Research On Government Subsidies,Technological Innovation And Enterprise Performance Of New Energy Industry In China

Energy and environmental issues have become increasingly urgent, such as the urban haze and high-price product oil. No doubt, the energy crisis has become a bottleneck for China’s sustainable economic development. In recent years,China launched a series of fiscal and taxation subsidy policies in support of the new energy industry. By a combination of methods, such as the use of Special Funds and establishment of exemplary projects, the government is aimed to promote the industrial progress. However, under the background of government support, problems concerned are increasingly highlighted. The PV industry in China is underdevelopment, even faced with the corporate restructuring. Then come the questions below. Does the government subsidy really benefit the enterprise performance as expected? What on earth should the government do to nurture the industrial development? Undoubtedly, technological innovation is the core strength of industrial development. The sustainable development of new energy industry depends on whether the government subsidy can promote enterprise financial performance by driving technological innovation. Therefore, this paper is attempt to answer these questions,on research of government subsidies, technological innovation and enterprise performance in this area.Based on the normative and empirical research, this paper analyzes the necessity of fiscal and taxation subsidy and the potential risks concerned. We adopt performance evaluation system and the samples come from the China’s new energy listed company in 2008-2012. First of all, this paper tries to test empirically the combined influence that the fiscal and taxation subsidy have on the enterprise performance on technological innovation. Then based on view of sustainable development, we further explore whether the government subsidy will encourage enterprises to intensify technological innovation, and thereby improve their financial performance as well.According to the empirical results, the preferential taxation policy provides tax incentives to corporate independent earning power between the year 2008 to 2012. However, the fiscal subsidy performance is not so satisfactory that it doesn’t make significant contribution to improve the technological innovation of these enterprises, due to its poor efficiency of R&D. Research results show the present technological innovation is insufficient to impetus enterprise financial performance when patent output is used as an indicator of technological innovation. It further reveals that the government subsidy has little to do with the sustainable development of new energy industry.Based on the case study of Suntech Power Holdings, this paper comes to research conclusions and puts forward the policy suggestions in terms of subsidy’s overall design, post-supervision mechanism and so on.