China In Transition Economies Allocation Of Financial Resources

The environment faced by transitional economy is different from that of the neo-classic's and the Coase's. In the transitional economy, resources allocation is not only restricted by market, information and transaction cost, but also restricted by the systems in the transitional economy. In China's transitional economy, the financial resources allocation is different from that of the other countries'. China's economic transition, which is taking place under the condition of the reduction of the central fiscal income, has been carried out through the government's control to the property of the financial institutions and control to the right of financial resources allocation. This has provided large amounts of cheap financial resources for the desired economic growth, thus has avoided the "L-style" reduction of the Soviet Union and some eastern European transitional countries, and realized the success in the first stage of economic transition.But the supportive policy of the government's "strong finance", with the formation of the buyer's market and the reform of the financial systems, and as its marginal revenue has continuously reduced as the accumulated financial risks increase, has proved to be weak effectiveness and even no effectiveness. Therefore, whether the second stage of China's transitional economy will succeed or not will depend on the following key factors, that is, the effective solution to the financial risks, the property reform and optimization of structures to the financial system, especially to the financial organizing system. Only through fundamental reforms to the situation of the government's monopoly to the state banks and the state banks' monopoly to the financial markets, can we provide a systematic environment for the economic growth and steadiness.The Keynesian zone is one that adopts the net currency analysis under the complete markets. Net currency analysis makes "the financial institutions disappear magically". Mackinnon Shaw's zone mainly deals with the analysis to the financial institutions and financial markets, but it has neglected the importance of financial system construction. The main reason for the lag of financial development in developing countries and transitional countries is the country's monopoly to the banks' property and the state banks' monopoly to the financial market competition. The results of the "double monopoly" are the low efficient financial structures which lack the stimulating regulation and the conversing selected and ethical risks accumulated markets, which are caused by the lack of competition. Therefore, if we say that Keynes's monetary economic theory has neglected the financial institutions, then Mackinnon Shaw's financial development theory, while finding the "lost" financial institutions, has also neglected the systematic arrangement in the middle zones. The "black case" is just the objective of this paper, and it is also the basis and analyzing structure which constitute the arguments of the paper.The financial resources are the key elements which link the three aspects of financial capitals, financial institutions and financial systems. The financial resources of the three aspects have not only different resources ownership, but also different functions in the financial resources allocation. The systematic resources provide thesystematic environment for resources allocation, they decide the position and quality of the financial resources allocator, the direction and scale of the financial capitals, and also decide the Pareto's improvement degree of the financial resources. This makes it very clear to us that in the transitional economy, the effectiveness of financial resources allocation is of great importance to the self-allocation of the financial systematic resources.The dualism of the financial resources shows in two aspects. On the one hand, it is a resource itself, a right source. This has decided that the financial resources have the function of self-allocation. On the other hand, it is a resource which has the function of reallocating the other resources, including natural resources and Social resources. The dualism of the financial resources makes their allocation encompass two aspects: the allocation of the resources themselves and the reallocation of the other resources. The efficiency of the financial resources allocation refers to the ability to reallocate the other resources, which is formed on the basis of their self-allocation.Through the analysis to the inner mechanism (including government allocation, property allocation and price allocation) of the different allocating ways of the financial resources in transitional economy, this paper has made a further study to the government-controlled financial resources allocation. It reveals that, as the market environment changes, the effectiveness of the government-controlled financial resources allocation is increasingly doubted. If the monopoly of the administrative authority is not changed, and the economic property of the state financial institutions is not identified and protected, then the reform of the financial system could not make a practical progress. Through the inside-system property reform to the state-owned commercial banks, let them have the independent lawful ownership, we can make the allocation of financial resources move to side of production possibility, and improve the efficiency of resources allocation. The financial market competition formed through the growing-up of the other financial allocation institutions outside the system will help to realize the optimization of the financial resources allocation. Therefore, the development of the inside-system financial institutions and the growing-up of the outside-system financial institutions are the key points in the reform of the financial system in transitional economy. Only the financial institutions have the clear ownership of their own, can they have the rights and qualifications to engage in financial businesses. Only so, the mechanism of interest rate could have practical micro-basis.Through local investigations to some single variable, we have got the ways to make a whole analysis to the co-functioning of all variables and how they take the effects. The modern market economy is a mixed economy. The efficient allocation to the financial resources will certainly be the result of the co-functioning of the government, financial institutions and markets. Therefore, under the modern economy, the mixed efficient triplicate structure of financial resources allocation, which consists of the government allocation, property allocation and price allocation, would be a final result. The corresponding financial systems to the triplicate structure of financial resources allocation are from the monopolistic financial system to oligarchy monopolistic financial system, and finally reaching the competitive financial system.