Study Of The Economic Functions Of Township Government And Township Debt

The new historical era encourages us to reconsider and reinvestigate the economic functions of township governments. As pointed out and emphasized by prime minister Wen Jiabao in his talk about"several currant agricultural and rural issues"on the 29th of December, 2005:"The function and service of township/village organizations can not be weakened, but should be enhanced". What are the economic functions of township governments nowadays? Which of them should be retained or even enhanced and which need to be weakened and minimized? How to guarantee the implement of township governments'economic functions financially? These are the key questions leading the research of this thesis.The thesis consist seven chapters. Chapter 1 and Chapter 2 are focusing on defining the main concepts and the area of the research, and reviewing various literatures and theoretical background that were related to the research. Following the foundation made up by Chapter 1 and Chapter 2, Chapter 3 to Chapter 6 are focusing on the normative analysis and positive analysis of the economical functions of township government, and further research about the causality of the misalignment of township government were carried out by comparing the normative and positive analyses. Chapter 7 is the third part of the thesis, which summarised the township reform theoretically and practically, and also investigated the policy guarantee of the formalization of township governments'economic functions. The contents are briefly introduced by chapters as follow: Chapter 1: Introduction. This chapter introduces the research background, the ground theories and the range of the research. It covers the ideas of the thesis writing-up, the main contents, and the research methods. The innovation points and potential weak points were pointed out as well. This chapter makes a clear outline of the whole thesis.Chapter2: Theoretical background and Literature review. A large amount of national and overseas literatures were reviewed in this chapter, which gives the followed-up research a very solid theoretical background. It mainly covered the revision of literatures about the theories of governments'economic functions, economic system and governments'economic functions, changes of governments'economic functions, orientation of governments'economic function, township financial system, etc.Chapter 3: Changes of governments'economic functions after the foundation of People's Republic of China. This chapter has included the positive analyses of township governments'economic functions in different time periods after the foundation of P. R. China, including theoretical analyses and case analyses. Within the theoretical analyses, a theoretical structure was built up to analyse the township governments'economic functions, which was based on the theory of public choice. Theoretical analyses on township governments'economic functions of four different time periods were carried out by using this structure. In the case studies, the currant situation of township governments'economic functions after the rural tax and fees reform were analysed in details. Three groups of towns of different economic developing conditions were chosen for the research. Various methods were used in the investigation of the township governments'economic functions after the rural tax and fees reform, including questionnaires, interview with the party chairmen, holding conferences and resource analyses. Questionnaires were used to obtain a general knowledge about the functions of township governments, and individual interviews and local investigations were then carried out to get close to the cases of the main economic functions of township governments. Finally, the economic behaviours of township governments were analysed in combination of the analyses of township governments'financial situations.Chapter 4: The orientation of township governments'economic functions in the socialist market economy. Starting from a logical point of rural productions'provision, this chapter carried out normative analyses on the formal orientation of township governments'economic functions in the socialist market economy. Based on the theory of public production, Research was carried out to investigate the supplying and consuming condition, the order of supplement and consumption, and responsibility allocation of financial loaning. The research has discovered differences of the supplying and consuming order of rural public production among different areas, which were caused by the differences of their economic development conditions.In addition, to increase the efficiency of rural public production supplement, the loaning responsibility should be allocated on the base of an equal-benefit rule among different levels of governments. Based on the analyses of the supplying and consuming order of rural public production and loan responsibility allocation, township governments were divided into two kinds according to the economic development condition: economical developing towns and economical developed towns. The economical developing towns only take the basic economic responsibilities which mainly based on to serve the rural production and rural labour transition. The economical developed towns have to actively take responsibilities on promoting the agricultural modernization and small town construction, in addition to the basic responsibilities.Chapter 5: Analyses of the misalignment of township governments'economic functions. Based on the normative analyses and positive analyses of the economic functions of township government, further analyses were carried out in this chapter to investigate the misalignment of township governments'economic functions and the cause and consequences of it. The misalignment of township governments'economic functions are embodied in two aspects: self-owned productions and public productions. The township government carries a fairy strong micro economic interfering function in the area of self-owned productions, while in public production area, township government carries a lot of responsibilities which clearly crossed the boundary of its restricted area. This chapter has given explanations of the cause of the misalignment of township governments'economic functions from the point of the competition system among township governments and also the point of the encouragement-and-restriction system by the upper level governments. The explanation was based on the Game theory and has used Cournot-nash's Equilibrium Model and Holmstrom and Milgrom's Principle-Agent Model as references. Finally, the consequences of the misalignment of township governments'economic functions were pointed out in the last part of this chapter.Chapter 6: The misalignment of township governments'economic functions and rural debts. By investigating and summarising the resource of rural debts, analyses were carried out on the extent and characteristics of rural debts, in combination with the local investigation of rural debts. Several characteristics were discovered from the research: firstly, rural debts are spread to a very large extent, which were far beyond the financial ability of township governments and hence are of very high risk; secondly, rural debts have very complex structure of responsibility, in which debts from financial organization play a very important role; thirdly, rural debts were mainly used to pay off the commonwealth (including foundational facilities construction like road, bridge and educational pay-outs) and the local enterprises. Following the summary of the rural debts structure, analyses were then carried out to look at the investment of township enterprises and the systematic cause of rural debts due to the non-equalization of financial power and non-financial power. Finally, I've drawn two conclusive points from the research: firstly, standardization of township governments'economic functions is the key to avoid the increasing rural debts; secondly, the key of paying off the rural debts is to formulate the quantity of existing debts and avoid new-coming debts, in which avoiding new debts is the most crucial point.Chapter 7: The guarantee system of the implement of township governments'functions. This chapter has theoretically summarised the existing township governments'reform and made a strong argument to fight against the opinion of withdrawing township governments. Meanwhile, we are aware of the weak points in the theory of enforcing township governments and combining township governments. Apart from that, the main methods of the reform of different township governments were summarised and the problems in the township governments'reform cases were analysed. Thereafter, the guarantee system to standardize township governments'functions was brought up for discussion.This thesis has been very innovative from several aspects. Firstly, it has very standard orientation of township governments'economic functions under the socialist market economy, which was based on the public production theory and clarified the economic boundary of township government in the development of rural economy. Secondly, it has theoretically analysed the township governments'economic functions since the foundation of P.R. China by constructing a theoretical structure. Thirdly, it has included the Game theory in the analyses and made explanations about the causality of the misalignment of township governments'economic functions. Fourthly, very intensive and broad local investigations were carried out in the research and the analyses of currant township governments'functional condition after the tax and fees reform were carried out appropriately and authoritatively. Last but not least, basing on the large quantity of intensive investigations, it has made very clear judgement of the characteristics of rural debts.