The Research On The Industrial Policy Of Local Governments From The Perspective Of The Relationship Between Central And Local Governments

During the past 70 years since the founding of the People’s Republic of China,China has made remarkable achievements in its economic and social development and achieved a leap from backward countries to developing countries at the middle-income level.Industrial policy played an irreplaceable role in the process of China’s economic development,especially since the reform and opening up,the Chinese government in giving full play to the role of the market in resource allocation,release and implement the industrial structure,industrial organization and industrial technology as the core of a series of industrial policies,constantly improve industrial policy in industrial structure,layout,organization and competition influence,and the industrial structure has profoundly been changed.Therefore China’s economy maintained a long high growth rate.However,there is no denying that the Chinese government also has encountered a series of problems in the practice of industrial policy.Under the background of the central-local relations,vertical central-local games and horizontal local-local competition have been generated.Longitudinal central and local game greatly affected the local government to implement the industrial policy from above,distorted or even hindered the local implementation of the established policy goals,as well as partly improved policy formulation.Horizontal local-local competition promoted the local government to flexibly use industrial policy tools to develop local economy,formed a fierce regional economic competition and effectively promoted China’s economic development,meanwhile caused resource mismatch and imbalance of regional development.For these problems,this paper makes an in-depth analysis and discussion on the combination of theory with practice,and the main contents are as follows:First,this paper introduces the types of China’s industrial policies,the industrial policy tools mastered by governments at all levels and their characteristics.Then it describes the operation mechanism of the industrial policies of the governments at all levels,especially the land policies,and finally introduces the characteristics of the Chinese local governments in implementing the industrial policies.Secondly,this paper uses three theoretical mechanisms of "Economic federalism",promotion championship theory and entrustment and agency relationship to describe the characteristics the central and local government relations.Then,from these three aspects,we discuss the theoretical mechanism of the vertical game between the central and local governments and the horizontal game of local governments on the implementation of local governments in the formulation and implementation of industrial policies.Thirdly,this paper adopts the method of case study to analyze the impact of longitudinal games between central and local governments on the formulation and implementation process of industrial policies.This paper selects the steel industry regulation policy and "iron-based event",photovoltaic industry policy and development process of photovoltaic industry,and automobile industry policy and the development of independent brands as cases.In the case study,game theory,multi-task entrusted agent model and top-down policy formulation model were used for analysis.At last,This paper adopts empirical research methods to analyze the impact of horizontal competition between local governments on the formulation and implementation process of industrial policies.This paper selects the land policy of local government as the research object and uses the system GMM model in the dynamic panel to analyze the relationship between local officials and local economic and social characteristics and the influence of local competition on land transfer,and the influence of local economic and social environment on the development area of different types.Then,this paper selects the behavior of the local government in setting up the economic development zone as the research object,uses the spatial autocorrelation model to test the comparison effect of the construction of neighboring urban development zones,and verify the existence of the local government using the development zone,an industrial policy tool for intergovernmental horizontal game.At the same time,it tests the influence of the political,economic and location of different cities on the establishment of the economic development zones in China.Through empirical studies,we validated the competitiveness of local industrial policies,proving that the horizontal competition of local governments has an important impact on the formulation and implementation of local industrial policies.Through the combing and description of relevant concepts,as well as case analysis and empirical analysis,this paper verifies the relationship between central and local relations with Chinese characteristics and local government industrial policies,and draws a series of conclusions as follow:1.Local governments have made the use of land transfer policies to regulate local economic growth rate and carry out regional economic competition.The specific policy tools are the transfer policies of residential land and public construction and transportation land.Local governments adopt inverse-cyclical land transfer to regulate local economic growth and carry out local economic competition.However,this behavior only exists in some areas and the working time of the municipal Party secretary is relatively short.With the growth of the working time of the municipal Party secretary,this land policy behavior is gradually weakened.So in general,the relationship between economic growth and land policy is not significant.The supply of industrial and commercial land is negatively related to the working time of the municipal party secretary,and the age of the municipal party secretary;the supply of residential land is negatively related to the age of the municipal party secretary,and the public construction land is positively related to the local financial pressure.Although the transfer of industrial,commercial and residential land is important sources of fiscal revenue for local government,the financial pressure of local government does not have obvious impact on the transfer of these land;the positive relationship between public construction land with no significant relationship to local fiscal revenue is instead and financial pressure.The convening of the Party National Congress has a direct and significant influence on the land transfer behavior of local governments.2.The prefecture-level cities have a significant comparison effect in the establishment of provincial development zones,but the effect of comparison in the national development zones is not obvious,which is related to the differences between the declaration and audit units of the development zone.In the context of central-government and local relations with Chinese characteristics,both political and economic performance are important factors in assessing local government officials.Through the construction,application and development of the development zone,prefecture-level governments can obtain significant political and economic benefits.Since provincial development zones are directly declared by the prefecture-level government and approved by the provincial government,the establishment of provincial development zones can improve the possibility of re-election and promotion of local leaders,thus becoming an important industrial policy tool for prefecture-level city governments for regional competition.Since the national development zone is declared by the provincial government and approved by the State Council,the provincial government comprehensively considers the construction and application of the development zones from the whole province.The prefecture-level city leaders need to obey the leadership of the provincial government,so that there is no comparison and competition between the prefecture-level cities in the establishment of the state-level development zones.3.The industrial policies of local governments may not only amplify the effect of the central policy,but also obstruct the implementation of the industrial policies of the central government.The main reasons for local government to vigorously develop photovoltaic industry are as follow: first,photovoltaic development scale has become the local government achievement project and is closely related to local economic development.Secondly,the relationship between it and the local economic development is positive.As an emerging industry,photovoltaic industry has attracted a large number of domestic and foreign capital in the formation and development stage,becoming a new growth point of local economy in many places,especially backward central and western regions,which is the most important reason why local governments are keen on the development of photovoltaic industry.At the same time,the main reasons for the local government to negatively imply the policy of eliminating the steel industry are as follow: first,weak measures,it is often difficult for the central government to detect the local government’s obstruction of eliminating the backward production capacity of the iron and steel industry in time.Secondly,the relationship between the policy and the local economic development is negative.As the steel industry is the pillar of many local economic development,providing large local jobs,the local government has tried every means to obstruct the implementation of the industrial policy of eliminating the backward production capacity of the iron and steel industry.The automobile policy is similar to the case of the steel policy.Due to the deviation in the starting point of the central industrial policy,such an impact may be both positive or negative.This paper deeply discusses the relationship between central and local governments and the formulation and implementation of industrial policies,and its innovation points are as follow:1.On the research object,this article discusses the central policy relationship on the industrial policy process and results,the current domestic research breadth and depth are not enough,especially in the past research of industrial policy only from industrial structure,macroeconomic,policy effect,ignore the perspective of the central relationship.2.From the perspective of research,it is borrowed from the entrusted and agency model of modern political economy to analyze the formulation and implementation of industrial policies,and put forward suggestions and suggestions for improvement.It is rare to analyze industrial policies from this perspective.3.On the research method,this paper will introduce a variety of frontier analysis method of public policy analysis into theory deductions and empirical analysis of the industrial policy theory,such as game theory,entrusted agent theory in realistic mechanism of industrial policy formulation and execution,as well as space autocorrelation model and dynamic GMM model of industrial policy dynamics which enrich the research content and research method and improve the accuracy of the conclusion.According to research and discussion,this paper puts forward the suggestions:reform the promotion and performance assessment mechanism of local government;promote the balanced regional development of the development zone;and further improve the implementation of local government industrial policies from many aspects.