Research On Chinese Zombie Firms Problem From The Perspective Of Public Finance And Tax

The“Zombie Firms Problem" has been restricting the development of Chinese economic in recent years,which becomes a major obstacle for Chinese economic in transformation and upgrading.The disposal of "zombie firms" in a positive and proper way has been regarded as the key link of dissolving the overcapacity and core-sector of "Supply-side Structural Reform".By means of disposing zombie-firms,the current severe overcapacity situation could be relieved and Chinese economics could grasp the opportunity of breaking through the bottom-predicament of the"L-type growth".Given that,it is necessary to study the "Zombie Firms Problem"systematically.Based on Fiscal Decentralization Theory,Externalities Theory and Government Failure Theory,this article,referencing correlative studies from domestic and oversea,then combines theoretical analyses and empirical tests from the view of public finance.First,the article illustrates the characteristics of the present situation of "Zombie Firms Problem",drawing the outline of the distribution of our country’s zombie-firms.Then,it puts emphasis on seeking the fiscal reasons of Chinese "Zombie Firms Problem".Based on these analyses,the article creates "game model between the governments",demonstrating in a perspective of Game Theory that the defects of"Fiscal Decentralization System" and "Official Promotion Mechanism" lead to the vicious competition between local governments chasing fiscal revenues and promotion benefits,which inevitably raises the severe complexion of overcapacity and buries an underlying problem of zombie-firms.Then this article selects several financial indexes of 2539 Chinese public companies in 2015,and create "Binary discrete choice model" to empirically analyzes relationship between government subsidies and the odds of the formation of "Zombie Firms Problem".The results show that:the excessive government subsidy will raise the probability of becoming a zombie-firm,which illustrates the correctness of my study.Furthermore,the article also set a "Preferential fiscal taxation policy-Overcapacity-Enterprises zombifying"theoretical model to illustrate the micro-formation mechanism from the perspective of public finance,revealing such conclusions:when preferential fiscal taxation policy existing,the level of company capacity investment is obviously higher than not.It will lead to over-entry and overcapacity situation when the preferential level is higher enough.Overcapacity will give birth to the "Zombie Firms Problem" which will also worsen the situation of overcapacity in return.Ultimately,it will become a vicious circle.In the end,based on those findings above,combining the thinking towards the characteristics of the present situation of Chinese "Zombie Firms Problem" and the fiscal factors resulting in the "Zombie Firms Problem",the article puts forward some suggestions aiming at disposing zombie-firms and defusing overcapacity from the perspectives of fiscal decentralization system,official promotion mechanism,public revenue budget restrict,the reform of public finance and tax system,social welfare network.Through these suggestions,the article expects to make a contribution to promote the "Supply-side Structural Reform".