A Study On Effectiveness Of The Local Government Subsidies To CQ Ltd.

Since 2011,due to the shrinking market and overcapacity,the steel industry is facing the dilemma of steel price collapse and raw material price turbulence.CQ Corp.has also been greatly impacted.In addition,CQ Corp.launched the "environmental relocation" in 2009,resulting in a rising cost and financial cost.Finally,the operating profit of CQ Corp.has been sustained huge losses since 2011.At the same time,CQ Corp.total accessed about 5 billion yuan of government subsidies of non recurring gains and losses in the 2011-2016 years,of which the "environmental relocation" related subsidies as high as 4.8 billion yuan.These subsidies helped CQ Corp.avoid the fate of ST for the two time in 2012 and 2014,and made CQ Corp.acquire an important cash inflow to maintain its production and operation.On the face of it,government subsidies help CQ Corp.complete environmental relocation and maintain their survival,which is undoubtedly effective.But this is not the case with the ultimate goal of the local government,that is,to reverse CQ's losses and promote its growth.From the economic and social benefits of government subsidies analysis found that,in terms of economic benefits,government subsidies for the CQ Corp.not only did not produce effectiveness,but its operating efficiency is deteriorating;in terms of social benefits,government subsidies are indeed effective to maintain the sustainable operation of CQ Corp.,ensure the staff positions and personnel diversion,promote environmental relocation;but ultimately,the company is insolvent and debt restructuring,so it seems that government subsidies are still lack of long-term effectiveness.The reasons for the lack of effectiveness of local government subsidies to CQ Corp.are the internal and external factors of the CQ Corp.,as well as the problems of local governments.Through the analysis of the causes,the case puts forward some suggestions for the reform and development of CQ Corp.and the subsidy for obtaining and using,and calls for local governments to transform their functions and establish a scientific subsidy decision and evaluation mechanism.The thinking of the case for effectiveness analysis of local government subsidies for CQ Corp.breaking the long-standing mindset that government subsidies are earmarked for specific projects.,focusing on the analysis from the overall aim of the government subsidies,which contribute to a more comprehensive and realistic understanding of the effectiveness of government subsidies.At the same time,through the analysis of subsidy effectiveness and related reasons,we can find some common problems in using subsidies of our state-owned enterprises and giving subsidies of local governments.For state-owned enterprises,there is a general lack of correct ideas about government subsidies,over reliance and inefficient use,and excessive subsidies,resulting in the loss of reform power of state-owned enterprises and so on.However,local governments often have problems such as random subsidies,excessive tendencies to difficult state-owned enterprises,and the lack of scientific and effective subsidy policy mechanism.These are worth further thinking and research.