This paper proceeds from Qinghai s reality,explicates about the specific policies and methods of how to make overall plans and configure the financial resource,exert financial functions and advance the economy and society to soundly and rapidly de-velop.

By dealing with the problem of capital deficiency concerning agriculture, rural areas and peasants, the paper proposes a new approach for strengthening the financial function of the government in the development of western China, that is, issuing local government bonds.

Therefore the financial function should be transformed as soon as possible,including defining objectively limits of expenses,increasing the supply of efficient public products,improving social system of income and distribution and social ensuring system,strengthening adjustment about income and distribution,making marke.