The Formation Of Backward Production Capacity From The Perspective Of Land Share-cropping Contract

The problem of backward production capacity has been plaguing the economic development of China for a long time, and is becoming increasingly prominent. Considering the industrial characteristics of backward production capacity such as high energy consumption, heavy pollution, lower level of technology and so on, a series of phase-out policies have been issued by the government to improve the industrial structure. Although these policies have achieved some success to a certain extent, the implementation effect, however, is not entirely as desired. The reason is, primarily concerned with the economic system of China and the tax-sharing system of the government. Therefore, this paper mainly studies the formation of backward production capacity under the existing institutional arrangements and tax-sharing system.Based on the existing theoretical investigation concerned, on the background of fiscal decentralization and from the perspective of land share-cropping contract, this paper gives a brand-new explanation to the cause of backward production capacity. This paper introduces separately the characteristics and differences of the land system between the west and the east, and also discusses the influence on the formation of backward production capacity under the given land share-cropping contract. Through establishing the single land share-cropping contract model between the central and the local governments, this paper discusses and compares the influencing factors and the amount of backward production capacity introduced by the local government, both in the cases of punishment and no punishment. Through the introduction of regional disparity, this paper discusses the model further and analyzes its impact on the aggravation of the problem of backward production capacity.Through theoretical analysis, the fixed land share-cropping contract between the central and local governments causes the formation of backward production capacity under existing system. The local government, which is risk averse, tends to favor the introduction of backward production capacity instead of good enterprises. Furthermore, the regional disparity will aggravate the formation of backward production capacity and then eliminate good enterprises through competition. On that basis, this paper takes the textile industry as an example to discuss the influencing factors of backward production capacity of each region, and use related data to make empirical analysis of the degree of regional economic development, regional tax revenues and other influencing factors. In the end, this paper proposes to strengthen the government oversight and implement a flexible system of contractual arrangements to wash out backward production capacity.