IntroductionDuring the reform era since 1979, the Chinese economy has been characterised by rapid growth and increasing inter-regional disparity. The economic growth in the eastern (coastal) region has been faster than that in the western region [1]. During the period from 1980 to 1994, the real GDP of the eastern region grew at an annual rate of 11.5 percent on average, compared to 9.4 percent in the western region (SSB: SYOC, 1981-1995, resulting in a widening inter-regional economic gap between the two regions. This disparity can be attributed to many factors such as economic reforms and open-door policy in favour of the eastern region, the different economic structure and resource conditions, coastoriented regional policy and direct foreign investment.Several studies have examined the influence of economic reforms and regional policy on regional economic development in China. These include Cannon (1990),