The Influence Of The Levels Of Government Reforms To County Financial Difficulties

The reform of the tax distribution system in1994, made the allocation offinancial relationship between the central government and the provincial governmentbasically has been further specification, but it does not straighten out the distributionrelationship between the province and the city and county. Following the centralgovernment did not standardize the distribution relationship between the province andthe city and county. With city county financial system problems gradually revealed,county and township grass-roots financial difficulties in terms of frequent occurrencein the country, and the lack of effective mitigation, this phenomenon makes the county,township and other grass-roots financial difficulties become the social hot spots, andsocial concern. In recent years, the counter measures to alleviate the financialdifficulties at the county level, the government has taken the levels of governmentreform measures, including the provincial governing county financial and economicmanagement of the county authority. This reform has become a hot spot of China’slocal fiscal reform, the original intention of the reform is in order to alleviate theplight of grass-roots financial and development of the county economy, how do thelevels of government reform of the financial difficulties at the county level? Thegrass-roots financial difficulties should be how to crack? Is there a deeper reason ofthe generation of the financial difficulties?This paper uses the county data from2002to2009in China to do some empirical analysesby system GMM method. This paper finds that the effects of independent implement one of‘County Directly Administrated by Province’ and ‘Expansion County’s Authority’ is reversed.Both put two of the policies into practice could help relieving fiscal difficulties. There has very biginertia of fiscal difficulties. It could not be solved in a short time. With the development of theeconomic, the fiscal difficulties could be relieved. But the effect of compressing expenditure foreconomic construction is revered.