Abstract: In recent years, the financial operations of the central and local governments are mainly for the purpose of capital accumulation to stimulate rapid economic growth. The specific actions are that the local governments rely heavily on the income from land finance and use it as investment funds to stimulate economic growth; meanwhile, the central and local governments attach great importance to boosting economic growth through government investment. However, the government’s financial operations have led China’s economy into the plight of uncertain future growth and unfair development environment. In response, the government should complete step by step the construction of the tax-sharing and classified financial system below the provincial level in the public financial framework, regulate the usage of land transfer payment, and establish a public service-oriented performance evaluation system of the leaders.

Key words: economic development; government’s fiscal action; land finance; government investment; economic growth