Financial Support To The Promotion Of The Old Industrial Base Of The Northeast

Since the implementation of developing the old industrial base of the Northeast, the demand to the financial support to promotion of the Northeast is more and more urgent. Theory and practice indicate that the promotion of regional economy can't leave the development of the regional finance. The later is important factor to the former. However, the relatively low financial level in the Northeast China has restricted the function of finance extremely that supports the development of the Northeast economy. Therefore, how to stimulate the development of finance in Northeast, has become a important problem that should be solved as soon as possible. This paper bases on Economics theory, makes reference to the successful experience in regional developments domestic and international, and according to the conditions of the finance in the Northeast, and finally, proposes concrete measures on financial support to the development of Northeastern economy. Chapter one in this paper introduces relevant theories of classical economics, relevant theories of development economics and financial theories on development, which supply theoretical basis to the financial support to the promotion of the old industrial base of the Northeast. Relevant theories of classical economics include Adam Smith'viewpoint about capital and Harrod-Domar Growth model. Relevant theories of development economics include R.Nurkse's theory of vicious circle of poverty, W.W.Rostow's theory of the Stages of Economic Growth, Lewis-Fei-Ranis Model, and Nalson's theory of low-level equilibrium trap. Financial theories on development include Goldsmith's theory of financial structure, and McKinnon& Shaw's theory of financial deepening. This chapter then illuminates directive significance of these theories on financial support to the promotion of the old industrial base of the Northeast. At last, this chapter illuminates important effect of regional financial development on regional economic growth. Chapter two analyzes the conditions of the finance in the Northeast. Firstly, to some extent, finance in the Northeast supports economic development in the Northeast, which include: 1) seting up the regional financial system in conformity with market economy tentatively. 2) loans and deposits of financial institution increasing fast. 3) keeping away and dissolving financial risks. 4) financial supervision being strengthened constantly. 5) the financial service innovating constantly, the service efficiency of the fund being improved. At the same time, this paper points out that the financial operation in the Northeast has some problems that can't be ignored, which include: 1) the financial institution being poor-performed, indirect financing being restricted. 2) the development of capital market lagging behind, the direct financing channel being not smooth. 3) the national monetary financial policy makes the financial inferior position in the Northeast. The relatively low financial level in the Northeast China has restricted the function of finance extremely that supports the development of the Northeast economy. Therefore, effective measure must be taken to promote the development of the finance in the Northeast, further, give full play to Northeastern finance to support the development of the old industrial base. Chapter three introduces successful cases of domestic and international regional economic development. The successful cases of domestic regional economic development include special economic zone development in Shenzhen and Pudong, Shanghai economic zone development. The successful cases of foreign regional economic development include development of western regions in U.S.A. and Hokkaido, Japan development. Both the successful experiences in domestic area and in foreign area show that to make the effectual regional financial policy is an important insurance to succeeding indevelopment of regional economy. Although differences on regional economic form exist and the successful experience may not function in another place, it could more or less give people some references, which may work as the reference to the making of the financial support policy to the old industrial base of the Northeast. Finally, this paper puts forward the concrete measures of developing finance of the Northeast. These measures include the following respects mainly: 1. Dissolve the non-performing assets, promote the indirect financial ability of the state-owned commercial bank. This is one of primary problems to be solved in developing Northeastern economy, which includes: 1) As for the non-performing assets caused by the policy reason, the country should compensate. 2) As for the non-performing assets caused by enterprise's reason, strengthen the reform of the state-owned enterprise, improve the profit level of state-run assets, take precautions against and reduce the non-performing assets. 3) As for bank-operational non-performing assets, should separate the new non-performing assets from the old one, use various kinds of innovative policies and methods to deal with non-performing assets. 4) Accelerate the system reform of the financial institution, take precautions against financial risks effectively. 5) Improve the credit environment in the Northeast actively. 2. Develop the capital market, strengthen direct financing, which includes: 1) Unblock financing channel, develop and foster fine enterprises entering the stock market and bond market to carry on direct financing . 2) Advance the pluralism of the investment subject and diversification in the financing way. 3) Advance the construction of second board market actively, offer the sufficient financing channel for enterprise run by the local people of the Northeast. 4) Support the development of securities traders, support their listing actively, make them give full play to the role of intermediary in operation of capital...