A Study On The Problems Of Public Investment In China

In this dissertation, public investment is separated from the total investment in order to study the structure, size, effect and institutions of public investment. With the rapid economic growth since China's reform and opening-up, substantially increasing investment plays a significant role. Therefore, the answers to China's public investment that whether or not the structure is reasonable, the size is right, the effect is satisfactory, and the institutions is perfect are positively significant to ensure a sustained, rapid and stable economic growth.The main conclusions of the dissertation are as follows:1. The main factors of public investment include the budget constraints and fiscal expenditure structure, the ability of private investment, the targets of economic growth, the needs for the coordinated development of regions and rural area.2. Along with different stages of economic development, public investment shows different optimal sizes. Firstly, the optimal size of public investment is related only to the slope of TSC line in the short term, but also to the level of TSB in the long-term. Secondly, there are different optimal sizes in different nations because the economic development level and the definition of public investment are different. Thirdly, the "the supply curve of public investment", the collection of all the optimal size points, is the guidance and reference for government to take public investment policy. Fourthly, it is estimated that China's public investment optimal size in 1981-2007 is 15.26%.3. In the dissertation, China's data in 1981-2007 are selected to verify the trend of the change and optimization in public investment structure which is in line with the general law. While, with past 60 years of P.R.China's economic development, four stages can be divided with public investment structure: High single degree stage, Progressive reform stage, Partial adjustment stage and Comprehensive optimized stage.4. In this dissertation, output effect of the whole public investment, human capital and R&D investment are discussed by using the statistical data separately. Firstly, the absorptive capacity of economic entity is weak because of external environments and internal system, which makes the output effect insignificantly. Secondly, under the influence of policy, the private investment is seriously crowded out and made little contribution rate of economic growth. Thirdly, the labor factor is more obvious to the economic growth for the reason that the extension growth pattern remains a dominant position. 5. Demand orientation of public investment was neglected and supply orientation of economic growth goal has been used all the way on the contrary in a long-term, which is the most important factor leads to serious shortage in public investment, the unreasonable structure of the distribution, inadequate effects of public investment and so on. It is imperative that the government should define the scope of the current phase of public investment and guide correctly public capital flows to promote economic growth rapidly, reform the current system of public investment and establish a sound monitoring system to ensure the healthy operation of the economy, clear the objective of the current public investment and enhance the capability of independent innovation to support economic progress, improve the current public investment effect and speed up the growth pattern to upgrade the quality of the overall economy.6. Suggestions about the 4-trillion-yuan stimulus package as follows: Firstly, the government should estimate the actual results of these funds objectively and prudently, make up positive supporting policies to stimulate private investment and start domestic consumer demand. Secondly, the financial crisis brings about the opportunities of re-adjustment of global industrial chain and assets, which gives us a rare opportunity to catch up to the developed countries. Thirdly, the government should do a good job on guidance and supervision of the 4-trillion-yuan investment plan. Fourthly, the government should take this opportunity to deepen the socio-economic reform in order to narrow the gap between the rich and the poor, to promote social justice and equity.