The Impact Of Agricultural Fiscal Expenditure On Farmers' Income In China

During the initial stage of New China, the country has taken the strategy of heavy industry priority development, resulting in increasingly severe issues concerning agriculture, rural areas and farms, for example agriculture foundation is thoroughly weak, rural economic development is quite sluggish for a long time, and farmers' income increases slowly. Since the reform and opening up, the party and the state has given top priority to agricultural development, and made a clear plan on establishment of a market-oriented system. The country has advanced the reform of rural economic system which has facilitated rapid development of agriculture, increased significantly comprehensive production capacity, and promoted the agricultural economy development and farmers' income. However, compared with urban residents' income level, the country's rural residents' income level still lags behind, and the income gap between urban and rural areas expands, meanwhile, the income gap between farmers in different regions is gradually expanding. Financial supporting agriculture is an important means of the government regulation and control for agricultural economy. Theorists have made a lot of researches on whether this policy can promote the agricultural economy and increase farmer's income, but they have not yet been consistent conclusions.This paper, on the basis of former literature, selected the related agricultural data of 1978-2012 in China, using the co-integration theory, error correction model, impulse response function and variance decomposition to check the effect of fiscal funds for supporting agriculture on the rural residents income. Finally it is concluded that: in the long run, while fiscal expenditure for supporting agriculture helps the increase of the per capita net income of rural residents, but its role in pull function is weak, every 1% of the funds for supporting agriculture increase, farmers' income can increase about 0.58%; in the short term, fiscal expenditures for supporting agriculture in one-period lag will have a downward pull effect on the per capita net income of farmers, influence coefficient is-0.073, which shows that fiscal expenditure for supporting agriculture seems to be useless in helping farmers to raise their incomes, but has certain inhibitory effect. In the end, on the basis of above research results, this paper has put forward five proposals: one is giving more financial support to agriculture, two is optimizing the structure of financial support agriculture, three is improving the finance support agriculture funds management system, four is strengthening rural infrastructure construction, and five is establishing complete rural financial system, to make full use of financial agriculture-supporting fund to promote its role on increasing farmers' per capita net income.