Market Integration in the People’s Republic of China

Abstract

Over the last 3 decades, the product, labor, and capital markets of the People’s Republic of China have become gradually more integrated within its borders, though integration has been significantly slower for capital markets. There remains a significant urban-rural divide, and cities in the PRC tend to be undersized by international standards. The PRC has also integrated globally, initially through its special economic zones on the coast as launching grounds to connect with world markets, and subsequently through the PRC’s accession to the World Trade Organization. For future policy considerations, we argue 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.

Keywords: market integration, economic cooperation, domestic integration, labor

JEL Classification: F2, L1, J4, H7, O1, O5, P5, R1