THE CORRELATION BETWEEN THE CIRCULATION SECTOR AND THE ECONOMY IN WUHAN, CHINA - A CANONICAL CORRELATION ANALYSIS

Abstract

ABSTRACT The circulation industry comprises those firms involved in the process that moves the finished products made by the manufacturer to the final consumer via the wholesaler and the retailer. The broad definition of the circulation industry includes all trade in business flows, logistics, information flows, and capital flows. This broad definition includes wholesale and retail trade, residential housing, catering (food services), lodging, transportation and warehousing, and the postal service. The narrow definition of the circulation industry includes: wholesale and retail trade, catering, and logistics[1]. A growing dependence upon the circulation industry has improved the functioning of the Wuhan economy accenting specialization and scale of production. This has resulted in increased research interest in the development of correlations among industries. Xiangdong Liu and Jieshen Shi[2] studied the internal links and the structural equilibrium between commerce and the three industries of the national economy and found that the commerce sector has clear features of productive service in the industrialization in China and further made it clear that the commerce should be an elementary and leading sector. Fan Yang, Qian Lu and Yongfang Ai[3] have studied the correlations among the science and technology sector, the information sector and the equipment manufacturing industry in China focusing on correlative and ripple effects through input-output analysis. They find that the science and technology sector and the information sector have played a leading role in the development of the national economy and that the equipment manufacturing industry has relied the most on the input of the scientific and technological resources. They have also found that the whole level of informational construction is relatively low and that integration with the equipment manufacturing industry was lacking. Naihua Gu, Jiechang Xia[4] have analyzed the motivation of the linkage between the hi-tech and the service sector on the basis of the value-chain model and found that their linkage can extend and increase the value chain of the service sector and raise the level of social productivity and benefits. Weiyang Yu, Weixin Qi[5] have made a study of the relevancy among the industries of the national economy in Qinhuangdao by using the principle of BP Neutral Networking and found that the construction sector has greatly affected the industrial system and that the service sector has become more dependent on the other industries. Yi Cao, Yuming Shen and Ling Qiu[6] adopt input-output methodology to analyze the correlation between the productive service sector and the manufacturing industry in Tianjin. They concluded that both the productive service sector and the manufacturing industry drop and that the productive service sector predominately served the tertiary industry sector. Huijuan Li[7] studied the internal structure of the tertiary sector in China and found that the direct consumption coefficients of its component to the traditional commercial catering and the traffic and postal service were rather high. The direct consumption coefficients were also found to be very low for the emerging finance and insurance service. Li also found that the influence and the induction coefficients of the traditional catering and the public residential service were high, but those of the finance and the insurance sectors were relatively small. Shuhan Liu, Rui Zhang and Lixia Liu[8] have analyzed the correlation between the productive service sector and the manufacturing industry in China and found that the intermediate demand structure of the manufacturing industry to the productive service and the structure of the intermediate input of the productive service industry to the manufacturing industry have continued to be upgraded. The pull effect of the productive service sector to the manufacturing industry is stronger than the push of the former to the latter. Jing Cao[9] has done research on the correlation between the circulation sector and the national economy in China concluding that synthetic correlative relationships exist among them, with the linkage of the wholesale and retail sector to the circulation sector being the strongest while that of the primary industry to it is the weakest. Zhimin Dai[10] has confirmed the mode of the technology transfer among the regional industries by analyzing the relevance. All the studies above have paid close attention to the relevance between the circulation industry and the rest of the economy concluding that close links have existed. These results have provided the necessary theoretical support for this paper.