Body of Study on different region effects by same monetory policy, Case study of ChinaCHAPTER 1INTRODUCTIONIntroductionChina is the largest developing country. Its total population reached 1.3 billion on 6th January, 2005. However, there is an unbalance in different regions on Chinas economy development. We may say that China has multi-level development within the country. The development level on coastal areas in China is higher than those of interiors. Our study is aiming at this unbalanced developing problem spread up. There are thirty-three provinces in China. From the economic point of 6view, China can be divided into three different development levels areas. Eastern area is located on coastal line which has higher development level; Central area positions on middle development level; Western area positions on low development level. We just consider the provinces in mainland, there are thirty of them. Eastern region have twelve provinces, Central have six and Western region have eleven provinces. Our study takes one province from each region as example to do study. Shanghai as the most well developed area in China represents for Eastern area. Henan as the most population province represents for Middle area. Xinjiang as one of the big undeveloped province represents for Western area.As the fact of that, Chinas government pays attention on the unbalanced development levels. Chinas government introduced “Western Development Strategy” some twenty years ago. Chinas government uses multi-way to give advantages to Central and Western Regions. Under Western Development Strategy, Chinas government provides monetary policy and also uses other financial intermediations to work on interiors region development. Our study tests the different effects of monetary policy and other financial intermediations on countrys economy in different regions. IssuesThe major issue of our study is Chinas unbalance development level. Following shows the facts of Chinas unbalance development. We can see that from the surface area of certain region and their economy development.Total surface area of Chinas mainland is 9.567 million square kilometers. Eastern region is 1.7821 million square kilometers, central region is 1.026 million square kilometers, and western region is 6.720 million square kilometers. Figure 1.1: Surface Distribution of ChinaSource: WikipediaIn 2005, total population of Chinas mainland was 1307.56 million. Eastern region was 613.22 million, central was 367.45 million, and western was 326.89 million.Figure 1.2: Population Distribution of ChinaSource: WikipediaFrom Figure 1.1 and Figure 1.2, we can see that Eastern region has the highest population density. We also know that population density has positive relationship with economy development in China. To prove this idea we see another figure for Chinas GDP distribution. We take a static of GDP in 2005, Eastern was RMB 6139.317 billion, Central was RMB 2712.465 billion, and Western was RMB 1824.844 billion.Figure 1.3: GDP Distribution of ChinaSource: WikipediaThe objective of our study is coming from the above economy distribution problem. Above issued Western and Central region cover 81 percent of the total surface area of China, but only has 33 percent of total GDP. From 1980s, Chinas government issues this problem and made their movement. Western Development Strategy introduced when the unbalance problem comes more seriously in China.Problem StatementOur study looks deeply into problems on the reasons of unbalanced development in China. Those problems do not exist independently.Unbalanced GDP Per CapitaGenerally, we use GDP per capita to talk about a countrys development level. According to Figure 1.2 and Figure 1.3, we can have GDP per capita in different regions. Let us see annual GDP per capita in 2005. Eastern regions is RMB 19825.41, Central is RMB 10082.22, Westerns is RMB 7250.27. From the data, Eastern regions annual GDP per capita is nearly three times as of Western region. Meaning to say 25 percent of Chinese citizens reach well living standard. At the same time 47 percent of Chinese citizens just have adequate clothing and food. Different living standards create different demands. Another problem after unbalanced GDP per capita is toward to urbanization. More and more people move from Western area to Eastern area, they are willing to have higher living standard. 1: Annual GDP per capita calculates by annual GDP/populationUnbalanced Population DensityAccording to Figure 1.1 and Figure 1.2, we can see population density in 2005. Eastern region has 336.75 people per square kilometer, Central has 358.14 people per square kilometer, and Western has 48.64 people per square kilometer. Eastern and Central regions are both almost seven times of Western regions population density. Problem comes from