Research On The Economic Development Led By Chinese Local Governments

The economic and social development cannot be separated from the government no matter whether in developed countries or in developing countries. Hence the government's function in the economic life is one of the fundamental points deeply concerned by the economics. However, people have different understandings to the government's function in various historic development stages. Generally, the government, which plays an important role in leading the development of society, economy and culture, is a governing body for state and social public affairs. With the evolution of government's functions, the government's economic function has also undergone a developing and changing process and become more and more important in the economic life.The government always consists of various administrative levels, thus central and local administrations are inevitably divided in most countries. Chinese local governments are a generalized"government unit"composing of local party committees, legislature organs, judicial organs and administrative organs, which centrally represents national conditions in China. The relationship between central and local governments directly affects the functions of local governments. For the relationship between central and local authorities, Marxism provides a theoretic guidance for dealing with that relationship in China. In general, as an administrative level in the government system, local governments'role, functions as well as their effectiveness are certainly affected by the existence purpose, development stage, political and administrative setups and economic operation system of a country. Since the founding of the People's Republic of China, the role mode and economic function of Chinese local governments were varied in different development stages. Under the traditional planned economic system, the local government is an executing body and playing the role of an executor. But the local government has become a leader of regional economic development and plays a leading role under the socialist market economy system. The leading function of local governments means the"orienting","guiding", and"coordinating"role played by the them via administrative, economic and legal means and with the centering of regional economic sources. The leading function of local governments in the economic development can be divided into three specific levels: leading function in macro-adjustment, leading function in micro-control and leading function in direct participation.Since the founding of the People's Republic of China, the economy in China has undergone a historic course from recovery and construction to development and rapid incensement. Looking back on the 60-years'economic development since the founding of the People's Republic of China, it can be seen that the standing and role of the local governments in Chinese economic development were varied in different historic stages and under different systems and different national policies for regional economic development, and it has undergone an evolution course. The economic development has experienced three periods, i.e. parent-zone system in the initial period of the People's Republic of China, Three-line construction during Great Cultural Revolution and the diverse development in different regions since the reform and opening to the outside world. The parent-zone system period is both the recovery period of national economy in the initial period of the People's Republic of China and the forming period of Chinese planned economy system, and the local government had corresponding autonomy in respect of administrative and economic management systems. Thus, the local governments played a positive role in the economic recovery and construction. The Three-line construction during the Great Cultural Revolution was also in the planned economy system period with high centralization of state power. The local economic development, under the consideration of balanced development of regional economy, had basically formed a state of balanced development. The local governments, which acted as executors of the central government's plans, had played a positive role in the economic development. However, the implementation of decentralization reform and unbalanced national development strategy as well as the readjustment of economic policies since the reform and opening to the outside world had greatly enhanced the autonomy of local governments'actions in the economic development. Under the leading of local governments, Chinese economy had been rapidly developed and resulted in obvious differences between regional economic developments. The local governments had played a non-replaceable historic role in the economic development.However, how the government intervenes in the economy, especially how the local government in a developing country plays a role? Marxism's economic theory, classic industry layout theory, traditional regional development theory and modern development theory provide theatrical supports and enlightenments for the local government to lead the economic development.The positive role played by the local governments in leading economic development and promoting rapid economic increment was reflected by the specific economic actions taken by various regional local governments, which featured universality. Moreover, essential experiences having respective developing features were formed. For instance, essential experiences on leading the economic development by the local governments in the Yangtze Delta include: establishing regional competitive advantage via the planning of local development strategies; constructing growth poles of regional economy via setting up development zones; increasing the level of resources utilization via controlling and resetting basic sources like the land; promoting regional economic development via monopolistic direct investments and running public products. Essential experiences on leading the economic development by the local governments in the Pearl River Delta include: enhance the motive force of regional economic development through institutional innovation; giving plays to the regional competitive advantage via establishing and adjusting regional development strategies; promoting the general adoption of the market principle in the regional economic development via introducing outside production factors. Essential experiences on leading the economic development by the local governments in the"Golden Triangle"of Inner-Mongolia Autonomous Region include: improving benefits of the regional economic development via adjusting regional development layout; propelling industrialization via implementing reverse gradient strategies; enhance regional competitiveness via creating economic development environment. Practices prove that the leading of local governments has played a significant role in the development of regional economy.Everything has two aspects. The autonomy of local governments in leading the economic growth within area under their jurisdiction has caused a series of economic actions with local government as the leading actor and aiming to promoting the economic growth in the area under their jurisdiction, which has objectively accelerated a sustained and rapid development of Chinese economy. However, some problems still exist: the first one is the imperfection of the local government system, which is specifically manifested by weak scientific and democracy of the policy decisions by local government, which causes serious waste to social sources. Moreover, the absence of effective supervision over administrative power has caused administrative corruptions. Especially the administrative evaluation system is not reasonable, which always lead the local government to take short-term opportunistic actions; the second one is the misplacement of local government's functions and severe benefit-driven actions, which appears as taking various means to weaken the implementation of macro-control policies by the central government, so as to maintain local benefits. Moreover, various short-term opportunistic actions are present in the establishment of regional development strategies. For example, local protectionism implemented for maintaining"local economic benefits"as well as the egotistical development strategies enforced during participating in the international and domestic division of labors. Furthermore, the provision of local public products and services during the performance of local governments'functions is neither adequate nor normative. The local governments always give most investments and pay highest attentions to the economic growth-related public products such as the infrastructure in the cities and towns and the like, while the investments in the education, medical care, public security and environmental protection, which should be undertaken by local governments, are inadequate; the third one is that administration tendency is present in the leading manner of local governments, which concretely appears as direct participation of local governments into the micro-economy operation, direct control of abundant micro-economic actions as well as direction interventions in market behaviors.The construction of governmental functions for promoting regional economic development and their operational mechanism is the basic thinking to solve the problems presenting in the economic development led by local governments. The concrete measures fall into three aspects: the first one is to construct a harmonious relationship between central and local governments. The problems occurred during the economic development led by local governments are, at the bottom, due to the objective existence of local benefits and their conflict with the central benefits since the reform and opening to the outside world. Therefore, a harmonious relationship between central and local benefits must be constructed, which includes perfect the division of duties and responsibilities and financial power between central and local governments, intensifying the authority of central government's macro-control, constructing a balanced mechanism for the benefits of central and local governments, strengthening and perfecting the supervision and restriction to local authorities as well as building a reasonable assessment system for the achievements by local governments; the second one is to normalize the obligation of local governments for providing public products, which includes reforming the supplying manner for public products by local governments, perfecting the supplying system of public products, strengthening the supervision and administration in the filed of public products as well as high-lighting the government's obligation for providing social security; the third one is to transform the economic growth led by local governments, which includes establishing and implementing regional economic development strategies under the guidance of scientific development concept, promoting enterprises to increase the capability of self-creation, so as to expedite the transformation of economic growth manner through institutional creations and accelerate the construction of an economical society.