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Reconstruction of Rural Public Goods Supply Mechanism of China

abstract  nowadays, there are still many problems facing china’s rural public goods supply, such as shortage of supply, imbalanced structure, and absence of efficient supervision on fund utilization and disturbance of supplier. to promote rural economy and social development and accelerate construction of new socialism countryside, the country should reconstruct its rural public goods supply system , establish urban-rural integrated public goods supply mechanism, build up a “bottom to top” rural public goods supply decision system, perfect supervision mechanism for rural public goods supply fund and achieve rural public goods investment’s diversification.
key words  reconstruction rural public goods supply mechanism
 
1 introduction
to construct new socialism countryside is a heavy decision of our government. it is a long-term and systematic project and the rural public goods supply is its key factor. now, our country’s rural public goods supply has many problems and seriously hindered the development of rural economy and improvement of farmers’ life quality and thus affected construction of new socialism countryside. therefore, analyzing current problems of rural public goods supply and discussing how to reconstruct rural public products have a significant meaning.
 
2 definitions of rural public goods
according to public economics, social products are divided into public goods and private goods. the former has been divided into pure public goods and quasi-public goods. the pure public goods are these social products having complete non-competition and non-excludability features. non- competition means that an individual’s consumption on public goods will not hinder others’ consumption on public goods; non-excludability means that public goods’ consumption can’t exclude the non-payers or the exclusion is given up due to its high cost. quasi-public goods are these social products with incomplete non-competition and on-excludability. private goods refer to the social products occupied and enjoyed by individuals and have competition and exclusiveness. 
rural public goods are these products for the purpose of meeting rural public consumption. with its different natures in the course of consumption, rural public goods are divided into pure public goods and quasi-public products. the pure public goods are those social products having complete non-competition and non-excludability features and should be offered by the government for free, such as administrative service of basic government (at the township and county level), basic rural scientific research, strategic research on agricultural development, general planning of rural development, countryside’s environmental protection, rural laws and policies, rural information systems and river dredges, etc. quasi-rural public goods refer to those social products with incomplete non-competition and non-excludability and can be divided into three types: quasi-public goods similar to pure public goods, such as rural compulsory education, electricity facilities, small valley anti-flood facilities, promotion of agricultural scientific achievement, public health and social insurance, etc; common quasi-public goods, such as senior high school (vocational high school) education, water facilities, medicine, road construction, cultural centre, technique training and information service, etc; quasi-public goods similar to private goods, such as telecom service, cable television and fountain water project for countryside.
according to different coverage ranges of consumption profit, rural public goods can be divided into national, regional and local rural public goods. national rural public goods’ profit covers the whole nation and should be offered by the central government, such as basic rural scientific research, rural laws and policies, rural information systems, compulsory education, militia training and family planning, etc; regional rural public goods go beyond the local boundary and should be offered by provincial governments, such as river dredges, large-size water project, rural information system and regional plant diseases and insect pests prevention, etc; local rural public goods only involve local area, so should be offered by county and township governments, for example, administrative service of basic government (at the township and county level), fountain water project, water irrigation, rural medicine, road construction and culture center, etc.
also, rural public goods can be divided into “hard” and “soft” two types. the first includes infrastructures, such as rural traffic, telecommunication, power network, etc. as well as basic water project construction and so on; the latter includes rural education, technology training, scientific research, information, technical service, maintenance of public order and relevant rules and policies, etc.
 
3 problems in our country’s rural public goods supply at current stage
rural public goods are a basic factor for farmers’ production and living, so the well-done rural public goods supply is a key point to rural development and new socialism countryside. but now there are still many questions in the rural public goods supply, which has seriously hindered rural economic development and improvement of farmers’ living standard, whereby influences construction of new socialism countryside.
3.1 shortage of rural public goods supply caused by difference in urban-rural separation
chinese government followed the imbalanced development pattern featured by heavy industry priority in 1950s, implementing urban-rural separation’s dual economic structure. government uses surplus agricultural profit to support industrial capital accumulation and urban economic construction. because central finance is committed to urban industrial and public construction, the rural public goods supply is in great shortage; meanwhile, due to attentions that were turned to urban area from rural, the rural public goods supply can only be supported by agriculture revenue and extra-policy income. after the reform of rural revenue system, the town revenue has decreased a great while the central and provincial support is far from enough, so rural public goods supply is in great shortage. 
3.1.1 serious shortage of rural productive public goods
after the implementation of the household contract responsibility system, farmers have begun to make production based on household, they urgently require government’s support in the form of productive public goods in large-size irrigation facilities, large-size agricultural fixed capitals, qualifying seeds, agricultural new technology and agricultural market information, etc. but due to the limited financial income of county and township governments, compounded by lack of relevant supervision and efficient incentive policy in non-budgetary fund input, the serious shortage of productive public goods supply is caused.
3.1.2 serious shortage of public goods supply involving sustainable development in rural areas
rural compulsory education, medical health, social insurance and environmental protection, etc involves rural sustainable development and cause serious shortage in supply.
now, local government and farmers mainly assume rural compulsory education’s fund. but due to the low income and limited financial condition of the local government, the education facilities are quite backward, campuses are tattered and faculty is poor, which totally can’t satisfy rural students’ demand on compulsory education. according to state statistics bureau, our country’s rural residents’ education period is as low as 7.6 years and rural residents having primary and junior high school educations account for only 75% of the total rural population.
the rural medical health care level is backward. the rural people which accounts for 70% of national total only occupies 20% of state public health resource. and rural cooperative medicine coverage rate is as low as 10%, and remaining 90% of the rural people should buy medicine on their own, so they have feeble capacity to resist heavy diseases. the rural social insurance system is imperfect, such as narrow coverage, low socialized degree, the government is unable to provide the basic social insurance to all rural people.
during recent years, our country’s ecologic environment has deteriorated, fertility of soil has reduced, and water resources have become poorer. although the nation has adopted a series of measures, such as program for conversion of cropland to forest, returning the herd to grass, south-to-north water transfer, etc, but most countryside still lacks actual measures made by government. the most serious thing is that, some local governments, for the purpose of seeking short-term economic development, even encourage good economic profit but heavy polluted enterprise to make expansion and improve output, bringing serious danger to rural sustainable development.
3.2 imbalance of rural public goods structure caused by “top to bottom” supply decision system 
our country always follows the “top to bottom” rural public goods supply decision system, which means rural public goods supply isn’t decided by farmers’ own needs, but from the up to down decision procedure and decided by superior government, therefore, the imbalance of rural public goods structure is resulted from.
in order to pursue own achievements and benefit, all levels of policymakers always prefer these public goods with short-term profit and obvious political achievement, such as various target-reaching activities and well-off projects, to the long-term and recessive public goods, such as rural development strategy, rural education, medical health and environmental protection, etc; and also prefer visible and obvious “hard” public goods, such as water facilities subject to inspection, rural power network reform and traffic & road construction, etc, to the “soft” public goods, such as promotion of agricultural research, general planning of agriculture development, construction of rural information system and rural laws and regulations, etc.
3.3 lack of efficient supervision on rural public goods supply fund caused by incomplete budget and asymmetric information
rural area’s reserve planning, fund-raising and apportion are typical fund outside of the budget and the income condition will not be reported to people’s congress and villagers, heavily lack of united budgetary management and its usage has the features of random and arbitrary.
the village financial management is in a disorder, and there isn’t complete accounting book, and qualifying accountant and cashier, the blank note on the accounting book is very popular.
the village and township’s financial opening policy hasn’t been executed, the transparency of public fund management isn’t high, which caused the asymmetry of information between the supervised and the supervisor and cost of superior inspection rises. and limited culture and knowledge of farmers also hindered the implementation of efficient supervision on funds. therefore, funds for rural public goods are often inappropriate or even wasted.
3.4 disunity between rights of affair and of property of the central and local governments leads to disturbance of rural public goods supplier
providing public goods and making up market problems are the main functions of the government. according to public financial theory, the governments should offer rural pure public goods free of charge and the rural quasi-public goods should be mainly offered by the governments and supported by market mechanism function. according to financial share-holding theory, some level of government should have the corresponding level rights of affair, and the rights of finance and of affair should match, therefore, central government should mainly be in charge of national public goods’ supply and local government should be in charge of local public goods’ supply.
but in real practice, both central and local government have unclear definition in rural public goods supply and disturbance of rural public goods supplier, which lead to the situation that the offering of public goods has been transferred from central government to local government and assumed by farmers. for example, compulsory education and family planning are national public goods and should be offered by the central government, but now are mainly offered by township and village governments; militia training belongs to national defense and is a typical national public goods and should be assumed by the central government, but, in fact, is assumed by the township and village government. those situations will cause that local governments’ rights of affair is beyond its right of finance, they can only transfer the responsibility to farmers and impose charges and apportions on farmers and make farmer become the supplier of rural public goods. 
 

4 countermeasures to reconstruct rural public goods supply system
to solve rural public goods supply’s problems at root, to meet farmers’ demand on rural public goods and spur rural economic and social development, we must reconstruct the rural public goods supply system. 
4.1 construction of urban-rural integrated public goods supply system
for a long time, since the government’s policy has focused on the industry rather than agriculture, the urban-rural separated public goods supply system is formed. in urban area, there’s public goods supply system mainly supported by government, and the “self-sufficient” public goods supply system mainly supported the farmers themselves, which causes shortage of public goods that are poor in quality. to speed up the development of rural economy and society, we should construct an urban-rural integrated public goods supply system.
first, regulate government policy in public expenditure; establish industry-based agriculture and urban-based rural mechanism. central government should ensure that its total investment in agriculture has an increase margin higher than that of financial regular income in accordance with stipulation of 《agricultural law of people’s republic of china》.
second, regulate financial structure in agriculture expanse; strengthen the expense on water facility, scientific population, general agricultural development, rural compulsory education, and other infrastructure’s construction; increase expenditure in helping the poor in countryside, rural medicine and farmer training, etc. and offer urban-rural integration public goods.
4.2 construction of “bottom to top” rural public goods supply decision-making system
for a long time, our country has followed the “top to bottom” rural public goods supply decision-making system, and the quantity and type of rural public goods’ supply aren’t decided by actual requirement of farmers but by political and economic targets of government officials at all levels, which lead to the deviation of rural public goods’ supply from the farmers’ actual demands and causes structural imbalance. to make the rural public goods’ supply meet farmers’ demands, we should construct a “bottom to top” rural public goods supply decision-making system.
first, establish a “bottom to top” mechanism to express needs and materialize most people’s opinions of a village or a town. so, we should promote rural basic democratic policy construction and through villager committee and township people’s representative committee policy, and let all the farmers or farmer representatives to vote on the community’s public goods supply and thus realize rural public goods supply decision-making procedure’s transformation from “top to bottom” to “bottom to top”.
second, press village-level organizational system’s reform. implement 《villagers committee organization law of people’s republic of china》, and carry out the system of direct selection of villagers’ committee’s members, in order to make the villagers’ committee an organization selected by villagers, reflecting villagers’ requirements, protecting villagers’ profits and their right to decide the supply of public goods.
third, reform current cadre appointment and removal system. village-level leaders should be selected by farmers in the area through democratic selection and shouldn’t be appointed by the superior. with selection’s guarantee, the leaders at the village level can really be responsible for local farmers and put local farmer’s profit in the first place.
4.3 perfection of mechanism for rural public goods supply fund supervision
first, formulate and perfect managements and measures for agriculture-specific fund, regulate the fund’s management, conduct cost and profit accounting and implement lifetime responsibility policy for the person in charge of project.
second, establish perfect township financial system and regulated village-level financial policy, implement open financial condition, regularly make income and expanse condition public and increase transparency of use of public goods supply fund.
third, play functions of internal auditing and accounting, integrate key checking, financial self-inspection and financial & audit examination, improve efficiency of public goods supply fund.
4.4 clear definition of the obligations and scope of the central government and local government in the provision of public goods
arrangement of rural public goods’ structure has decided various governments’ division principle: the public goods with profit covering the country should be offered by central government; the public goods with profit covering a locality should be offered by local government; the public goods with trans-regional feature should be jointly offered by central government and local government or specific beneficial government.
at present, the rural public goods which should be offered by central government mainly include: large river dredge in different areas, promotion of rural scientific research, countryside’s environmental protection, rural information system construction, basic rural scientific research, militia training and compulsory education, etc.; and the rural public goods which should be offered by local government mainly include: general planning of rural development, rural public security, infrastructure, rural social insurance system, information advice and training for farmers, etc. 
to achieve matching of the rights of affair and of finance of governments at various levels, we must quicken the reform of rural tax system, straight out public distribution relationship and deepen the transfer payment of rural grassroots.
first, establish an urban-rural integrated tax system. eliminate current arable land occupancy tax and urban land use tax, and uniformly levy tax on land resource, and adopt different tax rate according to different applications; increase vat collection range and uniformly levy vat on agriculture product in commodity market; and levy individual income tax on farmers’ production and operation incomes.
second, increase the transfer payment of rural grassroots. after rural tax system reform, rural public goods’ fund sources have further deceased. superior financial department should increase the transfer payment of rural grassroots, ensuring transfer payment to be implemented in villages and towns, making the township and village finance become the first finance in a real sense.
4.5 realization of diversification of rural public goods supply
since the rural has vast territory and large population, the demand for rural public goods is very great. shortage of the rural public goods cannot be eradicated if only resorting to limited financial fund. therefore, the diversification of rural public goods supply should be materialized.
rural pure public goods and some outward quasi-public goods should be offered by government, such as rural grassroots government’s administrative service, rural basic scientific research, rural environmental protection, rural laws and policies, large river dredge, rural public health, family planning project, compulsory education and militia training, etc.
a great number of quasi-public goods, such as farmer technique training, medicine & health care, agricultural product improvement, fountain water project, cable television network, etc. due to their small or low outward feature, and have stable beneficial group, can be jointly offered by government and private department through “bot” pattern or private department investment, and enjoy preferential policy and appropriate financial subsidy. farmers will offer the supply entity a certain amount of fee according to the principle that “who benefits, who assumes”.
in addition, non-government social organizations should also sufficiently play their roles, through a series of non-profit social organizations, such as the “hope project” “spring bud plan”, “green seedling action”, “health care action” and “charity orphan project” etc, in order to offer various public goods and make up shortage of rural public goods offered by governments in a certain degree.
 
5 conclusions
rural public goods are those products that meet rural public consumption and are the basis for farmers’ livings and productions. at current stage, there are many questions in our country’s rural public goods supply system and those problems have hindered development of rural economy and improvement of farmer’s living standard and effected the construction of new socialism countryside, therefore, we should reconstruct the rural public goods supply system.
 
references
[1]  he jufang, he qiuxian. construction of a new rural public goods supply system. zhejiang academic journal, 2004, (3) (in chinese)
[2] chen xiaomei. on status and reform of supply mechanism of rural public goods supply. copy materials of renmin university of china, 2004, (3) (in chinese)
[3]  zhong yumin, liu keshu. causes and regulation countermeasures to imbalanced rural public goods supply. jinyang academic journal, 2005, (1) (in chinese)
[4]  ye zirong, liu hongyuan. rural public goods supply mechanism: history, status & reconstruction. academic study, 2005, (1) (in chinese)
[5]  chen yongxin. innovation of china’s rural public goods supply mechanism. academic journal of sichuan university (social science version, 2005, (1) (in chinese)
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