Research On The Problem Of Excess Capacity During The Period Of Transition In China:Measurement,Cause And Influence

Since the mid 90s to get rid of shortage economy,it began to appear the phenomenon of excess capacity in China.After the international financial crisis in 2008,our country is facing a new round of excess capacity.Compared with the first two rounds of excess capacity,the excess is wider and deeper.In general,excess capacity has become one of the most prominent macroeconomic risks.After 2000,the central government issued a series of governance policy,but the effect is not obvious.For example:(1)some industry with serious overcapacity still has a batch of under construction and proposed projects,which rising the excess capacity risk;(2)it was a difficult task that eliminating the backward capacity,due to the backlash and backstabbing behavior of some local government;(3)the inefficiency of enterprise innovation causing it difficult to industrial upgrading,which makes our country have long faced the plight of low capacity excess and high capacity insufficient;(4)it is difficult to expand the domestic demand in the short term and transfer the excess capacity to overseas under the background of reduced external demand;etc.From the perspective of theoretical research,the existing literature mainly focused on the connotation,causes and governance of capacity and so on.Due to the uniqueness and complexity of problems,a lot of discussion has not yet formed consensus.In addition,the existing literature still need to further improve and expand,such as the analysis of the causes of excess capacity is too one-sided,the excess capacity measure and related empirical research is still thin,the governance policy discussion remains to be further indepth,etc.On the basis of existing research and in view of the shortcomings,this paper studied the measure,cause,influence and governance issues of excess capacity in China during the period of transition,using a more rigorous theoretical analysis and detailed empirical analysis.Therefore,it has certain theoretical and practical significance.This paper used the cointegration method and the stochastic frontier production function method to measure industrial capacity utilization of China's 30 provinces in 2001-2011,and empirical decomposed the effects of different factors on the capacity utilization.The study found that:first,the regional industrial capacity utilization by two methods are basically identical.Second,the change of capacity utilization shows obvious economic cycle characteristics.Third,the capacity utilization of the eastern region is lower than the central and western regions,the reason may be that excess capacity can be quickly reflected to the capacity utilization index in the eastern region because of a relatively perfect market.Fourth,the scope of excess capacity in China is gradually expanding.Considering the indexes of business inventories and benefit in each area,we found that the situation of industrial enterprises in China is not very ideal,especially the inventory digestion task of enterprises in the central and western regions are more serious than the eastern region.Fifth,market,government intervention,and the economic cycle are important factors which affect excess capacity.The relationship between capacity utilization and market factors is a dynamic change,and there is a significant positive correlation relationship between economic cycle and capacity utilization,and the government intervention is the most important factor which affect excess capacity in our country,especially in the eastern region.Secondly,we explain the formation mechanism of China's excess capacity in transition period by building a absorbing model.China's excess capacity is the result of joint action of many factors such as government and market,etc.which is different from developed countries.In the current transition period,the government intervention the most important reason to the formation and deterioration of excess capacity in China.The government intervenes on enterprise behavior mainly through the signal transmission and the soft budget constraint.According to the absorbing model,the causes of excess capacity in the developed countries can be summarized as"enter control" relying mainly on market factors,but in China is "enter and exit control" relying mainly on the government intervention.Government intervention leads a large number of enterprises to enter individual industries and overcapacity enterprises hard to exit.The enterprise behavior of pursuit profit and market share makes excess capacity more seriously.The resolving mechanism failure is the reason to China's excess capacity exacerbated and difficult to control.Due to the economic reality at home and abroad,the condition of export and domestic demand is difficult to change in the short term.This paper also analyzed the reason of the lack of innovation and the formation of exit barriers.Then,this paper empirical analyzed the influence of vertical industrial policy which as an important gripper of government intervention on excess capacity.After the regression of China's panel data of 28 manufacturing industry from 1999 to 2011 using the dynamic panel system GMM estimation method,we found that the effect of industrial policy on excess capacity was significantly negative,and industrial policy caused excess capacity by two channels which were encouraging enterprises enter and limiting exit.Further,the higher proportion of small businesses,state-owned enterprises and low technology,the more likely to cause excess capacity by industrial policy.In addition,the influence of different policy tools for overcapacity is not the same,such as:(1)reduced taxes will cause a decline in capacity utilization which are significant positive correlation;(2)the relationship between trade protection and capacity utilization is significantly positive,and the increase of trade protection degree will improve capacity utilization in the short term;(3)there is a significantly negative relationship between innovation subsidies and capacity utilization,and government subsidies for innovation efficiency has a negative effect.Again,this paper analyzed the impact of excess capacity on macro economic fluctuation.We suggest that:first,excess capacity will directly lead to economic fluctuation caused by the change of enterprise capacity utilization,and there is a significant positive correlation relationship between the two.Second,excess capacity will also influence economic fluctuations through the mediation effect of factor market distortions.The mediation effect of capital market distortions and factor allocation distortion is significant except labor market distortions,and the capital market distortions and factor allocation distortion show incomplete mediation effect.Third,the direct effect of excess capacity on economic fluctuations is greater than the mediation effect caused by capital market distortions and factor allocation distortion.Finally,this paper studied the management ideas and measures of China's institutional excess capacity mainly adopt the method of theoretical analysis and logical deduction.We think that the management policy failure of China's excess capacity for a long time is influenced by many factors,such as the error of policy type,there may be deviation between policy and market,policy conduction path is blocked,and the defect of institutional environment,etc.The governance of institutional excess capacity in China cannot and should not copy the experience of developed countries,and the negative list management may be an effective way for governance of China's institutional excess capacity,which the difficulties and obstacles mainly includes:unreasonable industrial structure and the transformation of government function.Among them,the top priority is to accelerate the transformation of government function.In terms of government transformation and horizontal governance policy,we put forward suggestions,such as:gradually using economic regulation instead of administrative control,strengthening the coordination between departments,eliminating hidden barriers,perfecting the credit control,encouraging enterprises to "go out",promoting enterprise in-regional or cross-regional mergers,improving enterprise innovation efficiency,etc.