TITLE:
Government Regulation, Land Marketization and Excess Capacity
AUTHORS:
Yufei Wu
KEYWORDS:
Government Regulation, Land Marketization, Over Investment, Excess Capacity
JOURNAL NAME:
Open Journal of Social Sciences,
Vol.4 No.3,
March
29,
2016
ABSTRACT: This paper discusses the reason of firm excess capacity in China in the aspect of marketization under government regulation, by using the data from World Bank China-enterprise survey 2012 to do empirical study of the relationship between obstacle of accessing land, land marketization and capacity utilization. According to the results, there is a positive correlation between levels of obstacle to access land firm capacity utilization. And the relationship between land marketization and capacity utilization is inverted U shape. When land marketization rate is 49.00%, firm capacity utilization is maximized. This implies that too low or too high land marketization rate will lower obstacle for firms to access land, resulting in excess capacity. In China, there is huge difference between land marketization rates in different regions. Especially, land marketization rates in developed regions are comparably lower, which means level of obstacle to access land is low in China for most firms. This is one key reason for China to suffer from excess capacity. Therefore, the government should formulate proper regulation policies to control land, in order to increase land marketization rate and obstacle to access land. Thereby, enterprise investment can be coordinated; capacity utilization can be improved; and the problem of excess capacity can be relieved.