The Problem Of Investment In Local Government And Its Countermeasures

The eighteenth national congress of the communist party of China greatly made an emphasis on dealing with the relationship between government and market,government and society,in the discussion of comprehensively deepening reform and speeding up the transformation of the pattern of economic development.It requires the government to speed up the transformation of functions,do certain things and refrain from doing other things,minimize intervention of micro specific affairs,concentrate mainly on building fair competition market environment and providing necessary public services,making the transition from 'almighty government' to'limited government'.However,some local governments have failed to effectively change the work way of thinking in the process of administration.With GDP evaluation mechanism,it becomes a widespread social and economic phenomenon that the local governments try every way possible to attract business.The investment promotion of the local governments is the product of the era,to some extent,has a positive impact on China's economy and society.But the excessive intervention of local governments has become an important factor of affecting market free configuration,restricting the efficiency of China's social and economic development.The no.62 document issued by the General Office of the State Council,the policy of cleaning up the irregular behaviors existing during the local government inviting outside investment,is a signal released by the central government of changing the government functions.The district governments are the most important capillaries of the government's body,penetrating into every aspect of social life.Pay attention to the study of the district government and the market has important practical significance for China's social and economic system reform and the empirical research of the department of investment promotion and capital introduction is an important section in the study of the district government and the market.In this paper,the research strictly accords with the basic train of thought,"theoretical hypothesis,analysis of the current situation,raising problems,analysis of reasons,and analysis of countermeasures".The article starts from the public choice theory and makes two correlation theoretical assumptions for the local governments'behavior of investment promotion,economic man and bounded rationality.Thanks to the assumptions,the article discusses that the investment promotion is mainly influenced by three environmental factors,fiscal decentralization,index evaluation and appointment system.Meanwhile,the local governments primarily apply strategies of Investment liberalization degree and preferential benefit degree in the course of investment promotion.The department of investment promotion and capital introduction,as the functional department of the local governments,is also restricted by the two fundamental properties,the "economic man" and "bounded rationality"and difficult to maximize the work efficiency of investment promotion and capital introduction.Therefore,without changing the national institutional framework,the minor repairs of the department of investment promotion have little effect.With the examples of Temasek Holdings and China's sovereign wealth fund,this article reviews and compares their background,development process,performance appraisal,governance structure and supervision pattern.Further,it puts forward the idea of reorganizing the mechanism of local governments' investment promotion and capital introduction,building the government platform company and using market mechanism to crack the problem of inefficient government.The innovation of this article is out of the old framework and opens up a new path.It regards the local governments' investment promotion as the operation problem of state-owned assets.Therefore,the issue of how to realize the efficiency optimization of the local governments' investment promotion is exactly the issue of how to give full play to the role of market in the state-owned resource allocation,so as to achieve the optimal allocation.Instead of local government departments dealing directly with the investment promotion and capital introduction within their respective jurisdictions,the local government platform company should be set up to efficiently supervise and manage the state assets,which is beneficial to clarify the local governments'identities of "owners,shareholders' role"and " the corporate decision makers and operators" and accordant with the modern concept of separation between ownership and managerial right.Temasek Holdings and China's sovereign wealth fund are the models of governance of state-owned assets,providing practical ideas for setting up the local government platform company to promote investment and introduce capital.