Empirical Research On Government Subsidy Policy, Industrial Restructuring And Urban Efficiency In China

As one of the main measures of Macroeconomic adjustment and control, government subsidy policy has played an important role in th e historical evolution of China’s economy. Besides, the adjustment of industrial structures stipulated in the 12 th Five-year Plan and the effect of global economic downturn on domestic economy have brought the government subsidy policy into the spotlight. Against this backdrop, this paper tries to work out the limitations of this government-subsidy-policy-related theory in terms of industrial structure and urban efficiency. This paper first sorts out relevant theoretical literatures regarding the effect government subsidy policy has on the adjustment of industrial structure and the improvement of urban efficiency, and at the same time, uses relevant data to illustrate the role the current government subsidy policy has played in different provinces, cities an d enterprises. Then, this paper analyses one by one the relationship between government subsidy and industrial structure, the link between government subsidy and urban efficiency and that of industrial structure and urban efficiency. Finally, this paper do es an empirical analysis of government subsidy, industrial structure and urban efficiency through data analysis. In the process of empirical analysis, this paper attempts to answer the following questions:In the implementation of government subsidy polic y, will there emerge any human factor that lowers urban efficiency? How does government subsidy exert its effect on industrial structure? What’s the inherent relationship between government subsidy and urban efficiency? Can government subsidy promote the a djustment of industrial structure? Does the role government subsidy has played in the development of regional economy and the improvement of urban efficiency live up to the government ’s expectations? Does there exist synergy among government subsidy, industrial structure and urban efficiency?The above-mentioned questions bear great practical meanings. By answering these questions, we can get a better understanding of the relationship among government subsidy, industrial structure and urban efficiency. Therefore, this paper, revolving around these questions, attempts to study in a comprehensive manner the relationship between the adjustment of industrial structure and the improvement of urban efficiency in the theoretical framework of fiscal policy and government subsidy policy, and then give answers to these questions.In the initial analysis, this paper holds the view that the government subsidy policy, in some way, exercises a negative effect on national economic growth and social equality. It is found t hat enterprises that have close relationship to the government are given more amounts of subsidies than the enterprises that are less close to the government. However, when it comes to usage efficiency, the latter makes use of government subsidy in a more efficient way. In addition, excessively subsidizing less efficient companies will increase social instability, which will lead to the unbalance of social public interests. Therefore, when the government subsidy policy is put into practical use, it is inevitable that there will emerge some man-made interference that hinders the policy to be implemented to its desired effect.Then it is revealed that fiscal policy is no longer limited to being the extraneous variable of economic growth. It turns out to be th e endogenous variable reflecting national economic growth by elements like education, labor force, technological advance and capital. It indirectly affects the transition of regional economy and industrial structures. Government subsidy policy gives impetus to the adjustment of industrial structure, which is inseparable from its policy framework. By means of tax refund, interest subsidies, free allocation, the policy has effectively achieved its goal in the process of industrial structure optimization and has promoted the transition of endogenous economic growth pattern. Also, this policy will indirectly adjust and control macroeconomic trends through capital element, which not only demonstrates the government’s will to carry out an overall strategic planning but also bears many advantages, for example, it avoids red tape and serves an obvious purpose. That ’s why it is regarded as one of the most important economic instruments to help adjust industrial structures nowadays.In the next chapter, this paper further studies the relationship between government subsidy and urban efficiency. It is found that by implementing government subsidy policy in an effective manner, meaning the government optimizes the allocation of market resources and data collection, it can effectively identify the false information released by corporations that attempt to hunt for subsidies.By financing industries that are more in need of government support, it can promote independent research and development within the industry concerne d and enlarge its scale, which will improve urban efficiency and boost regional economic growth. It is also found that efficient and impartial actions taken by the government can safeguard national laws and regulations, and the supervision system, which pr ovides the industry concerned with a solid i nstitutional infrastructure to reduce the operational risks it may encounter in the process of industrial restructuring and the expansion of business scale. All this will help accelerate the evolution of industrial structure and thus indirectly promote urban efficiency.Based on the research results, this paper finally reaches the following conclusions. First, government subsidy policy does play a positive role in industrial restructuring, which means that by strengthening this policy, it will help promote the industrial structure to shift from secondary industry to tertiary industry. Specifically speaking, of the three major regions(eastern, central and western) in China, the eastern region gives the most impetus with the western region taking the second place and the central region the third place. Manufacturing industries in eastern region are gradually moving to the central and western regions, making the proportion of service industries in eastern region incr ease day by day. What’s more, in eastern region where the government lays emphasis on and gives more subsidies to service industry, manufacture-related service industry accounts for much of the service industry. Because the central and western regions of China are taking over the industries transferred from the eastern region, in these two regions, enterprises of manufacturing industries are more subsidized by the government;Second, devoting greater efforts in the implementation of the government subsidy po licy can help boost urban efficiency in all regions of China. Urban efficiency can be increased through the following four approaches: optimizing the allocation of resources, encouraging the enterprises to take an active part in R&D, increasing the ratio of output to input in research and development, and reducing operating cost of enterprises. From the perspective of regions, in the eastern region, the effect of government subsidy policy on the improvement of urban efficiency is the most obvious, while in the western region, the effect is the least obvious. In the eastern region, the policy is carried out on a larger scale than that in the central and western regions. Also, in the eastern region, more importance is attached to the more efficient manufacture-related service industry, which helps to enhance urban efficiency. Compared to the western region, manufacturing industries in the central region develop much better on a whole. So, of the three regions, the central region witnesses the most obvious effec t of government subsidy policy on the improvement of urban efficiency; Third, government subsidy policy plays a leading role in the upgrade of industrial structure, but the leading role loses its momentum as time goes by. Conversely, the improvement of urba n efficiency has an inhibiting effect on the optimization and upgrade of industrial structure, and this effect will expand over time. As was mentioned above, the strengthening of government subsidy policy will boost urban efficiency, what is worth noticing is that the extent to which urban efficiency is boosted intensifies with each passing day. The optimization and upgrade of industrial structure will also exert a positive effect on urban efficiency, however, as time go on, this positive effect will fade a way.