Fiscal Policy And Agricultural Growth In China

Since new China was established, the active fiscal policy of Chinese government has laid a good material base for improving agricultural productivity and effective agricultural public product supply. The fiscal agricultural supporting policy plays a key role to agricultural growth in China. But the decline of relative scale of the fiscal expenditure on supporting agriculture (FESA), its structural deviation and the defect of its management system have been already hindering the further agricultural growth in China to a certain extent. For the sake of improving disposition efficiency of fiscal resource and optimizing its structure, we need to accurately find out the FESA's function in the process of china' agriculture growth , define optimum priority of FESA, analyze china's current system of fiscal support agriculture policy and discuss the causes for finance support agriculture policy failure.Based on the correlation between the growth of FESA and the growth of agriculture production tested by Granger-causality test, this paper built a production function to calculate the marginal product effect of each expenditure in order to find out the optimal priority sequence of FESA. Furthermore, integrate with the analysis of existing financial relationship between governments and provincial financial budget mechanism, this paper uses public expenditure function model to discuss the causes for the provincial structural deviation and policy failure of FESA.The main conclusions of this paper are as follows: there is causality between the growth of FESA and the growth agriculture in China. The science & technology promotion funds have the highest marginal product effect, the marginal effect of expenditure for capital construction takes second place and the marginal effect of expenditure for supporting agricultural production and agricultural operating expenses is the worst; Compared with such sequence, the current FESA present itself with structural deviation. In order to maximize the relocation efficiency of fiscal agricultural supporting resource, we need to increase the agricultural research input greatly, add the agricultural infrastructure input moderately and reduce agricultural operating expenses. The financerelationship between governments and financial budget system has impacted the forming of regional difference in provincial FESA. Therefore, we need to innovate and implement the fiscal agricultural supporting policy mechanism. On one hand, in order to strengthen the local government s motivation and form an inherent steady agricultural expenditure growth mechanism, the intergovernmental duties and responsibilities should be divided appropriately and each government's duty for supply agricultural public products and public service should be clearly defined. On the other hand, we need make the formal rule play a key role in the process of making and implement of fiscal agricultural supporting policy, promote the bargaining power of the agricultural sector, reveal the peasant's demands preference for agricultural public goods and improve the government's budget management system .