Institutional Approaches To The Township Debt Research

Since the recovery of township administrative system in China, townships has gone through the transformation in the functions and tax system, and become a thorny issue coupled with three rural issues concerning agriculture, countryside and farmers. The township debts are characterized by the wide coverage, larger size, great regional variation, and increasing expansion in size. It is evident that township debts have greatly impacted on the rural economic development, local government capacity, social stability and new rural areas movement in China, and become a pressing and thorny issue to Chinese central and local governments.This thesis is composed of six chapters, ranging from background, theoretical foundations, current situation, institutional formative mechanisms and solutions. The thesis systematically reviews the current researches on government debts and adopts the institutional approaches to give a deep analysis on the township debts in China. It makes conclusions that institutional milieu consisted of administrative system and government function and financial system generates the township debts in China. On the one hand, in terms of administrative system, the function distortion, expansion of government staff and agents, centralization of official power, competitive performance assessment system lead to the rise and expansion of township debts. On the other hand, weak tax base, mismatch between government capacity and financial ability due to tax and fee system reform, and irregular fiscal transfer from the higher governments to township government shrink and weaken the township financial base. In addition the interplay between the administrative system and financial system gives rise to the contradictions during the institutional reforms. Thus the township debt issue lasts and is hard to find effective solutions.Based on the systematic analysis on the formative mechanisms this thesis puts forward a package of solutions to the township debts with regard to tax reform, financial transfer payments, government function reform, government organization and performance assessment.