Fiscal Decentralization and the Divergence of Regional Foreign Trade in China

Abstract

Unbalanced distribution of regional openness is a factor causing regional divergence. This paper analyzes the mechanism on foreign trade from financial aspecl and discusses financial development framework under fiscal decentralization. It is found that:(1) financial improvement is beneficial to regional openness; (2) regional government intervention on financial system does harm to foreign trade; and (3) informal finance in some regions is beneficial to export development.