Government Function & Fiscal Expenditure Structure

The social and economic transformation since 1978 contains two issues. The first is that the transformation of resource allocation institution changed from conventional planned economy to market economy, and the second is the transformation from autarky closed economy to opening economy. This transformation in both aspects is an outstanding feature that distinguishes our nation from others. The government in the conventional planned economy was almighty and infinite, and governed almost everything, while the market institution plays a dominant role in resource allocation in market economy, which means that government functions would have to retreat and change. This change, as well as reformations in other areas, costs a lot. As the government controls resources so harshly, the properness of government function transformation will impact greatly on the progress of reformation and the long-term persistence of fast economic growth.The understanding of government functions has changed a lot alongside with the evolution of economics. The classical economics insists that government should leave microeconomic activities alone, while the Keynesian economics proclaims that the intervention of government is necessary to sustain the macroeconomic stability. Both government and market have deficiency and malfunctioning. They should not be substitutions but combine and correspond to each other.Considering that fiscal expenditure is the main way to perform government functions, it is objective to study the changes of fiscal expenditure structures to show the changes of government functions. In this paper, we tried to perform a complete analysis on government functions changes in the age of transformation. Through the actual investigation and comparative analysis on the fiscal structure of the state, provincial and country government, we found that the differences in function performance among different levels of government are great. This, on one hand is because of changing from power centralization to power separation, on the other hand shows that the present state of our government functions is far from perfect, so we should promote the reformation of government organizations and institutions to make sure the sustainable development of the entire economy.