Research On Overcapacity Problem Of The Steel Industry From The Perspective Of Finance And Tax

The overcapacity problem has been plaguing the government,market and enterprises of China in recent years,which becomes a lingering nightmare for Chinese economic development.While as the pillar of national economy,the steel industry has been a major part for the government to deal with in terms of preventing overcapacity.Research findings,based on the current theoretical studies and real situations,reveal that China steel industry's overcapacity is not caused by the failure of market but a result of institutional ills.A series of administrative investment policies issued by the central government in recent years can only take temporary effects rather than solving the problem radically.Therefore,it is necessary to research and demonstrate the formation mechanism of the overcapacity problem systematically.Based on Externalities Theory,Government Failure Theory and Incentive Theory,this article,absorbing and referencing relevant research results from home and abroad,combines the method of normative analysis and empirical analysis from the perspective of finance and tax.First,the paper macroscopically describes the development process of the steel industry and analyzes its current situation of overcapacity.Second,it theoretically analyzes the fiscal causes of the problem and creates "game model between the governments" and "preferential fiscal and taxation model" based on this analysis,revealing that it is the defects of fiscal and taxation system and the local government's improper intervention that result in the severe"excess capacity".It is the excessive pursuit of financial tax income and promotion benefits among local governments that make the overcapacity problem of steel industry inevitable.Uniting with a lot of steel enterprises,local governments overtly agree but covertly oppose the central government,which aggravates the situation of over-investment and overcapacity.The level of local governments' fiscal preferential policies and the investment level of steel capacity were positively correlated,which reveals that high level of fiscal preferential policies results in overcapacity problem.Third,this article selects six years' panel data(2008-2013)of Chinese iron and steel industry from 28 provinces(autonomous regions and municipalities directly under the central government)and analyzes the negative effects empirically from the perspective of finance-and-taxation.The results show that:The more financial pressures of local governments in low degree of fiscal decentralization regions,the stranger motivation intervening in economics and the worse situation of excess in production capacity;Under the current political system regarding the GDP growth as the core index of the official promotion mechanism,the faster region GDP growth,the stronger investment motivation of local government and the worse situation of overcapacity.Finally,on the basis of theoretical analysis,model analysis and empirical test above,the article combines the analysis of the status of steel industry overcapacity problem in our country with the reflection on the implementation effects of a series of central investment regulation policies,proposing specific suggestions from the perspectives of fiscal decentralization system,official promotion system,land property right,the restrictions of financial resources,resources and environment tax system,merging and reorganization,technical innovation and monitoring mechanism.Through these suggestions,the article expects to promote the sustainable development of Chinese steel industry in the next few years or even a longer period of time.