recorded at 0.985. This statistic also indicates a strong correlation between the predicted values and the actual data points, suggesting that the regression model performs exceedingly well in capturing the underlying economic dynamics of the western region.

Lastly, focusing on the intermediate region, the R² value is observed to be 0.993. This figure further underscores the model’s excellent predictive capabilities and demonstrates a very good fit for the data from the intermediate region. It suggests that the regression model is adept at forecasting the GRP trends within this particular area.

The overall population growth rate in the eastern region has shown a slight downward trend, especially with a significant negative growth (-4.05%) in 2016, after which the growth rate gradually stabilized.

The population growth rate in the western region is relatively stable with small fluctuations, with most years’ growth rates within ± 1%, showing a relatively stable growth trend.

The population growth rate in the Intermediate region experienced a significant negative growth (-4.22%) in 2015, but gradually recovered and showed a positive growth (1.79%) in 2004.

The regression analysis results show the relationship between population growth and years in various regions:

The population growth slope in the eastern region is 735.82, indicating an annual population growth of approximately 735 people. The (R ^ 2) value of the model is 0.975, indicating that the year has a strong explanatory power for population growth.

The population growth slope in the western region is 150.71, indicating that the population growth in the western region is relatively slow each year, about 150 people. The (R ^ 2) value of the model is 0.935, which also has strong explanatory power.

The population growth slope of the Intermediate region is 27.18, with the slowest growth rate, and the (R ^ 2) value is only 0.149, indicating that the explanatory power of the year for population growth in the Intermediate region is weak.

These results indicate that the population growth in the eastern region is the most significant, while the population growth in the middle region is relatively flat and unstable. Next, we can further combine economic development indicators to analyze the potential impact of these population changes on economic development.

Expected results

Based on existing literature and data analysis, it is expected that the research will yield the following results:

Economic growth trend:

Eastern region: It is expected to continue to maintain strong economic growth, with an annual GDP growth of approximately 314.1524 billion yuan. This indicates that the eastern region has a solid economic foundation, strong growth momentum, and good development momentum.

Western region: The economy is showing an upward trend, with an annual GDP growth of approximately 130.338 billion yuan. Although the starting point of the western region is relatively low, it has enormous growth potential and shows a positive development trend.

Central region: The economy is also showing healthy growth, with an annual GDP growth of approximately 143.8648 billion yuan. The development speed of the central region is between the eastern and western regions, demonstrating stable economic growth potential.

Population growth trend:

Eastern region: The population growth rate is the fastest, although there was a significant negative growth in 2016 (-4.05%), the growth rate has gradually stabilized since then.

Western region: Population growth is relatively stable, with growth rates ranging from ± 1% in most years, showing a relatively stable growth trend.

Central region: The population growth rate is the slowest and fluctuates greatly. In 2015, there was a significant negative growth (-4.22%), but there has been some recovery since then.

The relationship between economy and population growth:

Eastern region: Although the population growth rate is the fastest, the strong economic foundation and growth momentum indicate that the region can effectively absorb and utilize the labor resources brought by population growth.

Western region: Stable population growth, coupled with positive economic growth, indicates that the region has the potential to achieve coordinated development of population and economy.

Central region: The population growth fluctuates greatly, and more policy support may be needed to ensure that population growth matches economic development.

1. The eastern region is significantly better than the central and western regions in terms of economic aggregate, infrastructure, and per capita income, manifested in differences in social welfare and living standards.
2. The central region has made some improvements in policy support and market potential, but still faces problems of suboptimal industrial structure and talent loss.
3. The lagging development of the western region is mainly limited by geographical environment, transportation conditions, and lack of industries, and the overall level of socio-economic development is significantly lower than that of the eastern and central regions.

Through this study, it is expected to provide reference for the Chinese government in formulating regional development policies, helping to achieve coordinated development of regional economy and comprehensive social progress.

POLICY IMPLICATION AND CONCLUSIONS 

This study explores the uneven economic development in the three main regions of eastern, central, and western China, revealing the phenomenon of rapid development in the eastern coastal areas due to geographical advantages, favorable policies, and foreign investment, while the central and western regions lag behind due to various restrictive factors. The research aims to explore the actual situation of economic development in the three major regions of China, evaluate the impact of these inequalities on living standards, educational opportunities, and employment environment, and analyze the differences in policy formulation in different regions.

Policy implications

1. Investment in education and skills development: The study emphasizes the importance of enhancing human capital through education and vocational training, which can provide better employment opportunities for individuals and strengthen regional economies by attracting high-value industries.
2. Infrastructure construction: improving transportation, Internet access and public facilities can attract enterprises, promote trade, and thus benefit the local economy.
3. Encourage entrepreneurial spirit: Supporting startups and small businesses through funding, guidance, and infrastructure can stimulate the local economy.
4. Customized economic policies: Develop inclusive policies that consider specific regional challenges to ensure more equitable growth.
5. Public Private Partnership: Collaboration between the government and the private sector can mobilize resources for development projects and meet local needs.
6. Utilize technology: Promoting the use of technology can improve productivity and create new economic opportunities, especially in areas where traditional industries are lagging behind.
7. Regional equity measures: Implementing projects aimed at reducing disparities, such as creating employment opportunities in underdeveloped areas, can help balance regional economic growth.

Conclusion

1. Eastern region : It is expected to continue to maintain strong economic growth, with an annual GDP growth of approximately 314.1524 billion yuan. Although the population growth rate is the fastest, the strong economic foundation and growth momentum indicate that the region can effectively absorb and utilize the labor resources brought by population growth.
2. Western region: The economy is showing an upward trend, with an annual GDP growth of approximately 130.338 billion yuan. The population growth rate is relatively stable, demonstrating the potential for coordinated development with economic growth.
3. Central region: The economy is also growing healthily, with an annual GDP growth of approximately 143.8648 billion yuan. But the population growth rate is the slowest and fluctuates greatly, which may require more policy support to ensure that population growth matches economic development.

Through these analyses, this study provides reference for the government in formulating regional development policies, which helps to achieve coordinated development of regional economy and comprehensive social progress.

Rapid economic growth and industrialization may put pressure on the environment, especially in terms of resource consumption and pollution. Regions with slower economic development should also pay attention to balancing the relationship between economic growth and environmental protection while pursuing development.

The eastern region has achieved rapid economic growth due to its geographical advantages, favorable policies, and foreign investment. However, this growth has also led to issues such as soaring real estate prices and unequal distribution of educational resources. Rapid industrialization and urbanization are often accompanied by excessive resource consumption and environmental pollution, such as air and water pollution, land degradation, etc. As the most developed region in China’s economy, the eastern region may face challenges from these environmental issues.

Due to geographical conditions, natural resource limitations, inadequate infrastructure, and policy constraints, the economic development in the central and western regions is relatively slow. These regions face unique challenges in developing emerging industries, infrastructure construction, and labor mobility. Although these challenges may not be directly related to environmental issues, infrastructure construction and industrial development often require significant resource investment, which may put pressure on the local environment.

Finally, the western region is facing difficulties in natural resource development and industrial transformation, while also addressing the necessity of social security and ecological protection. This indicates that while pursuing economic growth, the western region needs to pay special attention to environmental protection and ecological balance to avoid unsustainable development patterns.

Uneven economic development also brings about social problems:

1. Unequal distribution of educational resources: Due to rapid economic growth in the eastern region, there has been a problem of uneven distribution of educational resources. This may lead to increased social inequality, as education is an important way to improve an individual’s socio-economic status. The inequality of educational opportunities may affect social mobility, making it difficult for people in economically weaker areas to improve their living conditions through education.
2. Differences in employment environment: Due to its developed industrial structure and the development of high-tech industries, the eastern region may provide more employment opportunities. However, this may lead to talent loss in both central and western regions, as people tend to migrate to more economically developed areas in search of better job opportunities. This talent loss may exacerbate economic and social problems in the central and western regions, as these areas have lost potential labor and innovation power.
3. Social welfare and living standards: There are significant differences in social welfare and living standards between the eastern region and the central and western regions. Due to its economic advantages, the eastern region may have higher living standards and a more comprehensive social welfare system. Due to lagging economic development, the central and western regions may fall behind in terms of social welfare and living standards, which may lead to social dissatisfaction and instability.
4. Soaring real estate prices: The rapid economic growth in the eastern region has led to a surge in real estate prices, which may exacerbate social stratification and make it difficult for low-income groups to afford housing costs, thereby affecting their quality of life and social stability.
5. Unbalanced regional development: The uneven development between the eastern coastal areas and the central and western regions may lead to population migration, further exacerbating social pressures in densely populated areas, such as housing, transportation, and public service pressures. Meanwhile, areas with population outflow may face labor shortages and a decline in economic vitality.

Through the above analysis, we can see that uneven economic development not only affects the economic growth of various regions, but also has profound impacts on social welfare, educational resources, employment environment, and living standards. These social issues need to be addressed through the development and implementation of targeted policies to promote social harmony and stability.

ACKNOWLEDGEMENT

This paper results from an academic exercise for EPPE3996 funded by EP-2018-001 at the Faculty of Economics and Management, Universiti Kebangsaan Malaysia.

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