Research On China’s State-owned Enterprise Excessive Investment

With the development of the economic, enterprises have developed rapidly, and thedevelopment of the enterprises needs investment. The investment plays an important rolein the decision of the enterprises’ economic activity. The investment which promotes thedevelopment of economy has its conditions. Only the reasonable investment directionand modest investment scale can promote economic development. The phenomenon ofover-investment is very common and serious in the enterprises especially state-ownedenterprises in our country. The over-investment of our state-owned enterprises has theuniversity and individuality, because China’s special system and economic environment.China’s state-owned enterprise over-investment not only brings serious harm to theenterprise’s own development, but also goes against the whole development of socialeconomy. Therefore, the over-investment of state-owned enterprise needs to get attentionand to solve.On the first part, this article carries out a detailed combing of domestic and foreignresearches, and reviews the achievement of the study on over-investment. On the secondpart, the article introduces the conception, the current situation and the adverse effects.First, the over-investment in state-owned enterprises is defined exactly. The articledescribes the over-investment problem of both the enterprises and the state-ownedenterprises. This article also introduces the characteristics of over-investment instate-owned enterprises, and links the over-investment of state-owned enterprises to thegovernment intervention. The over-investment of state-owned enterprises impacts theenterprises and the development of society, and article elaborates these adverse effects.The third part is the reason of the over-investment on state-owned enterprises-based ongovernment intervention. In this part, the article analyzes that government intervention isthe reason of the over-investment in state-owned enterprises. Firstly, the article makes thedescriptive analysis through the theory. Secondly, the article makes in-depth analysis onthe reason of government intervention through game model. The fourth part is the pathanalysis on government intervention based on soft budget constrains distorting the factorprices. In this part, this article introduces the prices of production factors, the distortions of price and the conception of soft budget constraints firstly. The paper analyzes thestate-owned enterprises’ investment under the influence of the government intervention,and then the article makes a conclusion that it is the government intervention that leads tothe over-investment of state-owned enterprises. On the fifth part, the article proposesmany appropriate policy recommendations on the problems of the over-investment instate-owned enterprises to avoid state-owned enterprises’ over-investment, and improvethe capital efficiency of state-owned enterprises.