Abstract: For a country, capital is often transferred from the less developed regions to developed regions; this would make the more developed regions be developed and underdeveloped regions even further behind due to the lack of effective financial support. The Northwest is one of the most undeveloped regions, whose economic and financial situation have been lagged far behind the developed east part of China. From recent economic development situation, the Northwest is China[JP8]’s[JP] sparsely populated region with harsh natural conditions, low social productivity and not welldeveloped financial situation. This issue should get our government and economists to attach great importance to the related research because the uneven development of the region and the country will affect social stability. The paper uses relative quantitative analysis to study the reality of the financial flows from the Northwest to the East of China. And based on Cointegretion analysis, Granger causality test and model VEC，the author finds out that these is a stable causal relationship between the economy gap and financial gap of two regions. And the financial elements escape out of the Northwest to the East, which has hampered the economic development of the Northwest and enlarged this gap. The test results show that there are a economic gap between the East and the West and a clear financial gap between the cointegration relationship, indicating the economic gap and the financial gap does exist the longterm equilibrium relationship, this relationship can be used in cointegration equation vector error correction model representation. This paper finds out the appropriate policy recommendations. These recommendations will help us think about the Northwest development，and reduce regional disparities adverse effects. Accelerating the development of economic construction is a difficult and responsible work. For the Northwest, the lack of funds is a serious problem; the less total deposits are of inhibition of total loans to market, thereby inhibiting the economy growth of the Northwest. For the east part of China, the problem is not much money to create greater abundance of economic and social benefits. The East-Northwest gap in economic development is the main reason leading to the flow of financial flow, while the financial flows in turn further widening the economic gap. In addition, the financial environment and investment opportunities are far behind the eastern coastal areas, the benefits reduce the financial elements, making the financial flows from the northwest region to the eastern region; the flow of financial flow of funds exacerbated the lack of the Northwest finance, further inhibiting the Northwest economic growth. The policy recommendations are as follows: central government’s regional development policies continue to be properly tilted to the Northwest less developed areas and to develop appropriate financial and taxation incentives, reasonable financial flow forwards the Northwest. The Northwest should create a favorable institutional environment and vigorously promote the economic and financial system, improving the financial environment for investment. On the other hand, the Northwest should learn the economic development models from the East, and combining with the actual situation of the Northwest's own, the Northwest should explore the scientifically developing roads.

Key words: financial flows, cointegration analysis, unit root, causality test, China