Research On The Soft Budget Constraints Problem Of The Overseas Investment Of Chinese State-owned Enterprises

Kornai proposed soft budget constraints firstly.With the deep research of manyscholars，the soft budget constraints theory is beyond the scope of the socialisteconomy and has become a more general economics concept and a variety ofeconomic theory. The research content is closely related to many economic subjects. Inreality，the solution of the problem has very strong explanatory power.Since the reform and opening up， especially after joining the WTO， thestate-owned enterprises had step out of the country and started to use“two resources”and “two markets”. Overseas investment is increasingly becoming the important formof the multinational resource allocation of Chinese state-owned enterprises. In recentyears，the overseas investment of Chinese state-owned enterprises expands rapidly，expanding scope and increasing international influence，which fully displays thesignificant growth of the state-owned enterprises and the enhancement of theinternational competitiveness of China. But there are many serious problems in thestate-owned enterprises in the process of overseas investment，such as excessiveinvestment，investment decisions which are not science，huge losses and so on. Themain reason of these problems is the soft budget constraints problem. Based on that,this paper aimes to research on the soft budget constraints of overseas investment ofstate-owned enterprises to find out the root causes and the utility and countermeasures.Also it is important to improve overseas investment efficiency of state-ownedenterprises and the international competitiveness，and ensure the safety of state-ownedassets overseas and increase their value and deepen the reform of state-ownedenterprises and speed up the reform process.This paper studies the soft budget constraints problem of state-owned enterprisesin overseas investment and the full text is divided into seven parts： The first chapter is the introduction. First of all，it is the writing purpose andmeaning. The second is the literatures review，the literatures on the soft budgetconstraints problem and the overseas investment of the state-owned enterprises havebeen discussed for providing solid literature and theoretical basis. Moreover，theresearch ideas and methods and the main research contents and the framework areintroduced. Finally，it shows that the innovation points and shortcomings.The second chapter is the production of the soft budget constraints of overseasinvestment of the state-owned enterprises. First of all，it puts forward the soft budgetconstraints problem of the state-owned enterprises and studies the types and forms andcharacteristics of the overseas investment. Then，it makes the D-M model as the basicmodel to research the soft budget constraints. Also，under the open condition，itgradually introduces the information asymmetry，trade barriers，exchange rate，theparticularity of the state-owned enterprises (unclearing property right，principal-agent，high transaction cost，policy burdens) and psychological factors，enriching the basicmodel， which produce soft budget constraints of overseas investment of thestate-owned enterprises theoretically.The third chapter is the process and present situation of overseas investment of thestate-owned enterprises. This chapter primarily provides a good history and realitybasis for the later analysis of the chapters. Firstly，since the reform and opening up，theoverseas investment process of the state-owned enterprises is divided into severalstages： initial development period (1979-1985)， steady development period(1986-1991)，wave development stage (1992-2001)，the development stage afterentering the WTO (2002-present).It reviews the situation and characteristics ofoverseas investment of the state-owned enterprises in all stages. Then，it analyzes thepresent situation of overseas investment of the state-owned enterprises from theperspectives of overseas investment performance and international influence andoverseas investment field and investment style.The fourth chapter is the main problems of overseas investment of the state-ownedenterprises and the soft budget constraints. Through the analysis of the relations of the soft budget constraints and the problems of high risk of overseas investment and theexcessive investment and the investment insufficiency and the innovation and the lossof state-owned assets in the state-owned enterprises，it points out that the soft budgetconstraints are the keys of the problems. It is necessary to solve the soft budgetconstraints problems for improving overseas investment efficiency of state-ownedenterprises practically.The fifth chapter is the rationality analysis of the soft budget constraints ofoverseas investment of the state-owned enterprises. First of all，this chapter analyzesthat the soft budget constraints is the necessity of market failure. Then，it analyzes thepositive results of the soft budget constraints of overseas investment of the state-ownedenterprises，including speeding up the transformation of state-owned enterprises，protecting the country and overseas investment security，promoting economic growthin specific period. At the same time，it discusses what the appropriate soft budgetconstraints are preliminary theoretically.The sixth chapter is the countermeasures to the soft budget constraints of overseasinvestment of the state-owned enterprises.This chapter discusses the relatedcountermeasures from both the positive and negative aspects. For moderate soft budgetconstraints，it points out that the government should keep or realize the moderate softbudget constraints by constructing efficient fiscal policy system， providing efficientpublic services and creating a good atmosphere.For the malignant soft budgetconstraints，it should further deepen the reform of the system of property rights andperfect corporate governance system and promote the reform of the state-ownedcommercial bank system and promote the reorganization of international state-ownedenterprises and cultivate the entrepreneurship of multinational state-owned enterprises.The last part is the conclusions. It summarizes this paper and gains severalconclusions，including that soft budget constraints have strong vitality and explanatorypower which can be used to study overseas investment of the state-owned enterprises，and that soft budget constraints are essentially externalities problems，and that theroots of the soft budget constraints of overseas investment of the state-owned enterprises are various and complex，and that although overseas investment of thestate-owned enterprises has achieved remarkable results，there are many contradictionsin the system，and that soft budget constraints have the double effects which should besolved classification management measures.This paper studies the overseas investment problem of the state-owned enterprisesfrom the soft budget constraints perspective. It researches the soft budget constraintsunder the opening condition and makes practical innovation which makes up for thedeficiency of the existing research and has the certain innovation. However，therecognition of the essence of the soft budget constraints may have some deficiencies ina certain extent and enlarge its denotation because that the ability of the author islimited. So it remains to be further in-depth researched. In addition，it is hard to collectthe related information of the soft budget constraints of overseas investment of thestate-owned enterprises due to the statistical caliber and secret and collecting ability，such as net profit of overseas investment and main business income overseas and assetliability ratio. So the paper can not accurately expound the situation of overseasinvestment of the state-owned enterprises and its soft budget constraints problem andinfers from the situation of overall Chinese enterprises，and it is difficult to make theempirical analysis between soft budget constraints and the overseas investmentperformance of the state-owned enterprises.Moreover，some theoretical understandingsmay be not comprehensive and profound in the process of using the existing theorieswhich affects the preciseness of the argument because of the lack of the author’scognitive ability. These are all the deficiencies of the paper which constitutes the nextresearch direction.