Researches About The Influencing Mechanism Of Decentralization With Chinese Style On Economic Growth

Looking all the way back to October 1st 1949 and till now,China' s central government has carried out a lot of different policies which were related to decentralization.All of these decentralization related policies have played various kinds of significant roles for China's economic development.From the early governance status of administrative,fiscal and economic centralization,to the 20th century's 80 to 90's status of administrative centralization,fiscal and economic dentralization,then to the most recent ten years' administrative,fiscal and economic decentralization,during these periods,all these different sorts of decentralization and centralization have laid great foundation for our country's marvelous economic development.The decentralization policy with Chinese style is a combination and summarization of western decentralization theories and China's own economic and social systems' charateristics.For this paper,decentralization with Chinese style includes fiscal decentralization,economic decentralization and administrative decentralization featuring the streamline administration and delegate more powers to lower levels,usually called“Jian Zheng Fang Quan" in Chinese,which are all in Chinese style.This paper will look deep into the formation background of decentralization with Chinese style.The first step is to explain the definition,history,meaning and characteristics of decentralization combined with the understanding of federalism in a general perspective;and then this paper will take a few paragraphs to look into the development process of the federalism of developed countries,and discuss market-preserving federalism.What is more,on the basis of analyzing the relationships between central government and local governments,centralization and decentralization,this paper also reflected the connections and relationships between "Fen Shui Zhi" tax sharing system and tax system reform;and this paper also looked into the contributions that "Fen Shui Zhi" tax sharing system and tax system reform had made to our country's economic growth and also mentioned the mechanism behind it.At the same time,this paper made a comparison between the decentralization with Chinese style and the federalism with Chinese style,and believes that under the market-preserving federalism with Chinese style,the brand new decentralization with Chinese style has pushed China's economy onto a long lasting,high speed and stabilized growing track in an effective and efficient way.Then,this paper also digged very deep into the relevant theories about the relationships between all these decentralizations and economic growth.What is more,it also added some detailed background information,for instance,the background information of our country' s state owned enterprises,to smooth the understanding of the mechanism between decentralization with Chinese style and economic growth.Furthermore,this paper utilized both words and graphs to explain the complicated relationships between decentralization with Chinese style and economic growth.Later,this paper puts forward a few research hypotheses:under the current tax sharing system,further fiscal decentralization from the central government to the local governments will speed up the growth of China's economy;meanwhile,as "Jian Zheng Fang Quan" moves on,the economic growth in the provinces of China will go up;and a deeper degree of economic decentralization will lead all the China's provinces' economy to develop in a more rapid way.To test the rightness of the mechanism and hypotheses behind the relationship between decentralization with Chinese style and economic growth,this paper used provincial panel data set and fixed-effect model to conduct an empirical study,and had the following conclusions: firstly,the relationship between fiscal decentralization with Chinese style and economic growth is non-linear,which looks like a reversed "U",proper fiscal decentralization will push China's economy forward,but not when the fiscal decentralization level stepped over the perfect point; secondly,at the beginning period of "Jian Zheng Fang Quan",it temporarily pushed China's economy backward,but it will have a positive effect on China's economy in the long run;thirdly,the relationship between economic decentralization with Chinese style and economic growth is also non-linear,which looks like a reversed U",proper economic decentralization with Chinese style will have a positive effect on China's economic growth,but if it stepped over the perfect level,it will also slow China's economy down.To better ensure China's economy moving onto a stabilized and long-lasting growth track,this paper provided three suggestions:first,deepen fiscal decentralization with Chinese style,and maintain a long-lasting momentum for economic growth.The main way is to gradually build a modern fiscal system,set up modern governmental fiscal relationship,and deepen the tax system reform.Second,deepen economic decentralization with Chinese style,to pave a better developing road for non-SOEs to play a bigger role in China's economic growth.To fasten the supply-side structural reform and mixed ownership economic reform will be effective for deepening economic decentralization with Chinese style.Last,deepen administrative decentralization with Chinese style.This will help unleash inner potential of economic growth.It is also helpful to maintain a healthy relationship between government and market,and then ensure stable and effective economic growth in China.