The Development Of Governance Mechanism Of Chinese Government And Impact On Economic Growth

Chinese government plays a key role in the transition process, who is a main designer, promoter and controller of reform. The whole process of reform is a process of change from ruling to governance by government, as well a process of change from controlling economy to meddling in economy by government. The result of reform is to make Chinese government a strong one which is reasonable, long-term planned, active and limitedly meddling in economy, and provides assistance, guide and intervention for utilization and integration of social resources, industrial development and planning, growth and development of private enterprises, etc., even sometimes "plays a role as enterpriser to intervene issues it considers necessary". It can not be avoided to study on Chinese economic growth issue without study on the governance mechanism and its impact on economic growth.The centralized system reached the top in Qing Dynasty through a waved change in thousand of years, but rapidly declined in recent100years. The intensification of centralized system can provide effective protective supply, implement river regulation, enlarge domestic market and ensure the smooth flow of materials, thus guarantee the super long-term stable growth of Chinese economy. However,"low rate" resulted in an extremely high expense. In modern times, the centralized system can rapidly promote the economic growth in a short time due to the government transfer enough productive inputs and accumulation from low marginal output industrial department to higher marginal output industrial department through forced strength, so as to break the former path dependence and realize scale effect. But after rapid development in the beginning, the long-term price of this policy exceeded its short-term effect, which led all countries to an economic stagnation with representative of shortage.Efficient economic organization is the key point of economic growth, as it can make arrangement in system and establish ownership to create a kind of encouragement, to make personal economic efforts become activities of making personal rate of return close to social rate of return. Under the background of transition period powerful government, the reason for China to realize economic growth is that when the governance mechanism carries forward the officers’ideal of "ideal person", it objectively realizes the feature of "reasonable person" of officers, and make officers’personal efforts become activities of making personal rate of return close to social rate of return, and government officers can obtain more social capital such kind of hidden prize when they participate in promotion competition. The influence on promoting economic growth reflects on reducing uncertainty, reducing information asymmetry and action coordination.With current governance mechanism, central government is a different body from local government, so the locations of utility curve and utility maximizing are hardly be the same. The local government focuses on the maximizing of local benefits, and is willing to distribute the efforts on increasing economic growth rather than providing public service, whereas central government can hardly realize complete supervision due to information asymmetry, the Only Nash equilibrium of gaming is "the central governmental supervisor will give heavily punishment if the local government do not implement the policy". The remedy measure that central government takes is to classify the macro-control policies, and implement "interview","vote" such kind of measures which emphasize the importance of central policies on those policies the local government has to implement, even to make it directly link up with the promotion of the local officers, so as to form a new Only Nash equilibrium "the local government implement the policies and the central governmental supervisor votes". The gaming activity also exists between upper and lower local governments, even it reflects as "direct annex" in cities and towns. The study also found that the financial pressure is the main course for local government to intervene finance.The present governance mechanism leads to a result that the relationship between the same level local governments behaves as competition or even non-cooperated competition, rather than cooperation, which is considered as "Prisoner’s Dilemma". The government officers consider the positive external effect which is beneficial for competitors as a harmful thing. At the same time the same level local governments carry out the non-cooperated competition, they also carry out frequent and efficient economic innovation action and imitation action, and it appears as a changing mode of "intermediate diffusion type" to promote the sustained growth of Chinese economy.