The Correlation Analysis Between The China's Fiscal Decentralization Practice And The Financial Difficulties Of Counties And Townships

In recent years, many local governments have been facing financial difficulties. For example, the contradiction between financial revenue and expenditure is sharp, the outstanding salaries are general, the disposable financial resources to the local finance are limited, the actual debt burden of local governments is heavy, the financial risk of county and township governments is becoming more and more bigger,and so on. Some of them already imperil the implementation of government function, and it is likely to evoke financial crisis. If let it go on like this, it will influence even the whole finance system. Against the background of the total abolition of agricultural taxes in 2006 and post-financial crisis era, the financial resources of the county and township finance face shrinkage, giving an impact on the financial revenue and reducing the counties and townships finance's ability of self-financing,which make some counties and townships finance more difficult. Finding a path along with which the counties and townships finance develop and an access to overcome the financial dilemma have already turn to an important and real issue.To solve the problem causing by the counties and townships financial difficulties, firstly we should find out the causes of them. After briefly analysing in several possible causes, the thesis finds out that the China's fiscal decentralization practice exhibits characteristic of one ring linked with another. It makes the government at the higher level to form a logic and thinking to set about concentrating funds, which has a crucial correlation. Expecting to solve the problem on systemic reforms through the study.In chapter two, the paper makes a research on the fiscal decentralization and the counties and townships financial difficulties, and establishes the theoretical basis of thisthesis. Combing the theory developments from the classic to the generation.Listing some common perspectives of domestic scholars'study. Then introducing the academic community primarily concentrate on the causes and solutions of the financial difficulties. The content in chapter three is about the China's fiscal decentralization practice. As the state council promulgated in 1980, fiscal system of China came into a substantial decentralization stage since then. The paper insists that 1980 should be the parting line between centralization and decentralization. At first, dwelling on the the China's Fiscal decentralization practice by five stages. At the same time of Recognizing the achievement of reform, pointing out that there are still some problems in the reform at present, such as the unsymmetrical in intergovernmental financial authority powers and expenditure responsibilities , the irregular in intergovernmental transfers system , the low level of law-based , a lot of problems in the financial system below the provincial, and so on. At last, pointing out that the China's fiscal decentralization practice has its particularities.In chapter four, the paper analyses the present state of the counties and townships financial difficulties and some possible causes. Choosing indicators to represent the fiscal decentralization and the financial difficulties of counties and townships in the fifth chapter. Analysising with econometric on the basis of establishing a model, drawing a conclusion that there is a positive correlation between the two. After then, the paper puts forward several policy advices in chapter six.The academic community separately study of the fiscal decentralization and the financial difficulties of counties and townships a lot, but on the other hand, the solution is few on the view of the fiscal decentralization. It is the paper's innovation on visual angle of research. Innovatively applicating a large body of data to research on the financial difficulties of counties and townships in the study process. By choosing proper indicators and building a Panel Data model, find out the quantitative relationship between the two and try to design a new system by adjusting the degree of the fiscal decentralization to settle the financial difficulties of counties and townships. The paper insists that regional disparity makes every province to face the different optimal degrees of fiscal decentralization. In this case it is supposed to consider all kinds of factors at the beginning of designing systems to correspond the conditions of each province. The paper's view is that the tendency of reform should flat the financial levels.It is to be highlighted that we can't promote the reform by one side. We should strengthen the main reforms, which will be a huge project even touch deep-rooted and underlying problems about the economic system and political system. It is impossible to achieve a purpose only by local government. There should be an incremental approach and top-down to change.