Abstract: In this paper, authors introduce simply principle and procedure of the method of principal component analysis (PCA) and use two examples to set forth concretely the application of PCA in regional economy. The first is to adopt the method of principal component analysis to appraise the economic developmental level of all counties in Xinjiang, the second is to adopt the method of principal component analysis to select the leading industries in the regions along the new Eurasian continental bridge (Xinjiang's section). The two examples show the method of principal component analysis is suitable and feasible for regional economy dealing with comprehensive appreciation. This method has the following characteristics： (1) The correlation effect between the original indicators is removed and the result is more accurate. (2) The original indicators system is simplified and the new system covers the information and statistical features of the original indicators system as more as possible. (3) The right weightiness of the new indicators is obtained easily in the course of calculation and it is not be affected by some man-made factors. At last authors remind readers to need to be paid attention to four problems in the application. Among them, the most important one is that this method is not suitable for the in-correlative and nonquantitative indicators system.

Key words: principal component analysis, regional economy