Influence Of Provincial And Lower Fiscal Decentralization To The Provincial Environmental Quality In China

In the development of China’s road to vigorously promote economy and society,especially since the reform and opening up, the economy and society have maderemarkable achievements. Industrialization and urbanization develop fast. People’sliving conditions and levels have been significantly improved and enhanced. However,in this process, the environmental quality of our country has made great sacrifices.Environmental pollution problems are increasingly prominent, inevitably falling intoan awkward situation that bucks for the rapid development of economy at the expenseof the destruction of ecological environment. To accelerate the construction of aresource-conserving and environment-friendly society, the Party Central Committeeand the State Council make the environmental protection as a fundamental measure topush the construction of ecological civilization and as the important content to carryout the Scientific Outlook on Development. The report to the18th National Congressof CPC discussed ecological civilization singly for the first time. This paper putsforward the great goal of future ecological civilization construction--‘beautifulChina’, and places the construction of ecological civilization in the five in one of theoverall distribution of height.Most researchers research the environmental quality in China mainly fromeconomic point of views such as the economic growth, externality, foreign investment,and from political point of views such as the local government’ behavior.Environmental problems, however, is an extremely complicated problem, is the resultof joint action by multiple factors intertwined. Economic and political factors explainonly part of the environmental quality problem in china. We also need to consider theinstitutional factors, social factors, etc. Especially our country is in economictransition period, forming a unique Chinese characteristic fiscal decentralizationreform combined with economic decentralization and political centralization. How toproperly divide the environmental protection responsibility between the central,provincial and lower government becomes a problem to be solved urgently.Numerous studies show that Chinese characteristic fiscal decentralization greatlystimulated the enthusiasm of the local government to develop the economy and topromote the regional economic growth. Meanwhile it made the local governmentignore the function of environmental protection in the pursuit of economic growth and improve the achievement, resulting in regional environmental quality deterioration.This paper consists of six parts: literature review, status description, econometricanalysis, cause analysis and policy analysis. The first part introduces background,significance, research ideas and framework. The second part combs the theorydevelopment in the theoretical development of domestic and foreign scholars on theenvironmental quality of the fiscal decentralization. The third part analyzes how thefiscal decentralization contributes to environmental quality. The fourth part analyzesprovincial environmental quality in China’s actual situation of decentralization reform.The fifth part uses the System GMM method and the provincial panel data in China,in combination with relevant theoretical knowledge, to research econometric effectthat provincial environmental quality is made by the degree of fiscal decentralization,and to explain the structure of the source of the datum and variables, and to give eachvariable the descriptive statistics, and to come to the results estimated by quantitativemodel. The sixth part gets relevant policy implications according to the results of theeconometric model and the cause of environmental quality.This paper, by using2000-2011panel data from Chinese province, was mainlyfocused on the fiscal decentralization on the provincial environmental quality. Weselected industrial wastewater emissions, industrial waste gas emissions and industrialsolid waste emissions as the measurement indicators of environmental quality. Wechose expenditure decentralization degree, revenue decentralization degree andself-sufficient rate of province, prefecture and county levels and "three wastes"investments as explanatory variables. And we selected the per capita GDP and itssquare item, per capita foreign investment, industrialization level as control variables.Empirical study indicated that the provincial and prefecture-level fiscal expendituredecentralization, provincial fiscal revenue decentralization and county-level financialself-sufficiency rate laid negative impacts on the environmental quality. While theprovincial self-sufficiency rate, the prefecture-level and county-level revenuedecentralization, the county-level expenditure decentralization had positive impactson environmental quality. The impact on environmental quality made bythe prefecture-level self-sufficiency rate was not clear.