Study on Whether International Trade Has Increased the Inequality in China's Domestic Income Distribution

Abstract

Inequality in income distribution is a major problem faced in China's and even global development, and has traditionally attracted much academic attention. How to reduce the income distribution gap and achieve common prosperity has also been an important concern of the government for a long time. Meanwhile, foreign trade plays a pivotal role in China's economic development, and along with the changes in the external trade environment and internal economic policies, the country is witnessing a new situation of full openness in all regions. Based on the above background, this paper investigates whether there is an impact of foreign trade on China's income distribution. The empirical results show that foreign trade has increased the income distribution inequality in China, and the impact of export trade on intra-regional income inequality is greater than that of import trade on intra-regional income inequality; the impact of export trade on income inequality in coastal cities is greater than that in inland cities, when viewed by coastal and inland. Finally, based on the empirical results, this paper puts forward three suggestions on narrowing the inequality of domestic income distribution: reasonable guidance of foreign investment, optimization of industrial structure, and increasing the cultivation of talents.