The Influence Of County Government's Behavior On Chinese Economic Growth

The reform and opening up which was from1978brought China economic success for more than30years. And momentum of this growth has not seen any change or reversal. How to explain the long-term economic success of China? Why China can maintain economic growth in30years? This problem can be handled through the perspective of county government competition. Through the perspective, you can see the free movement of production factors and the formation of industrial clusters, which is the efficient allocation of resources. Furthermore, you can see all levels of government officials at all levels of government, businesses and residents in the economic activity status are equal. Through the perspective of county government competition, indeed you can see the profound meaning of China's economic success.The judgments are based on the understanding of the characteristics of county government. Chinese county government is significantly different with other levels of government, in some ways as fiscal revenue and expenditure, government targets and policy orientation and other interests. According to the facts that county governments have the right to sell the land, and that county government officials focus more attentions on local economic development than the other levels of government in exchange for more opportunities of political promotion, it is the county government's goal that its GDP is higher than the GDP of the other county, in addition to county government so closer to the concept of a neutral government. Therefore, The purpose of this study is for a comprehensive understanding of county government's behavior.In the application of institutional economics analytical methods, along the logical line of the " System-Target-behavior—results", this paper discusses the county government's institutional environment, as well as independent economic entities their unique needs and goals. And then, the paper discusses the competitive relationship in the county government and the essential competition between the occurrences of competitive behavior. Finally, it discusses how competition leads to economic growth. This paper mainly studies the issues on the relationship between the county government and other economic entities. In discussing the institutional environment, the paper focuses on the design of mechanisms and institutional arrangements of county government's incentives and constraints. This paper discusses the relationship with higher levels of government powers, fiscal system reforming, Zhejiang's new management system for empowering the county government. It is also related to the officials'promotion tournaments, business and residents'monitoring mechanism of "voting with hands" and" voting with their feet". Institutional environment and economic status of the subject discussed in this paper constitutes the second chapter.In discussing the needs and goals of county government, the paper puts forward a hypothesis that the needs of county government are collections of officials'demands for political promotion, the county government's interests must be linked up with the major economic and social interests of economic entities closely. The target of County government is the maximization of GDP. It fully meets the business, residents and officials at all levels. It achieves an agreement among GDP maximization, profit maximization, utility maximization, and promotion opportunities maximization. This is the main content of the third chapter.In discussing the behavior of county government, this paper discusses the relationship on the competition of the county government. At the same time, it focuses on the behavior of the county government competition. The study found that the purpose of county government's competition is maximizing GDP, the result of this behavior and a variety of county government equal status of economic entities. All kinds of equal relations between economic entities in market, to promote all kinds of production factors can flow freely through the various jurisdictions; to promote local industrial tradition of distinctive cities and counties continue to grow and develop to form a unique cluster. The free movement of factors and the occurrence of industrial agglomeration provide the growth of economic. This is the main content of the fourth chapter.After the study, the paper reached the following three conclusions:I, County government is a relatively independent economic entities; Ⅱ, the only way to meet the needs and achieve the goals of the county government maximizing local GDP; III, political strategies have a common feature, which is to protect the area of equality between economic agents, in order to achieve the free movement of factors between jurisdictions, then to promote the city's industrial agglomeration and ultimately make China's economic growth. The conclusions which are derived from the three economic characteristics of local government provide anew perspective of economic growth in other countries. Considering China's economic requirements of sustainable development and reform of cultural system, using GDP as an indicator of assessment methods are outdated, while maximizing the local GDP of a nation or a region has also been outdated, so in the new era of the history, the quality of the economic development should be taken into the Government's most important agenda, it will effectively constrain government behavior that reforming the Assessment mechanism on the local government officials with more livelihood-related content, and reforming monitoring mechanism of the residents and businesses on local government officials and local government. At the same time, strengthening the rule of law, continuing to deepen market economic system reforms, strengthening the market's role of cutting the cake, strengthening the competition between the county governments, etc. all of them will make China's economy maintain a rapid growth and achieve a qualitative leap. This is the main policy recommendation of the paper.