Market Integration in China
Government of the United States of America - Office of the Comptroller of the Currency (OCC)
Board of Governors of the Federal Reserve System - Division of International Finance - International Banking and Finance Section
Lixin Colin Xu
affiliation not provided to SSRN
April 1, 2011
World Bank Policy Research Working Paper No. 5630
Over the last three decades, China's product, labor, and capital markets have become gradually more integrated within its borders, although integration has been significantly slower for capital markets. There remains a significant urban-rural divide, and Chinese cities tend to be under-sized by international standards. China has also integrated globally, initially through the Special Economic Zones on the coast as launching grounds to connect with world markets, and subsequently through the accession to the World Trade Organization. For future policy considerations, this paper argues that its economic production needs to be spatially concentrated, and its social services need to be spread out to the interior to ensure harmonious development and domestic integration (through inclusive rural-urban transformations and effective territorial development).