The Research On The Approach That Local Governments' Competition Leading To Overinvestment And Its Settlement

Beginning with attention on the 2006 macro-regulation, this dissertation concerns on why the local governments always become the direct regulating object whenever the central government launches macro-regulation, how the local governments lead to over-investment, and how to cope with this situation. It is vital to recognize the macroeconomic situation of China, establish regulated intergovernmental competition system and maintain steady and standing economic growth.This dissertation begins with summarizing literature which concerns on overinvestment, overheat and macro-regulation problems in 2003-2004. Combined with independent thoughts on their viewpoints, the author establishes criteria to judge whether the macro economy is overheated in the overinvestment situation. Not only should the growth rate be pondered over, three other more criteria should be complemented, whether the economic growth brings on resource and factors scarcity, whether the fixed assets investment spills consumption and whether it contributes to mandatory savings. These criteria effectively differentiate overinvestment with overheating. According to it, the author results in the statement that though China boasts overinvestment in the first half of 2006, the macro economy is not overheated thanks to in-time macro-regulation.However, this overinvestment doesn't induce consequent overheating economy due to rigorous macro-regulation. We shouldn't ignore the pull which investment imposes on the overall economy. There's a popular viewpoint that the economic growth after China Open and Reform is boosted by investment in to a large extent. The author demonstrates it with statistic test between fixed assets investment and gross domestic product, and comes to a result that investment augment is the Granger causality of China's economic growth, which proves the logic that overinvestment boosts economic overheating in China to be true.To find out why overinvestment was triggered continually, the dissertation focuses on analysis on the non-cooperation between local governments and their control over land and credit assets, and consequently accounts for the approach that local governments'...