On The Legal System For Supervision Of Government-investment In China

Investment, demands and consumption have been hailed as the troika topromote economic growth in China, to which investment is of great importance.Meanwhile, government-investment plays an important role in social investmentactivities. In order to cope with the economic impact of the global economic crisistriggered by the American Subprime Crisis in2007, the State Council of China, inNovember2008, puts forward a bailout plan with the expansion ofgovernment-investment in dominance, investing about four trillion yuan before2010.As an important initiative, government-investment weighed heavily in expandingdomestic demand, increasing employment and stimulating economic growth. Atpresent, China is witnessing an accelerated development of urbanization andindustrialization. The construction investment is of large scale and maintains asteady growth accordingly. However, due to the imperfection of investment system,the indefinite functional orientation of government and the backwardness oflegislation on investment, it is noticed that the pace of standardized management ofgovernment-investment has significantly lagged behind the growth of investment.Therefore, it is imperative to study the investment supervision conducted bygovernment and its corresponding legal systems, be it from the perspective ofstrengthening the ability of government economic regulation, or for the targetconsideration of the sustainable development of China’s economy and society, or inaccordance with the need to protect public interests in reality.This thesis, from the perspective of Jurisprudence, analyzes the validity ofgovernment-investment and the supervision of it, the legal systems on investmentsupervision in developed countries, and the historical development of China’sinvestment system. In addition, this thesis also points out the main problems ofsupervision of government-investment in China, and proposes, on the basis of thesuccessful experience of developed countries, countermeasures for a better legalsystem for supervision of government-investment for china.In terms of this, this thesis is to be developed in the following four chapters.Chapter one covers the validity of government investment and the supervision of it. This chapter first analyses the definitions and features ofgovernment-investment, differentiates between central government-investment andlocal government-investment, and explains and clarifies the boundaries of the scopeof government-investment and public-investment, so as to grasp the intention andextension of government-investment more accurately. Furthermore, in light of thetheory of public goods, this chapter explains the market’s limitation in providingpublic goods and the necessities and the superiorities of government-investment onthis point. This turns out to be the theoretical basis of government-investment. Inaddition, this chapter, in perspective of Jurisprudence and Economics, analyzes thetheoretical basis for the establishment of a strict government-investment supervisionsystem. This chapter discovers, on the one hand, in accordance with the publicchoice theory, that government failure is the reason for the construction of thegovernment-investment supervision system; on the other hand, the supervision ofgovernment-investment is, to some extent, an important part of the legal system ofgovernment regulation in economic law and is compatible with the basic principlesand spirits of economic law.Chapter two is focused on the legal systems of supervision ofgovernment-investment in four developed countries and their inspiration to China.According to the management modes of government-investment, the legal systemfor supervision of government-investment can be categorized into three types:relatively concentrated supervision, privatized supervision and mixed-typesupervision. Cases in point can be displayed in the analyses of the supervision ofgovernment-investment in the USA, Japan, the Britain and France. These legalsystems on this point are discussed in terms of their supervision agencies, thesupervision of investors, investment behavior monitoring, and investment projectsupervision. The chapter then compares and comments on the legal systems forsupervision of government-investment of the above countries, and summarizes theadvanced systems and criteria that China could learn from.Chapter three analyzes the legal systems for supervision ofgovernment-investment in China. Firstly, this part investigates China’s historicaldevelopment of the reform of investment system. It is noticed that the investmentsystem in China has gone through three periods, i.e. the traditional investmentsystem before the reform and opening-up, the exploratory reform stage of investmentsystem, and the gradual establishment of institutional framework adapting to socialist market economy. In2004, the State Council issued On the Decisions ofInvestment System Reform, which initially conceived the framework and theoreticalmodel of the legal system for supervision of government-investment. Hence it set aclear orientation for the perfection of the legal system for supervision ofgovernment-investment. Nonetheless, problems still remains in the legal system forsupervision of government-investment in China, i.e. the lack of systematicity in legalprovisions, the disorder of regulatory agencies and their limits of regulatory authority,the unfair and non-transparent regulatory procedures, the ineffective supervision ofinvestment funds and the imperfect project supervision. All these suggest the greatnecessity to enhance the legal system for supervision of government-investment inChina.Chapter four proposes a detailed tentative plan of establishing a better legalsystem for supervision of government-investment in China. According to theelements of legal relationship of government-investment, this chapter, in light of theexisting problems of our legislature, suggests amelioration of legal systems in termsof regulation agencies, the supervision of investors, investment behavior monitoring,and investment project supervision. Firstly, it is necessary to establish and improvethe internal control system and the external supervision agencies ofgovernment-investment. Secondly, emphases should be put on legislation to improvethe governmental supervision of investors, so as to regulate the scope ofgovernment-investment and better the legal liability system of investors. Thirdly, it isnecessary to pose a rigid examination on the decision-making ofgovernment-investment, and standardize the approval and tendering procedures andconduct legal regulation of the budget and payment of government-investment. Lastbut not least, supervision of government-investment projects needs to be improved.