Research Of Expenditure Competition Mode Between The Governments Of The County Level In The Process Of Marketization

Since the reform and opening-up, China’s economic system transition has gradually from a planned economy system to a market economy system. Due to the historical culture, geographical location, economic development level and other factors, the commercializes level of each China’s provinces, municipalities and autonomous regions can be said to be differ in thousands of ways, forming different regional marketizations. Among them, the most representative and typical market approach is represented by Zhejiang Province coastal" civilian dominant" market economy and to Anhui as the representative of the inland" governmental dominant" market economy. The former carries the primary, endogenous characteristics, the government role is limited, and marketization level is higher; while the latter government carries a rich dominant color, and the "outside" effect is obvious, so the market process has been relatively slowly. The reform of economic system has promoted the market process of all the areas, at the same time,it also brought the corresponding fiscal decentralization. Given the administrative management system, a competing for various economic resources is taken by local governments because of the fiscal decentralization, the competition includes the tax competition and the expenditure competition in the use of fiscal policy. With the tax preferential policy increasingly standardize and the preferential policy is gradually from the region to industry, the local governments using the preferential tax policy to expand the economic cake space is reduced, thereby forcing them gradually shifted to the fiscal expenditure policy means. Because of China’s regional different marketization level and the diversity of the financial system, the county government expenditure competition presents different behavior strategy and operation mode, it is mainly manifested as civilian competitive mode with the feature of "value civilian expenditure, despise material expenditure" in Zhejiang county governments and material competitive mode with the feature of "value material expenditure, despise civilian expenditure" in Anhui county governments.This paper will combine the fiscal decentralization and expenditure competition with the reality of China, under the background of different marketization level between the market transition, by using the quantitative and qualitative analysis methods, and analyzes the different expenditure competition mode under different market process and fiscal decentralization.This paper is divided into five parts.The first part is the introduction with the contents of the background, the related concepts and existing literature for a review.The second part, we will start from the theoretical background, and analyze the framework of the county government expenditure competition under the two aspects of market evolution theory and the fiscal decentralization theory.The third part, we will start from the realistic background of our country to analyze the social environment of different expenditure competition modes from three aspects—egional marketization level, the evolution of the fiscal system of county government under the background of decentralization and the influence on the expenditure competition of the county government, and draw conclusions in which the reform not only exacerbated the county government expenditure competition, but also made the obvious differences on the county government expenditure competition. It is mainly manifested as the high level expenditure competition strategy in some developed areas appeared to "fiscal policy of increasing welfare spending".The fourth part, the author combines the economic data of the county government of Zhejiang and Anhui for statistical analysis,and obtains two expenditure competition modes—"value civilian expenditure, despise material expenditure" and "value material expenditure, despise civilian expenditure" under the agreed marketization level and financial system. Based on the two modes, we analyze the reasons and a series effects such as causing the area gap, affecting the fiscal policy of increasing welfare spending and the equalization of basic public services.The last part, in order to regulate the county government expenditure competition behavior, and make the expenditure competition mode towards a healthy order environment, the author puts forward some specific policy recommendations based on accelerating the speed of the market economic system and constructing for a healthy development fiscal order, including cultivating endogenous and innovative private enterprise growth soil, encouraging free competition, fair trade and other new economic order in implementation, and transform the government functions based on the above conditions. At the same time, we should define the provincial, city and county levels definitely, improving the local officials examinational system and the sub-provincial transfer payment system, guiding the behavior of the local governments and constructing a healthy fiscal expenditure order.This paper explores different county government expenditure competition mode based on the background of market and fiscal decentralization. This will have a further effect on improving our country’s market economy system and straightening out the relationship among all levels of the governments, especially the sub-provincial governments.