Research On Effects Of China Financial Expenditure On Agriculture

Agriculture is the foundation of national economy. It not only provides basic living condition for humanbeings and provides the base for production activity, but also its incremental productivity is the origion and foundation for industrialization. Stably developing agriculture is substantial to guatantee suatained national economic development. Every country stresses on agricultural development. Especially for such a developing country as China which has a huge number of agricultural population, it is particularly significant to enhance the agricultural development. It can not be ignored that there is still weakness in agriculture and the conflict of incongruity between agriculture and the whole national economy has appeared increasingly. Agriculture is so important that government must support it either from the nature of agriculture or from the function of public finance.Since the reform and the open policy, China government has stressed on agriculture and arranged certain expenditure on agriculture every year. There are several indexes to measure a country'agricultural development, such as agriculture economic growth , the level of farmer's income and the output of the food staff. This paper makes a positive analysis qualitatively and quantitatively on the effects of government expenditure on the three former aspects separately based on three angles: the expenditure size, the structure and the method of agricultural expenditure.In terms of the size of agricultural expenditure, it can be concluded that government expenditure has surely promoted increasing agriculture GDP, agricultural output and the farmer's income. The elasticity coefficient in order is 0.38, 0.15, and 0.88. Further increases are projected for the future.In terms of the expenditure structure, it can be concluded based on positive analysis of the size of each item relative to the size of the total expenditure that Assistance Expenditure on Agricultural production contributed the largest, with coefficient 1.36; the second is Expenditure on rural infrastructure, with coefficient 0.96: the third is the Expenditure on Utility of Agriculture, Forest, Water and Weather, with coefficient 0.61; and the least one is the Expenditure on Relief, with coefficient 0.5. Based on the effects on food staff production of expenditure structure, the same order is got for the variety of expenditure, and the coefficient are 3.4, 2.95, 2.33, and 0.29 separately. On the point of the rural area'development, the structure promoted the construction of rural infrastructure and upgraded the contribution rate of agricultural technology and advancement.Concerning the method of agricultural subsidy, China government enforced price subsidy to agricultural product before 2004, and since then direct subsidy and price subsidy have been enforceed together, among which direct subsidy primarily includes Food Staff Direct Subsidy, Subsidy to Purchasing Agricultural Machine and Seed Subsidy, which are referred to as the three subsidies. Through analysis of its effects, it can be identified that Price Subsidy failed to increase the farmer'income and the output of food staff, in contrast, it undermined the farmer's benefit, nevertheless, it accomplished the goal to stable food staff price, to ensure the citizen's life, especially to ensure the basic living level of city residents. While the three subsidies increased the farmer's income and food staff output effectively. Nevertheless, there exist problems as less size and the lack of subsidy method.Tax expenditure as a special expenditure method took an important role in encouraging the activity of tax payer, in alleviating taxpayer's economic burden and in promoting economic development, so it is commonly used by countries. Agriculture tax imposed the past years that taxed agricultural income was cancelled in 2006. This is expected to be a great strategy to support agriculture and it is sure to effectively increase farmer's income and food staff output.Government expenditure surely promoted the agricultural development, while there still exist some elements that discouraged its effects: 1) not enough financial capital. Much higher or much lower expenditure size is uneconomic. Conceptually, there exist optimal scale for agricultural expenditure, consequently, this paper works out the optimal scale based on qualitative and quantitative analysis, and then finds out that there is a pretty large difference between the real expenditure and the optimal expenditure. It is still identified that the expenditure scale is small compared with other countries. So conclusion can be drawn that less expenditure is a important element that restricts rural development. 2) unreasonable expenditure structure. Under certain expenditure scale, how to arrange the proportion of each item accounting for the whole expenditure will directly affect the effects of financial agriculture expenditure. This paper concludes on the basis of econometrics model that the proper composition in proportion order of each item relative to the total financial agricultural expenditure is: Expenditure on Aid to Rural Production, Expenditure on the Rural Basic Construction, Expenditure on the Utility of Rural Forest, Water and Weather, and Expenditure on Aid to Rural Relief. While the real order is Expenditure on the Utility of Rural Forest, Water and Weather, Aid to Rural Production, Expenditure on the Rural Basic Construction, and Expenditure on Aid to Rural Relief. Clearly, this structure is unreasonable. 3) the method of subsidization to be perfected. Agricultural subsidies include price subsidy and direct subsidy. Each kind of subsidy has different effects on rural development in different period and different under different economic condition. Price subsidy should be decreased and direct subsidy should be enhanced as reforming and perfecting the circulate system. 4) the efficiency of using financial expenditure to be increased. Under certain expenditure size, composition and method, to what extent that the expenditure is used effectively becomes a important factor to affect the effects of agricultural expenditure. Practically, the real effects are restricted by the problems existed in the management system.Focusing on the factors that restricted the effects of agricultural expenditure, this paper presents following solutions: 1) increase the size of agricultural expenditure; 2) optimize the structure of the expenditure; 3) adjust methods for agricultural subsidy; 4) further perfect the management system and increase the efficiency of running financial capitals.