Demand Structural Adjustment Oriented Fiscal Policy In Transition

The deflationary trend appeared in china owning to the double effects of Asia finance crisis and domestic supply and demand transformation in 1997. China government started the active fiscal policies which main content were increasing public debt and constructing infrastructure on July in 1998, on the condition of continuous economic growth slowdown and price fall after several monetary tools had been used.The paper estimates the whole effection of recent years' fiscal expantion through construct the IS-LM model. Result shows that aggregate demand increased markedly during the 10th Five-Year Plan but investment grown faster than consumption after 2000 which resulted in the ratio of consumption and investment decreased continuously from 1.57 in 1999 to 1.04 in 2005.The market mechanism of imbalanced domestic demand structure is also disscused based on savings distributary in this paper which reveals low investment efficiency is the ultimate cause of high investment growth while many causes include capacity, motivity, structure, habit and environment induces low consumption growth. Inconsistent domestic demand structure conceals enormous economic costs and risks especially resouce waste, environment deterioration, bank risk rising and resident payment dropping, etc.In order to understand the issue clearly, the paper reflects the carrying course and character of the recent years' fiscal expansion policy and summaries the practice experience of overseas fiscal expansion. A new transfer idea and several concrete advices are put forward at the end of the paper which emphasizes improving economic growth quality and adjusting domestic demand structure especially.