Local Government Intervention’s Influence On Traditional Manufacturing Investment Efficiency

Under the assessment guide of GDP growth, the competition between local governments lead to local governments in promoting the great momentum of rapid economic growth. This is China’s rapid economic growth in the past 30 years in our country "password". Combined with the reform of the fiscal and taxation systems lag behind, social wealth excessively focus on the government and the reversed transmission mechanism in public services, the government has the conditions up investment. Add including money prices, resources and human capital factor price distortions, China’s export-oriented and investment-driven mode is gradually strengthening. Now, a series of problems from the traditional model has appeared, such as the international rebalancing pressure, excess production capacity, resource waste and environmental pollution, etc. The central government is aware of the seriousness of the problem to control when the international financial crisis, in order to safeguard social stability and ensure economic growth, enacted the four trillion economic stimulus plan, within two years from 2009 to 2010, increasing government investment stimulating domestic demand, basically achieved the set economic goals but increase the difficulties of traditional manufacturing overcapacity.Since 2011, the central government using administrative means to curb excess capacity and speed up the transformation and upgrading, and successively promulgated the "dissolve the contradiction severe overcapacity guidance" and other rules and regulations. In central file and under the double pressure of market conditions, the traditional manufacturing enterprise seek survival way, of course, transformation and upgrading, but consider the parts of the local government for their own achievement, use their rights intervention in local firms continue to expand the scale of investment, lead to inefficient investment.This paper choose 2011-2013 years, the central government clearly as severe overcapacity of four traditional manufacturing industry listed companies as research samples, explores its investment is influenced by local government intervention, and further analysis, lead to the economic consequences of government intervention affect business investment, which come to the conclusion as follows:From 2011 to 2013, the local government intervention to the traditional manufacturing enterprise of severe overcapacity investment has a positive effect, focusing on the points region: The eastern region of the local government intervention is weaker, the traditional manufacturing enterprise of severe overcapacity investment has no effect; the mid-west local government intervention is stronger, the traditional manufacturing enterprise investment of severe overcapacity more positive effect. Local government intervention in the traditional manufacturing enterprise investment inefficiency of severe overcapacity, focusing on the points region: the eastern region of the local government intervention is weak, the traditional manufacturing enterprise of severe overcapacity investment efficiency; the mid-west local government intervention is stronger, traditional manufacturing enterprise investment inefficiency of severe overcapacity.Macroeconomic policy is the common use of the "visible hand" to play a role, the promulgation and implementation of macroeconomic policy will eventually implement to microcosmic enterprise investment behavior, the government should use of macroeconomic policy, and from the long-term view to consider the profound influence to the national economy macro economic policy. But the local government intervention in enterprise investment motive is mainly in order to protect local employment, improve the GDP growth rate, because both are the central government to local government performance measurement is the most important evaluation criteria. Thus, to reduce local government intervention, the central government requires starting from the local government’s intervention motives, at source to cut off the idea of local government intervention in the enterprise.