Research Of The Relationship Between Township Enterprises And Foreign Investment Enterprises

Development of township enterprises had sprung up to slowdown and is in a jam now, which is important phenomena coming from the process of china's economic transform and growth. In the same period, another important phenomena, in a opposite relationship with the slowdown of township enterprises development, is the influx of FDI after the 1990s and Foreign investment enterprises rapidly grown up in China. Seeing from experience and data, Township and foreign investment enterprises have a negative relationship.The article excavates the negative relationship between township and foreign investment enterprises in depth from finance aspect, and it demonstrates the combined effect of FDI and incomplete finance deepening on the development of township enterprises further more, via examples. From some extent, though the influx of FDI is not the direct reason of the slow down, reformation and turning in a jam of township enterprises development, it makes an important influence on the anaphase development via finance deepening. Goods and factor markets are more advanced while financial market is severely lagged behind, which is in favor of traditional township enterprises, when ambiguous property rights is the basic characteristics, but the influx of FDI brought in enormous political impact and competitive pressure, along with the deepening of the country's open policy, it also contributes to the financial system of liberalization reforms and the development of financial market in China in some content. On one hand, FDI, the external strength, tattered the financial supporting mechanism, which was the " financial protective layer" that township enterprises depended on, by financial liberalization reforms. On the other hand, FID was influencing gradually so it caused a transition period that financial repression and liberalization existed at the same time, while in the period, new financial supporting mechanism for township enterprises didn't appear. It is the financial support mechanisms absence, the direct reason that township enterprises has sprung up and turn to a slowdown and in a jam. In a sense, FDI brought in negative impact on the development of township enterprises by financial deepening. But it won't continue forever, positive affect will be brought in just by FDI itself. Only when the attitude of opening to foreign investment is continued can the financial liberalization reform in our country expands to more extensive scope and promote our financial market development, thereby it could born out of the financing channels for township enterprises and SMES. It's not just the outlet for township enterprises and SMES to get out of development jam but also the outlet for free market with high efficiency.