Influences and Supports of Fiscal Policies on the Development of the Regional Ec

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Abstract.In this paper, the author makes a preliminary definition on the meaning and roles of the fiscal policies by focusing on the transforming principles of the financial policies. In the mean time, on this basis, the author carries out an analysis on the evolution and development of the financial policies of Shenyang, and then discusses the transforming principles of the fiscal policies in details. The purpose of this paper is introducing the importance and necessities of transforming the financial policies, and indicating the nature of the sustainable development of the fiscal policies as well as its influences and supports on the development of the regional economy from the multiple aspects.

Key words:fiscal policies; Regional Economy; Question Studies; Strategy Analysis

1.Introduction

Fiscal policies are the very important means for the governments to regulate and control the economy. At present, it is easy for people to see governments to make great efforts to the innovation of the strategic decisions and the new changes on the social management from the perspectives of the fiscal policies.

In this paper, the author carries out an analysis on the influences of the current proactive fiscal policies on the economic development of Liaoning province and then tries to explore the paths for it to select the fiscal policies next time.

2.Background and Contents of the Proactive Fiscal Policies

The so-called fiscal policy refers to making the economic and social development and other economic objectives realized through the tax and fiscal expenditure means.

In accordance with the roles of the fiscal policies in the regulation aspect of the total national economic gross, fiscal policies can be classified into three types, which are tight fiscal policy, neutral fiscal policy and expansionary fiscal policy.

The financial crisis that sourced from the subprime mortgage crisis of the United States started in 2008. In the second half of the 2008, the emerging and developing countries suffered from the impacts of the financial crisis from the developed countries greatly; whether it is virtual or real economy, the economy all over the world trended to develop very slowly, and this provided some countries with the opportunities to raise the trade protectionism at the same time.

The proactive fiscal policies that are mentioned by the author in this paper includes the expansion of the governmental financial investment, the increase of the financial subsidy scales, the promotion of the tax reform, and the adjustment of the financial expenditure structure, and the supports to the innovation of science and technology, the energy conservation, and the emission reduction and so on.

3.Measures and Effects of the Implementation of the Proactive Fiscal Policies

Many people must want to know how about the effects of the implementation of the proactive fiscal policies. The author believes that the current situation of Liaoning province of China is the most representative to answer this question. Since the half second of 2010, the government of Liaoning province issued a great number of the policies and measures.

The measures taken by Liaoning province prove to have many significant effects ultimately. After the government of Liaoning province implemented the current proactive fiscal policies, the results that are achieved by Shenyang and even the whole Liaoning province become highly obvious to the people all over the country.

In the first quarter of this year, the increases of the most important economic indexes of Liaoning province are higher than the mean level of the average country.

4.Influences of the Implementation of the Proactive Fiscal Policies on the Economic Development of Liaoning Province

4.1. Influence on economic growth cycle

The theory of economic growth points out that the economy is always in the fluctuation state (i.e. prosperity, depression, crisis and recovery), and the cycle is five-eight years generally.

The implementation of the proactive fiscal policies is taking advantage of the external strengths to carry out the regulation and control on the economy, making the "soft landing" of economy achieved, and driving the recession period of economy to be shortened.

Table 1: Economic Cycle Fluctuations of Liaoning Province and Chins since 1970s

From a national perspective, and according to the estimates of the State Council Development Research Center, the current 4 trillion RMB of investment throughout the country will boost 1.5-2 percentage of GDP.

From the perspective of Liaoning province, first, Liaoning takes up a large proportion of the expansion of domestic demand by the central government. Secondly, the upstream industry and basic industry take up a higher percentage in the industrial structure of Liaoning province. However, the policy of expanding the domestic demand will drive these industries to attain a fast growth directly.

Compared with the national GDP growth, the GDP growth rate of Liaoning province has remained above the national average level since 2000.

4.2. Influence on the total economic turnover of Liaoning province

The economy of Liaoning province is just located in the central position where the old industrial base rose abruptly in east China. For this reason, the implementation of the proactive fiscal policies will certainly make prominent the resources, talents, regions and carrying advantages further, and finally promote the policies of responding to the financial crisis to rise.

4.3. Influence on the construction of infrastructure

The implementation of the proactive fiscal policies will drive the central government to enlarge the investments and financial subsidies on the infrastructure projects directly, loose the monetary policy with a moderate degree, and finally speed up the progress of constructing the national projects. All these will bring about a great number of the great opportunities to Liaoning province in the construction investments of railways, airports, highways, rural roads and water transports.

4.4. Influence on carrying on the industrial transformation

Carrying on the industrial transformation is one of the most important means for the governments to give response to the financial crisis, and is one of the necessary roads to make the leapfrog development of Liaoning province realized.

5.Necessities of Implementing the Proactive Fiscal Policies in Liaoning Province

Let's take a look at the policy formulation characteristics and historical situation of Liaoning Province first. Take Shenyang for example.

By taking the history of the economic reform and political change of Shenyang as guidance, the author divides the fiscal policy changes of Shenyang in the recent three decades into the three- phase changes.

The first phase was the mobilization phase of fiscal policies from 1978 to 1998. This phase was a process for the internal demands and external stimulus of the fiscal policies of Shenyang to learn the imitation and introduction under the macro-economic environment.

More importantly, the phase was an evolution process for the fiscal policies of Shenyang to attain experience and new recognition.

The second phase was the adjustment phase adjustment phase from 1999 to 2009. This phase was started in 1999 when the market economy was established in China. This is a phase in which the financial policies underwent changing-over accommodation, adjustment and replacement.

However, compared with Heilongjiang province and Jilin Province, Liaoning province has still a large difference in the economic development. For this reason, it is highly necessary for the government to carry out the proactive fiscal policies in the areas of Liaoning province.

First, the regional difference in permanent asset investment level is a direct reason for the larger and larger difference in regional economic development. Generally, the per capita investment level in this region is quite high; the per capita gross domestic product (GDP) and the per capita income are relatively high, and vice versa.

Second, the decrease of the "two proportions" makes the ability of the central government to regulate and control the economic development gap among regions weakened directly. The "Two proportions" refer to the proportions of fiscal revenue in GDP and the central government GDP respectively.

Third, the unequal and non-standard fiscal policies are not conducive to driving the economic development in the central and western regions of China. The financial and tax systems of Shenyang was not standardized nor uniform before the government implemented a reform on the industrial and commercial tax system in 1994.

Due to the tax preferential policies in China's special administrative regions and coastal cities, the industries that were supposed to be expanded to other areas were still kept in the special administrative regions and coastal cities to develop.

In addition, the fair competition and fair taxation are two of the most fundamental principles of Shenyang to make a reform on the financial and tax systems in 1994. However, in fact, the specific implementation deviated from the two principles.

Fourth, there is a highly large difference among the different regions in the financial service level. Such a difference is one of the most important factors to give rise to the inequitable distribution of social performance and the unbalanced state of the social and economic developments.

6.Suggestions for Liaoning Province to Implement Fiscal Policies Formulated Scientifically

In this section, the author mainly gives the suggestions to the government of Liaoning province based on the analysis of the factors of influencing the formulation of the fiscal policies.

6.1.Making sufficient investigation and research before formulating the policies

Before the decision-making, it is necessary for the government to attach full importance to the research and investigation work. Besides, it is necessary to abide by the principles of seeking in-depth, details and realities.

As a result, the policies that are formulated in such a way will not have changes frequently, will give full consideration to all aspects, and will take the safeguard of the interests of the people as the fundamental starting points.

6.2. Observing problems from a developing perspective and treating the changes of policies environment correctly

Take Shenyang for example. The changes of the policies environment exert a highly important role in the transformation of the fiscal policies of Shenyang. For example, the government of Shenyang takes the policy of "efficiency first" orientation for the pursuit of a high GDP growth rate.

In 2002, the sixteenth national congress of the Communist Party of China (CPC) proposed the idea of stressing efficiency in the first distribution and giving priority to fairness in the second distribution.

However, the harsh realities that there is a great disparity between rich and poor people tell the government that it is necessary to attach high importance to the unfair problems in the first distribution.

6.3. Regarding the social contradiction correctly and adjusting the adjustment policies timely

After China implemented the reform and opening-up policy, the income gap among the people from all walks of life in the urban and rural areas becomes larger at a very rapid speed.

To the mid-1990s, the overall Gini coefficient had risen to 0.45, and had reached a very serious state. The increasingly obvious social contradiction is the background for the social policies to emerge in society. Therefore, every social policy requires the strong financial resources to support.

6.4. Fiscal policies are formulated from by social elites to by the public

Fiscal policy is a kind of the authoritative allocation made for the social values. The participation of the mass people is the cornerstone of formulating the fiscal policies.

Therefore, it is necessary for the local governments of Liaoning province to create a very favorable environment for the citizens to participate in the formulation of the fiscal policies, and make sound the institutional arrangements for the participation of the citizens.

6.5. Transforming the agenda models

The policy target group refers to the individuals or groups whose behaviors are necessary to be adjusted due to the particular fiscal policy decisions. Agenda setting refers to making a sequence on the importance of all kinds of issues

In this aspect, it is necessary to point out that the key of the external pressure model in the initial stage lies in how solid the public opinion foundation is and whether it imposes a sufficient pressure on the decision makers.

The public opinion refers to the so-called "concerned citizens" and the "general public". In addition, the premise for the external pressure model to play a role is that the agendas a few of people are concerned with can change to the financial agendas that a considerably many of people are deeply concerned with.

Besides, it is very difficult to make a judgment on how the external forces exert an influence on the agenda setting actually.

7. Conclusion

Fiscal policy is one of the most important means for the governments to carry out the regulation and control on the economy. As important part of the economic policy, fiscal policy has a very close connection with the security of the national economy.

Therefore, the fiscal policy will not only give rise to the property loss in the country, but also will play an impact on the entire national economy as well as the people's stable life if it fails in the formulation process.

8. Acknowledgement

This Paper is a Result of the Key Fiscal Project 2011 of Liaoning Province (No. 11B008).

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