Fiscal Policy On Stimulating The Residients' Consuption In China

Since the economic crisis took place, the overseas consumption demand has decreased dramatically. The problem of overproduction has become more serious. Because we didn't have a relatively great domestic consumption power, only a limited amount of the surplus could be consumed domestically. It has led to the crisis that the enterprises of the seaside cities in the Southeastern part of China face. These enterprises have been depending on the overseas market for quite a long time. The crisis has led to the failure of many export-oriented enterprises. A large amount of peasants have been laid off. Many workers have become jobless, which has decreased the living standard the residents whose incomes are low, and which has worsen the slack situation of domestic demand. All these have posed a serious threat to our sustainable economic development.The root cause for the insufficiency of domestic demand is that residents'incomes have not been in pace with the economic development, which has resulted in the phenomenon of poor people in wealthy countries. In addition, the social welfare is not in the place, therefore people have no extra money to spend, and dare not spend either.Excess supply is the elementary form of overproduction. It can easily change into excess production capacity, which actually has been popular in China. Before the crisis, the overproduction industries formed complementation with the consumption markets in developed countries, such as America. Thus the demand in overseas market covered the shortage of the consumption demand in domestic market, helped to deal with the excess production capacity, and lowered the possibility of overproduction crisis. After the crisis, western people were punished for their lifestyles which depended on overdraft, deficit spending and excessive consumption, which led to the dramatic shrinkage of our overseas market. If the developed countries take rigid measures of trade protectionism to protect their own economies, restrict the exports of the relevant commodities, or fall out with our country and impose economic sanctions against us, the exports of our products will be even more insufficient, which will lead to overproduction or even economic crisis.With the improvement of our economic level, the cost advantage is becoming smaller and smaller. It is a natural outcome. The model effect of our pattern in the surrounding countries such as those in Southeastern part of the world has challenged our cost advantage. Meanwhile, our economic development has not broken away from the traditional way of pollution by western countries first and then treatment. In a substantial amount of places of China, with the rapid economic development, we have paid heavy prices for the environmental pollution. Most of the export-oriented enterprises are of high energy consuming and heavy polluting. The developed countries on the one hand enjoy the comfortable lives which are brought at the cost of pollution and the consumption of energy in China, and on the other hand blame the environmental pollution and the heavy social cost on us Chinese. In order to support the exports, our government has relinquished many tax rights. Out of various reasons, the market economy of China has been widely recognized. Whenever there is a sign of disturbance or trouble, the export-oriented enterprises will face the challenge of anti-dumping. The price advantage brought by our government's tax release will come to naught immediately. The loss outweighs the gain.Within ten years China has faced the financial crisis from foreign countries. We took the policy of expansion twice. What was the difference between the problems we faced and the emphasis that we put when the two crises was ongoing? Only when we give a good answer to the question can we change the crisis into opportunity. Insufficient domestic demand implies that the policy of expansion has only solved the superficial problem, and has not solved the problem of social development radically. If the infrastructure is robust, residents'consumption, especially that of the residents in rural areas and the residents'sustainable consumption have become the problems that we have to face. The economic crisis and the shrinkage of the foreign demand have helped to develop a reversed transmission of the pressure for easing monetary condition, which forced Chinese government to make a downright determination to solve the quality problem in economic operation. If we can solve the problem well, to China the economic crisis is more of an opportunity than a crisis.The dissertation reaches its goal by three methods. Firstly, the interdisciplinary study has been carried out. The finance, economics, consumption economics, ecological economics have been combined. The study has focused on the comprehensive analysis and processing of information. We expect that a new perspective to study our residents' consumption demand can be found out, a universal rule which affects the residents' consumption demand and the particularity of their consumption can be explored. Secondly, a comparative study has been done. It includes both the longitudinal comparison between the historical data and the lateral comparison among the synchronous data of many other countries. By comparison the particularity of the residents'consumption has been probed and the adaptability of foreign experience to the special circumstance in China has been tested. Thirdly the empirical analysis has been done. The comparative analysis is based on the empirical analysis of a large amount of data. The historical data have benefited summing up rules and have given persuasive help to testify the arguments and the grounds of arguments. By way of positive analysis, demonstrates the fiscal policy effectiveness in stimulating consumption, and then explain the many tax tools, which stimulation is more conducive to stimulating household consumption in China.The dissertation is composed of two parts which are seven chapters. The first part is a comprehensive elaboration on current status and theories. It has introduced the development of consumption demand theories both in China and abroad. It has also presented the study of relevant taxation policies on enlarging domestic basic need proposed by scholars home and abroad. The residents'consumption demand is difficult to enlarge because it is under the thumb of consumption capacity and effective supply capacity. The water chestnut with two pointed ends is used to express the constraints. The right pointed angle represents income constraint, while the left one represents that of the resources provision. Because of the author's limited study ability, the new concept does not mean a new theory. The author has only attempted to make a correlation analysis of the income constraint and the resource constrains which have significantly affect the residents consumption demand in order to expand the knowledge of the factors which affect residents'consumption demand and to make out the corresponding solutions. The part is composed of the first four chapters.Based on the first part, the second part has made a detailed analysis of the diamond constraint on our residents'consumption demand, and has demonstrated the causes, effects and the financial countermeasures of the income constraint and the resource constraint. In terms of income constraint, the author focuses on the institutional difficulty that the current fiscal and taxation system faces when breaking the income constraint. In this part the author has pointed out that the fiscal expenditure system can be more effective than taxation policy. It has been proposed that we should establish new taxation system which is just and fair. The author has advocated that we should take the reformation of property tax seriously and that we should concentrate on cultivating the middle class. In terms of resources constraint, the author focuses on how to promote the upscaling of the industrial structure by fiscal and taxation policies and how to direct residents to consume sustainably. The part is composed of chapter 5, chapter 6 and chanpter7.After study, we have found out fiscal and taxation policies have a great effect on solving the problem of our residents'underconsumption. In order to realize it, we have to establish a new fiscal and taxation system which is directed by fairness, justice and sustainable development.Increasing residents' consumption has been an issue which has been studied extensively in China. It is difficult to bring forth new ideas. After detailed study, the author has proposed the following personal viewpoints. Firstly, the concept of "diamond constraint has been proposed for the first time". The nuclear concept is that in short terms the residents'.consumption is restricted by income constraint and that in long terms it is restricted by resource constraint. After the concept was proposed, the constraints on our residents'consumption demand have been integrated. It can help to plan and solve the underconsumption of our residents, and clarify the government officials'train of thought. Thus they can formulate the policies with a well-defined objective in mind. Thus the efficiency of formulating and executing the policies can be increased. Secondly the concept of "basic consumption" has been defined. The nuclear concept is when people consume, they only take the usefulness of entities into consideration without considering other factors which belong to the consumption of the low level. The functionality of the consumer goods should be the focus of consumption. The other factors such as environmental protection are restricted by the income factor and can be ignored. Thirdly the concept of "sustainable consumption" has been developed. The concept is not new, but the breakthrough is that the link between resource constraint and income constraint has been established although the correlation between them is not so strong. The correlation shows that when the income constraint is not so restrict the sustainable consumption can be developed into a consumption demand of a high level. Fourthly, by comparing the different income structures before and after the reallocation, we can draw the conclusion that the regulating function of the current taxation policies is weak, and the method of fiscal expenditure, which can be used to solve income restraint, can be more effective. Fifthly, the new tax system of "being fair and just" has been established. It has been advocated that we should deal with the property reformation prudently, and cultivate the middle class in China.The dissertation touches upon economics, fiance, ecological economics and consumption economics. My knowledge is limited; therefore I could not have an excellent command of everything. I can not escape the circumstance when I know how but do not know why, or even when I make a mistake. Some of the new viewpoints are not mature, and they are personal.