Research On Public Financial Investments On New Countryside Construction Based On The Perspective Of Fiscal Decentralization

In accordance with the degree of the public nature of public goods, public financial investment in New Countryside Construction can be divided into four categories:social service (mainly concerned with education, health, social security, culture, etc.), agricultural production basis (mainly concerned with agricultural subsidies, comprehensive development of agriculture, agricultural equipment, and helping the poor eradicate poverty, etc.), production infrastructures (mainly including roads, water conservancy, electrical power and communications facilities, etc.), life infrastructures (mainly including drinking water, clean energy, etc.). According to fiscal decentralization theory, the central government should supply public goods with a wide range of social benefits, while the local government should mainly provide local and community-oriented public goods. Thus, focusing on testing the applicability of the classic fiscal decentralization theory to China's financial support for agriculture, this dissertation does research into the public financial investment in New Countryside construction.Firstly, this dissertation surveys and makes comments on the related research status and theory basis. By summarizing the experience of financial support for agriculture in developed countries and combining theoretical models, it explores China's division system of financial investment in New Countryside construction. By analysis of the system, it discovers that the division of responsibilities between China's central government and local governments in New Countryside construction is in line with the principle that division is made in accordance with the range of social benefits. However, in respect of agricultural production basis, there is a serious problem of unclear "horizontal power division" among the central ministries and commissions. Concerning some infrastructures and social service, there is also the problem of seemingly clear but actually unclear "vertical power division". This indicates that the way to perfect the division of responsibility for financial investment in New Countryside construction is to integrate all levels of financial investment funds for New Countryside construction and to reasonably determine the models of supplying rural public goods.Secondly, this dissertation does research on the status quo of central and local government investment in New Countryside construction. It shows that the central government financial investment is characterized by increasingly widening scope of support, incremental reform, gradually quantifying proportions, promoting project investment, etc. Due to the unbalanced power division between governments, the shortage of effective incentive policies, and extremely complicated system of management of funds for supporting agriculture, the support scope and strength, in particular, cannot keep pace with the development of agriculture and rural areas whatsoever. Although there are many ways of raising funds, the investment of them is excessively diversifying. In addition, too much emphasis is put on physical capital investment and therefore human capital investment is neglected. Investment structure of funds needs to be epitomized and efficiency in using them also needs to be boosted. In respect of local finance, county finance corresponds to "education finance" because of the influence of the essential system. The mechanism for supporting New Countryside construction has not yet been formed. Problems exist such as insufficient scale of funds, unbalanced structure, lack of enthusiasm, etc. Meanwhile, the dissertation does research on the disparity between "transfer payment of financial subsidies" and "transfer payment of subsidies for special purposes" for the local governments to support agriculture by investment. It has empirically tested the "Flypaper Effect" hypothesis in fiscal decentralization theory. The way to balance the two kinds of transfer payment is to integrate agricultural supporting funds.Thirdly, given the vast territory and the wide regional disparity in rural areas, this dissertation has done research on the priority order of public financial investment in New Countryside construction in different regions under the fiscal decentralization policy. It shows that emphasis of financial investment should be placed on planning, improving rural infrastructures of weak public nature and strengthening social securities of farmers in New Countryside construction of eastern China. Due to the excessively large number of rural labor force in central China, the focus of financial support is to increase funds investment in farmer training. In western China, financial support for New Countryside construction should focus on adopting the method of transfer payment of subsidies. In northeastern China, one of the main grain production area of China, the financial support of the central government should focus on increasing grain subsidies on a larger scale and compensate the loss resulted from ensuring the nation's grain security.Furthermore, with typical cases the dissertation analyzes the issue of funds integration of county finance under the fiscal decentralization policy. The cases indicate that it is good for overall funds arrangement that building overall coordination mechanism for the integration of agricultural supporting funds and actively doing practice of integrating agricultural supporting funds in advantageous industries and key projects. Neveitheless, the present county integration serving as the major method which neglects the demand of small rural households is not good enough to boost the efficiency of funds investment.Finally, based on the above research, the dissertation puts forward some general ideas and strategies of constructing the New Countryside via optimizing the public financial investment. First, set clear targets of financial support for New Countryside construction. The central government should focus on developing national public properties (services) by way of steadily increasing grain production and promoting people's livelihood, while the local government should concern more about supporting the community construction and farmer business initiations; second, perfect decentralized model of constructing the New Countryside with the public financial investment, and define scope of investment via the New Countryside construction supported by the public financial. As benefit from the different scopes of the effectiveness divide affairs and powers, and utilize the informational advantages of each rank of government to make sure the responsibilities of financial expenditure; third, in recent time, optimize the New Countryside construction in which public financial investment should play a leading and coordinating role, strengthen the budget management of the public finance earmarked to agriculture, adjust the pattern of public financial investment & expense in New Countryside construction, and implement policies of regional differentiation in financial-aiding; forth, optimize public financial investment in New Countryside construction, give support to institutional construction in the long run, form a system of framework of diversified policies to back up construction in rural areas, develop a scientific evaluation on how public financial investment performs in New Countryside construction, and uphold the market-oriented investment & financial system in New Countryside construction.