Financial Discount Operation Mechanism Of Western Development

During the Development of Western China, governmental financial investment should play an important role in it. However, the enormous capital demand, the limited financial fund, and many restraints of financial investment result in the unfeasibility of the way of large-scale direct investment of government. So we must explore a new way of financial investment to meet the need of the market economic system.From the angle of resource allocation in market economic system, the author demonstrates that government should support the development of Western China mainly by policy and assistantly by capital investment to exert the function of encourage and guidance. As a lever mechanism, fiscal interest-subsidy can glue and start the social capital with a small amount financial fund. Its advantage of low risk and no "crowding out effect " make it be the good way of government investment that meets the need of market mechanism. It is necessary and feasible to use this policy in the Development of Western China. In the process of the application of the policy, government should design reasonable mechanisms including the mechanism of supply and demand, the allocation mechanism of interest-subsidy fund and the operating procedure. Moreover, according to the reality of western economic development and the characteristic of fiscal interest-subsidy, the author defines the range of application within infrastructure construction, economic structural readjustment, technological reform, environment protection and education and human resources exploration, etc. Whether the fiscal interest-subsidy is successful or not depends on the full play of operating efficiency and effective precaution against risks. the author analyses the correlation on fiscal interest-subsidy policy's operating efficiency and rate of interest-subsidy, loan interest rate, service life of interest-subsidy, the financial revenue and expenditure, and rate of return on project investment etc. At the same time, the author compares the difference of operating efficiency of different way of interest-subsidy mechanism. Finally, the author analyses all kinds of risks in the operating of the mechanism, for example, rent -seeking risk, market risk, operating risk.and financial risk. Furthermore, some corresponding suggestions are put forward, First, to set up and perfect scientific system on project decision and operation avoiding the market risk and operating risk. Second, to reinforce the work of audit and supervision, and set up and perfect the system that weakens rent-seeking risk. Third, to reinforce the coordination of relevant departments and emphasize the harmony of different policies against the emergence of financial risk.In brief, we can draw a conclusion: government should support the investment project with the fiscal interest-subsidy policy in the Development of Western China by systematized analysis on basic principle, advantage effect, application qualification, operating mechanism, range of application, efficiency and risk of the policy.