Research On The Formation And Governance Of Overcapacity Under The Supply-side Factor Distortion

China’s “overcapacity sickness” has not been cured for a long time,especially since the international market has continued to slump after the international financial crisis.No matter the traditional manufacturing or emerging industries,the problem of overcapacity has become increasingly prominent.Against the background of the new normal economy,China is facing the urgent task of optimizing the economic structure and realizing economic transformation and upgrading.Meanwhile,the concentrated outbreak of overcapacity in this round has become a big obstacle and continues to increase the systemic risk of macroeconomic development.If it is said that the traditional industry has a severe overcapacity due to its historical accumulation of capacity,why the overcapacity phenomenon in strategic emerging industries such as wind energy equipment,polysilicon,photovoltaic cells and so on has been continuously highlighted,and even which industry the government wants to develop,the strange appearance of overcapacity in this industry will appear.In fact,the problem of overcapacity has been the focus of China’s macroeconomic regulation and policies to resolve overcapacity have been put forward one after another,but overcapacity has not been fundamentally resolved,but has shown a growing trend.However,even if the central government has made it clear that some industries have severe overcapacity that must be controlled,many enterprises still expand production capacity by violating various regulations.Why do local governments fall into the cycle of regional overcapacity supervision fluctuations and failure in the process of overcapacity governance?In 2015,General Secretary Xi Jinping proposed to strengthen supply-side structural reforms: use reforms to advance structural adjustments,reduce inefficient and low-end supplies,expand effective and mid-to-high-end supplies,focus on improving the quality and efficiency of the supply system,and enhance sustained economic growth motivation.Then,the central government listed de-capacity as the top of five tasks of supply-side structural reform.In 2017,16 ministries including the Ministry of Industry and Information Technology issued “the Guiding Opinions on the Use of Comprehensive Standards to Promote the Exit of Backward Capacity by Law and Regulations”.Local governments have also issued relevant policies to eliminate backward production capacity.Building a backward capacity exit mechanism is of great importance.Which factor and subject will hinder the exit of backward capacity? How to effectively eliminate backward production capacity?In order to answer the above questions,this research adopts a combination of qualitative research and quantitative analysis,logical deductive method and systematic induction method,and theoretical research combined with empirical analysis.This paper explores the formation mechanism and governance countermeasures of overcapacity under the distortion of supplyside factors.It combines the perspective of production force and production relation,and explore the behavioral characteristics of various stakeholders in the game,and seek effective ways to coordinate the conflicts of interest of all parties.Try to help the theoretical innovation of research on overcapacity under supply-side factor distortion,and also hope to crack the factor distortion,adjust the structural contradiction of overcapacity,and provide practical reference for improve capacity governance.Firstly,this paper constructs a logical framework for analyzing the problem of overcapacity in the context of “supply-side + structural + reform”,and discusses the formation and governance of overcapacity in terms of factor distortion from three aspects: institutional supply distortion,factor price distortion and factor allocation distortion.Then,the influence of stakeholder games on the entrance and exit of the capacity tank is analyzed by constructing a capacity tank model.It is found that the problem of overcapacity is mainly manifested in the“supply side”,the essence and root of the problem is “the structural contradiction of factor distortion”,the solution to the problem is to “improve the governance overcapacity through reform”.The various types of institutional supply distortions that exist under the economy transition period are the source of distortions in factor prices and factor allocation.There is a conduction mechanism between the three,and it can induce and motivate the formation of overcapacity and hinder the governance of overcapacity.Under the distortion of supply-side factors,capacity stakeholders control the entry and investment decisions of enterprises through the entry side during the game,and control the exit decisions of backward capacity through the exit side,which has an impact on the formation and governance of overcapacity.Secondly,based on the reality of the predicament in strategic emerging industries under the distortion of factors,this paper puts forward the hypothesis of overcapacity formation and solidification mechanism.The dynamic model of the three-party evolutionary game between the central government,local government,and enterprise has been constructed and the evolutionary stability strategy analysis of the system has been solved through the system simulation method.The influences of game player decision-making change and different factor distortions on the system evolution are studied by the system simulation method.A single population evolutionary game model of strategic emerging technology enterprises is constructed,analyzing the influencing factors and dynamic adjustments of game behavior among enterprises.It is found that the central government dominant selective industrial policy has a direct stimulus effect on the overcapacity of the industry.Local government can affect regional industrial layout and enterprise decision-making mechanisms by distorting factor prices and factor allocation.Under the influence of the central and local government,enterprise would be overly reliant on strong positive signals from the government,and a large number of enterprises enter industries encouraged by the government would become the only evolutionary stability strategy.The higher the central government’s dominance of the selective industry strategy,the higher the local government’s distortion of factors,and the higher the enthusiasm for adopting support strategies.It has formed a certain path dependence,weakened the enterprise’s technological innovation ability,and caused obstacles to industrial transformation and upgrading.All above factors combined have led to the formation and consolidation of overcapacity.Thirdly,through combing overcapacity governance logic and starting from the entrance side governance,this paper studies the fluctuation of overcapacity illegal investment supervision and supervision failure issues,and constructs a dynamic game evolution model of local government supervision agency and enterprise on overcapacity investment supervision and governance,defines the concept of investment supervision failure.Then,using system simulation methods to adjust the game evolution model of capacity investment supervision from the perspective of vertical historical evolution and horizontal cost-benefit analysis,and exploring the influence of key factors on the effect of supervision operation.It is found that under the condition of distorted factor prices,the trajectory of the evolutionary game system of capacity investment supervision is a stable limit cycle centered on the equilibrium point,which provides a reasonable theoretical explanation and mathematical proof for the phenomenon of periodical fluctuations in capacity investment supervision.Both the position of the system evolutionary mixed equilibrium point and the amplitude of the periodic fluctuations affect the probability of supervision failure.In the process of supervision,measures such as increasing punishment for violated overinvestments or reducing the cost of supervision will reduce the probability of violated overinvestments by enterprises to a certain extent,but they cannot effectively alleviate supervision fluctuations and failures.Eliminating the distortion of the factors behind the local government’s formal supervision and illegal investment by enterprises,the normalized strict supervision and long-term mechanism have a more obvious effect on reducing the probability of supervision failure.Finally,based on exit-side governance,the issue of exiting backward production capacity is studied,and a dynamic model of the evolution game of the backward production capacity exit mechanism based on government-enterprise relations between local governments and overcapacity enterprises is constructed.The system replicate dynamic differential equations is built to found the stable strategy for system evolution and analyze the key variables that influence the strategy evolution of the players.System simulation methods are applied to explore the impact of changes in initial conditions and key parameters on system evolution under different exit mechanisms,so that China’s government determination and enterprise will on resolving overcapacity issues can be reflected through the overcapacity exit mechanism.It is found that if the government does not provide effective exit incentives,the evolutionary stable state of enterprises exiting backward capacity will not exist,and the game between the two parties will move to a stable state of(non-incentive,non-exit),which will hinder the exit of backward production capacity.Increasing the percentage of local government effective incentives and exceeding the threshold value,enterprises will receive positive signals,the proportion and speed of backward production overcapacity exit will gradually increase,and eventually move towards a stable state of exit.Enterprises should strengthen their own sense of responsibility,strengthen market supply and demand trends research and information guidance,and actively eliminate operation of backward production capacity.The government should comprehensively use laws,economic and necessary macro-control measures to strengthen policy guidance and coordination,actively encourage enterprises to exit backward production capacity,and form a joint force to resolve the serious overcapacity contradiction and guide the healthy development of the industry.In the specific implementation process,the government should step up its transformation to a service-oriented approach by implementing policies based on the characteristics of different industries and enterprises to form a personalized exit plan for backward production capacity.It is crucial to implement a dynamic reward and punishment mechanism,reduce the cost of enterprise exiting,improve related supporting policies and protect the rights of enterprises and employees,avoing using a single and static policy.It is necessary to take into account the current situation and the long-term perspective,and take into account the evolution of the system to form a long-term mechanism to resolve the serious overcapacity problem.This paper puts forward corresponding policy suggestions from five aspects: the improvement of system and mechanism,the flexibility of industrial policy,the implementation of governance policy,the support of social policy and the guidance of innovation policy,so as to make every effort to do a better job in stabilizing growth,promoting reform,adjusting structure,benefiting people’s livelihood and preventing risks in the process of overcapacity governance.