Measuring Excess Capacity On China And Empirically Researching The Relationship Of Macro Economic Fluctuation

After20years of rapid development, China’s economy has entered a new stage of development. In this new stage, Overcapacity has become a widespread and frequently occurring economic phenomena. The second national economic census shows that China now has nearly500kinds of products which capacity utilization below60%, Especially in the industrial field in which device idle rate is as high as40-50%. in recent years, Overcapacity has plagued China’s economic development, Especially since the financial crisis, Overcapacity problems are more serious. in the short and long term,Overcapacity will cause some negative impact on China’s economy and Undermine the healthy development of the industrial structure, Increase the risk of total economic fluctuations. Overcapacity has caused great concern of all parties And relevant government departments have taken a series of measures to adjust the problem, But so far yet not to be effectively addressed. In the next period, High investment is still the main driving force of China’s rapid economic development, Therefore, Research overcapacity formation mechanism should have the very important guiding significance.This paper, from the perspective of production capacity to research degree of excess capacity. According to related research, Capacity utilization is the preferred measure of overcapacity. This paper also uses the capacity utilization to measure the degree of overcapacity. After analyzing the pros and cons of the measure of capacity utilization, this paper uses the non-parametric methods-data envelopment analysis (DEA) method to measure the extent of29provinces, autonomous regions and municipalities directly under the1998-2010production overcapacity. According to the standard of measure for the capacity utilization level in Europe and the United States and other countries, as well as China’s Hong Kong, Normal capacity utilization is generally79%-83%. if it is Significantly lower than79%, then there is excess capacity. The measure results show that the capacity utilization of the vast majority of our region was significantly lower than normal. While the eastern part of the capacity utilization levels were significantly higher than the central and western regions.This paper systematically analyzed the overcapacity formation mechanism and Theoretically analyzed the connotation of industrial overcapacity, On this basis, this paper suggest the hypothesis that production overcapacity has relation with the macroeconomic volatility. Use the fixed effects variable intercept panel data model to Empirically Analysis the impact on the region industrial overcapacity of macroeconomic volatility and the level of investment in fixed assets. Studies have shown that:in the short term, Macroeconomic volatility have a certain impact of overcapacity, and the impact is positive, Macroeconomic fluctuations will cause vendors elements cellars behavior which Leads to reduction in the level of capacity utilization. Excessive investment in fixed assets will result in a decline in the level of capacity utilization, which will have a positive impact on excess production capacity. It can be seen from the average fixed effect characteristic value, Overcapacity showing distinct regional characteristics, The eastern part has the higher fixed effects and has a lower Overcapacity, the central region has the lowest fixed effects and its Overcapacity situation is very serious. Fixed effect of the western region range between the central and eastern, In the above analysis, the paper give some policy recommendations to solve Overcapacity in China.