Cllaborative Competition Mechanism Between Local Governments In China

Since the reform and opening-up policy, China has gradually from the plannedeconomy to the socialist market economic system. Further devolution of power withthe central government, local governments gradually have a more independent right ofaction and autonomy interests of the local governments also will be awakening. So thecompetition between local governments will be generated. Competition among localgovernments has led to the development of the local economy in the short-term. Butdue to the limitations of the policy, institutional, resource, and many other reasons, thecompetition between local governments gradually evolved into a vicious competition.Vicious competition between local governments not only be extremely adverse impacton the regional economic, political, social, but also threaten the country’s sustainabledevelopment, is not conducive to long-term development.In this paper, local government as a rational “agent”, the pursue regional benefitmaximization as the starting point of all acts and policy makers. But with the reformof the national economic system, coupled with limited natural resources, localgovernments gradually recognized that is necessary to change the traditional conceptof destructive competition into collaborative competition.This paper uses the game analysis, comparative analysis of the destructivecompetition and collaborative competition between local governments, tries to findways to construct the collaborative competition between local governments. The useof empirical analysis, analysis of actual cases of collaborative competition betweenlocal governments. The use of literature research method, the theoretical basis of thisarticle provided by literature collection, sorting and induction, think on the basis ofprevious research then propose reform measures.In this paper, the first part introduces the research background, significance,research status at home and abroad, writing ideas and research methods ofcollaborative competition mechanism between local governments in China. Thesecond part describes the competition between local governments in China and itsevolution, including the major form of local government competition in China,analysis of the hazards of destructive competition, the causes of collaborativecompetition and the positive effects. The third part analyzes the current difficulty ofcollaborative competition between local governments in China. Because of the weakfoundation of collaborative competition in our country, local government excessive pursuit of local interests, the current financial system and the land property rightssystem is flawed. The lack of effective incentive mechanism, officials achievementsappraisal system is imperfect, unreasonable interest compensation mechanism alsomakes local cooperation difficult. The constraint mechanism between the localgovernments needs to be improved. At present, China has not been formed thecollaborative competition laws and regulations in the system specification betweenlocal governments. The lack of effective coordination among local governments, andthe positioning of government functions in the process of development exists bias.The fourth part in view of the above questions, come up with strategies to build theframework of collaboration between the local government competition mechanism.The mechanism must have a good institutional basis, the fiscal and taxation systems,and land property rights system should be reformed. Need to build an effectiveincentive mechanism, improve officials appraisal system and the benefitcompensation system, in order to encourage local governments to develop regionaleconomy. The establishment of a complete and effective restraint mechanism toregulate collaborative competition between local governments from the relatedregulations, policies of government functions and coordination mechanisms.