Transformation Of Economic Development Model In China

Mainstream economists in China mostly analyzed transformation of economic development model form the perspective of economic structure. However the angle of view which sees public goods as an external variable could not effectively reflect the institutional futures of Chinese economic development model:whether the economic growth can improve most people’s welfare or not? Can it lead to the distribution justice? Does the function of government efficiently exert? To fix the problem, this paper made in-depth research on Chinese economic development model by using public goods as an internal variable, and effectively demonstrated urgent needs for reform and institutional innovation in the context of transformation of economic development model.The growth of human capability lies on how many public goods and private goods he can actually get, meanwhile, while the number of public goods and private goods lies on the growth of national income and economy. This paper established an optimal economic development model in which public goods is internal variable, and raised a hypothesis:to supply a proper number of public goods can guarantee maximization of the most people’s welfare, so that it could eventually lead to optimal economic development model, which means too much or too little public goods can bring economic development model straying from the optimal path. So there is a deduction that government can optimize economic development model by adjusting the supply number of public goods and public service. To prove the hypothesis, the paper especially made experimental test on the policy process of economic transformation in western countries.Through empirical analysis, it is proved that the major problem of Chinese economic development model is shortage of public goods which makes economic growth couldn’t realize maximized growth of the most people’s welfare. Distribution justice is the core issue of economic development model. The shortage of public goods not only limits the growth of middle income group, sharpen the polarization between the rich and the poor, but also locks the economic structure into a low development level that failed to create economic development model with orientations of low carbon, consumption, service industries and human capitals.This paper putted forward reform recommendations of increasing public goods with a target of enlarging middle income group. The author have no doubts about that China’s market-oriented economic reform during the last30years had successfully found an effective way to conquer the shortage of private goods, but now the shortage of the public goods mainly owing to the lagging of the transformation process of government has become a fundamental reason behind economic development model deviating from its optimal path. Therefore properly increasing the supply of public goods is very important for improving people’s capability and providing people in low and middle income group with opportunities and capacities of upward mobility. This is a fundamental way to successfully transform economic development model today. In conclusion, China should speed up the construction process of public service-oriented government as a key to reform in a new development stage, and adopt a reform path of optimizing the overall allocation of public resource and pushing forward coupling reform among public sectors.