Abstract： The theory of socialist market economy is an important part of the political economy of socialism with Chinese characteristics. It is a major theoretical breakthrough of the Marxist political economy based on the practice of China's reform and opening-up. The essence is the organic combination of socialism as a social system and market economy as a resource allocation mechanism， in which both advantages of socialism and market economy are utilized. The combination generates new institutional advantages.Many important theories and viewpoints have been concisely withdrawn from the theory of socialist market economy. These theories and viewpoints have covered major theoretical and practical issues of the relationship between government and market， the basic economic system， the income distribution system， the operation of the market economy and the opening-up practice. Some of them have become the basic principles of political economy of socialism with Chinese characteristics. The new practice of comprehensive deepening of the reform and the process of building a moderately well-off society in all aspects will provide an impetus to the deepening and systematization of the socialist market economy theory.
Key Words： Political Economy of Socialism with Chinese Characteristics; Socialist Market Economy Theory; Main Theoretical Principles; Development

Abstract： Tax sharing between governments reflects the intergovernmental fiscal relations， and the tax rate reflects the relationship between the government and the market， so we can observe the influence of the former on the latter through the study of the relationship between tax sharing and tax rate. The statistical description shows that the tax sharing rate between Chinese governments is flexible， and enterprises are faced with differential tax rate. The theoretical analysis indicates that the actual tax rate is influenced by local government preference and the tax sharing rate. Empirical analysis finds that with enterprise income tax and value-added tax sharing rate increasing， corporate tax evasion will reduce and the actual tax rate will rise. Though the research on the relation between the tax sharing and tax rate， the paper reveal show the fiscal system influence the relationship between the government and the market， and explains why Chinese enterprises face different tax rate， and provides a reference for the further reform of the fiscal system.
Key Words： Flexible Sharing Contracts; Differential Tax Rate; Intergovernmental Financial Relationship; Government and Market

Abstract： Under the situation of “new normal”， People Bank of China makes the creation of structural monetary policy， in order to promote structural transformation of the economy. Based on DSGE models incorporating two production sectors and two banking sectors， this paper analyzes the effectiveness of two types of quantitative structural monetary policy and two types of price-based structural monetary policy. According to the Bayesian estimation， simulation and policy frontier analysis， we draw the following conclusions： four types of structural monetary policy are all effective， and they play the role by directional affecting the operating costs of financial institutions， thus affecting the cost of external financing of sector with by-product of negative externalities， finally promoting the industrial structural upgrade; asymmetric implementation of structural monetary policy can further simultaneously take account of economic stability and industrial structure upgrade.
Key Words： Structural Monetary Policy; Industrial Structure; Economic Stability; DSGE Model

Abstract： Based on the difference of heterogeneous industries， this paper developed a theoretical model considering environmental regulation， factor input structure， and industrial transformation， then tested the theoretical model using panel data of industries in China from 2002 to 2012 empirically. The theoretical findings show that the relationship between environmental regulation and industrial transformation is a J-shape curve， and the inflection point of J-shape curve depends on the tradeoff between distorting effect of resource allocation and technical effect of environmental regulation in heterogeneous industries. The empirical results verify the findings above， and address the impact of environmental regulation on industrial transformation presents J-shape feature in the eastern， central and western regions. However， environmental regulation intensity at inflection point of J-shape curve is different among three regions， which is lowest in the east and highest in the west. Therefore， the government should choose the proper timing of treatment， and implement differentiated environmental regulations and policies in various areas.
Key Words： Environmental Regulation; Factor Input Structure; Technique Effect; Distorting Effects of Resource Allocation; Industrial Transformation

Abstract： Identifying the sources of productivity advantages in special economic zones (SEZs) is important for the policy makers and academic circle alike. This paper attempts to be the first to distinguish the two important channels—agglomeration effect and selection effect—through which special economic zones affect productivity. Using the approach developed by Combes et al. (2012)， we compare the productivity distributions between SEZs and non-SEZs in detail， thereby quantify the importance of the agglomeration and selection effect. We find that， firstly， both agglomeration and selection effect improve firms' productivity in the zones， but the productivity advantage is mainly driven by the selection effect; Secondly， the agglomeration effect only operates in the short-term， and it is dominated by the selection effect in the long run. Thirdly， young， private and less productive firms benefit more from agglomeration effect， suggesting that SEZs contribute to improving the resource allocation and that SEZs do have the effect of “incubator”， so as to promote the development of small and medium-sized private enterprises.
Key Words： Special Economic Zones; Productivity Advantages; Agglomeration Effect; Selection Effect

Abstract： As the platform of innovation elements flowing and allocating， the condition of the factor market has a direct and important influence on the innovation efficiency. This paper establishes a theoretical model to analyze how factor market distortion affecting on innovation efficiency， and makes an empirical analysis to prove the theoretical conclusion， using the panel data of China's high-tech industries during the period from 1997 to 2009 The results show that the factor market distortion has a significantly negative impact on innovation efficiency， and the negative impact exist a law of diminishing marginal effect. And the law means that the marginal contribution， which the improvement of factor market affecting on the innovation efficiency， is smaller when the degree of distortion is high. It also means that the marginal contribution will be growing when the degree of distortion is continuing to decline. In addition， the empirical results show that the effect on innovation efficiency presents enterprises difference， and the appropriate changes of enterprise characteristic can avoid the dampening effect which factor market distortions affecting on innovation efficiency.
Key Words： Factor Market Distortion; Innovation Efficiency; High-tech Industry

Abstract： This paper introduces distortion into a model combing entrepreneur selection and talent allocation， in which SOE and non-SOE co-exist. Our studies show that government regulation and the rule of law affect economic growth through quantity and allocation effects. Reduction in government regulation speeds up growth but at same time enlarges income gap. Enforcement of rule of law and economic growth exhibit U type relationship instead of linear positive one. The model's simulations reveal that a reduction of 0.1 unit in government regulation leads to 0.72 percentage point increase in China's economic growth given return on rent-seeking. Enforcement of rule of law leads to a U type relationship regarding economic growth， the turning point is at about the level of 1.6 for return on rent-seeking.
Key Words： Distortion; Rent Seeking; Rule of Law; Economic Growth; Income Inequality

Abstract： How should China deleverage it non-financial corporate sector？ By analyzing four million Chinese manufacturing company samples during the period of 1998—2013， this papers present evidence from three aspects. First， which company has borrowed the most？ We find that within the sixteen year period， most sample firms have already been significantly deleveraged， with the average leverage ratio declining from 65% in 1998 to 51% in 2013 In contrast， only several thousands of companies have significantly leveraged， mostly large scale， state-owned， listed firms. Second， has the change of leverage supported by the firms' fundamentals？ We find that within the sample period， significant changes have been happened on major firm characteristics， including improved profitability， rising business risk， and declining share of tangible asset. These changes are aligned with the aggregate deleverage trend. We further find that for private firms， the relationship between their firm characteristics and their leverage ratios are highly consistent with the evidence of Western companies. In contrast， firm level factors are not significant in the leverage function of state owned enterprises. Third， we have preliminarily explored the effects of supply-side on firm leverage. Our results indicate that， Chinese banks allocate capitals with increasing biases toward SOEs. Moreover， the issue of zombie lending occurs prior to 2008 and are aggravated post to 2008.
Key Words： Deleverage; Non-financial Corporate Debt; Capital Structure

Abstract： This study tries to solve the problem that classical instrumental variable cannot be applied for the research on “law and finance” across regions within a country， exploring how different levels of legal enforcement have affected financial development across regions under a unique legal origin and a unified legal system. Based on provincial panel data of China from 1997 to 2009， we use the legal education background of the secretaries of the Political and Legislative Affairs Committee (PLAC) of the Communist Party of China as the instrumental variable to control the endogeneity between legal enforcement and financial development. We find that better legal enforcement has significantly improved the development of credit market， but hasn't the similar impacts on the marketization of financial industry and stock market development. But after 2003， the improvement of legal enforcement have promoted banking loans and stock market development as well as the marketization of financial industry while the effects after 2003 have been more significant， because the status of PLAC has been considerably promoted after 2003.
Key Words： Legal Enforcement; Financial Development; Secretary of the Political and Legislative Affairs Committee of the CPC; Instrumental Variable

Abstract： Whether is public spending on healthcare an important way to eliminate health inequalities among different income groups and social distribution gap of cash income， which depends on who can benefit from the public health service.Based on CFPS and insurance value method， this text analyzed benefit incidence of public spending on healthcare after and before China's new medical reform in 2009 Results show that the progressive of benefit allocation of public spending on healthcare has been improved and a certain degree of justice has been achieved by expanding health insurance coverage and improving the level of financial assistance after 2009， which made the poorest income group to become the main beneficiaries. The justice distribution of benefit allocation of public spending on healthcare reduced the Gini coefficient by 5 to 7 percentage points. However， benefit redistribution of public spending on healthcare has two obvious problems in China： one is that the serious bias of public medical service cost towards the poorest income group， which significantly reduced the income redistribution effects of public spending on healthcare， leading to the Gini coefficient of income distribution rising by 2 to 3 percentage points; the other is that the redistribution effect of public spending on healthcare does not occur between the poorest and the richest group， but within the top 80% income groups， which caused the benefit share achieved from public health services by 60% middle income families to decrease from 55% in 2008 to less than 30% in 2012.
Key Words： Public Spending on Healthcare; Inpatient Service; Benefit Incidence; Distribution Effects

Abstract： Using monthly data of prefectural cities from Jan. 2013 to Aug. 2015， this paper empirically investigates how the governance quality and corruption level impact fixed asset investment growth across Chinese regions. We find that the news of a government official being investigated by the CCP's Central Commission for Discipline Inspection significantly depresses the growth of fixed asset investment with a one-month lag in the city where the official is located. On average， the investment growth rate in the impacted city is lower than other cities by about 2 percentage points. We also find that cities with better institutional environments suffer less from such news than other cities. The results are in support of the hypothesis that in the short run， intensive anti-corruption campaigns may hamper the “greasing-wheel” effects of corruption and thus depress investment growth. Yet improvements on governance quality of local governments can alleviate such short-term negative impact.
Key Words： Fair Competition; Anti-corruption; Fixed Asset Investment; Greasing the Wheel

Abstract： The effective assets pricing is based on the disclosure of risk factors. This paper studies the relationship between the risk disclosure and IPO efficiency under the Chinese IPO prospectuses. We firstly find， after controlling relevant variables， more total risks， financial risks and operational risks disclosure will reduce IPO underpricing and boost liquidity. Secondly， companies with poor future performances have stronger willingness to reveal information， as a result of avoiding the regulation penalties following with the on-going earnings falling down，rather than being more honest or wiser instead. Thirdly， with the credit lack in securities market， honest disclosures will get more reward with lower IPO underpricing and more liquidity. Another important contribution of this paper is that， instead of indirect measurements of risks by keywords searching and counting by computers， we manually collected risk information by the undergraduate students， in the way to set up the “vagueness index” comparing with the raw risk disclosures. The conclusions of this paper are benefit for improving information disclosure level in China in terms of theory and practice.
Key Words： Information Disclosure; Risk; IPO Underpricing; Liquidity; The Prospectus

Abstract： This paper studies the short-term and the long-term effect of the system of bureaucratization of native officers (‘Gai Tu Gui Liu’) in Southwest China during Qing Dynasty. We find that， in Qing Dyansty， the population density and human capital are both higher in those regions which were transformed into the direct governance than those regions which were not. These reuslts have persistence effect after Qing Dyansty. In 1990， the population density， average income of rural residences， and infant survival rate are higher in those regions which were transformed into the direct governance earlier in Qing Dynasty than those which were transformed later. The positive effect of the policy on economic development was caused by both the immigration from the inland after political intergration， and more efficient provision of public good by the local government. Thus， this paper not only provides empirical evidence for Machiavelli's governance problem in a culturally heterogeneous nation， but also proposes new direction for understanding the economic inequality in the frontier.
Key Words： Governance of the Rontier; The System of Bureaucratization of Native Officers; Economic Development