The Study On Government Actions Under A New Stage

In 2008, China's per capita GDP has come to 3,000 U.S. dollars, which indicates that China has entered into the middle-income economies from the low-income economies. During this stage, the objectives between the government and business begin to deviate from each other, that's, the government begins to switch its objective from the pursuit of economic development to the goal of social welfare and while the corporate aim is still to pursue the maximization of economic benefits. In this stage, in order to realize the rapid development and the transition of the economy to a high stage, and to prevent the fall into the so-called "middle income trap", China must change the mode of economic growth and change the government target. If the Government target change too fast, the risen social welfare will cost too much. The government will have to ask more money from the firms, which will destroy the competitiveness of firms, corporate bankruptcies and other phenomena, and finally will lead to fiscal deficit, the debt crisis, financial crisis, stagnant growth and a series of adverse consequences to the economy called as "growth trap." If the Government takes the appropriate transition, the economic growth mechanism is consistent with this stage and the improvement of social welfare is based on economic development, then the economy will avoid the "middle-income trap" and come to the developed economies. Therefore, the study on this transition mechanism in China's economic growth and behavioral change of government targets will have a strong theoretical and practical significance.This article first reviews the recent research situation on the growth mechanism and Government Actions of this phase systematically. Based on the above detailed analysis, this article explains the mechanism of the economic growth from the economic theory, extracts some economic policy indicators, quantifies these economic policy variables using quantitative analysis method, and studies this mechanism. Finally, this article gets some conclusions, and makes some relevant policy recommendations.Firstly, this paper systematically introduces the literature on the mechanism of the economic growth and Government Actions of this phase, and gives a detailed analysis of the problems at this stage, which has laid a theoretical foundation for the use of economic theory to analyze. This result reveals that the strategic that make the economy grow from low-income economies to middle-income economies can not be reused. If not, the original growth mechanism will have difficulty in breaking the "middle income trap", and then the economy will be prone to the wandering period of the middle-income stage.Secondly, the paper systematically introduces the mechanism of economic growth and government behavior choice theory of this stage, which reveals the complexity of the mechanism of economic growth and the Government Actions of this phase from the perspective of behavioral economics. When deriving the new growth mechanisms, this article brings an index called government supporting index into the production function, combing the government goals and business objectives, and so the problem is converted as that how to choose the objective in the new situation in order to promote economic development.Furthermore, this article does an empirical analysis on this growth mechanism and government behavior of this phase. The results of the empirical analysis not only confirm the necessity, reasonableness and importance of the transition of government behavior after the country has entered a post-middle-income economies stage, but also find that in this stage, with the rapid increase of urbanization level, China should avoid the "middle income trap" in advance and change the current mechanism of China's economic growth from the perspective of long-term development vision.Finally, based on the current the macro background in this stage, this article further discuss the effect of the transition of the mechanism of China's economic growth, and gives some recommendations.