Direct Provincial Supervision Of County Finance Reformation’s Effect To Economy Growth Of Yongji County

Since the reform and opening up, China’s economic situation has undergone greatchange. At the same time, China’s economic construction has been deepening as thecenter of the reform, with the problem of regional disparities has become increasinglyprominent in the process of economic development, the central government vegan torealize that difficult to achieve the balanced development of all parts of Chinawith limited financial resources. Therefore, local governments can get closer to theactual and put resources to rational use to develop the local economy; the centralgovernment began to try to encourage local economic development through thedecentralization of more rights.After the1993tax system reform, Jilin Province has been in use of fiscalmanagement system in which province governs city, and city governs county. In July2005, based on to support the county economy and to change the county government’sstatus quo of debt management risk and to deal with gradually increase the range ofpowers of counties a relatively small property rights and reduce the risk of distress andof the county government’s, Jilin Province began to implement the financial system theprovince governs both city and county, referred to as “the Province Governs Countyfinancial system”.This paper reviews the literature of fiscal decentralization in the above context,summarizes the studies of the relationship of fiscal decentralization and local economicgrowth, and clarifies the relevant factors and mechanisms of fiscal decentralization onthe local economic impact. We analysis the history and current situation of JilinProvince’s fiscal reform, emphasis summarize the old financial system architecture inYongji County of Jilin Province, and Yongji County’s change after the province of county fiscal reform and. Through the measurement analysis on the factors of economicgrowth in Yongji County, we found that the degree of fiscal decentralization mechanismof rapid increase in the level of industrialization, led to the improvement of the YongjiCounty’s GDP. Overall, the effect of the Province Governs County fiscal reform in JilinProvince, and the improvement of the degree of fiscal decentralization have asignificant impetus to the development of county economy. These effects in the modelsand theories have been better confirmed.