China?s Fiscal System: A Work in Progress

Christine Wong and Richard M. Bird ()

No 515, International Tax Program Papers from International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto

Abstract: We argue in this paper that unless China begins to tackle more systematically the serious problems that have emerged in the finances of its various levels of sub-national government the problems to which the present unsatisfactory system give rise will over time increasingly distort resource allocation, increase distributional tensions, and slow down the impressive recent growth of the Chinese economy. Despite the lack of solid and reliable information on the size and nature of China?s real fiscal system, we show that the evidence available is generally consistent with this pessimistic reading. China?s fiscal and ? in time ? economic future thus rests to some extent on reforms to key aspects of its fiscal system, especially its intergovernmental finances. Moreover, a more consistent and purposive framework to this complex of problems seems needed. Given the scale and scope of China?s underlying public finance problems, the ?reactive gradualism? evidenced in recent ad hoc reforms to this or that piece of the fiscal system has, we suggest, run its course.

Keywords: China; intergovernmental finance; taxation; budget (search for similar items in EconPapers)
JEL-codes: H11 H70 O53 P21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cna, nep-pbe, nep-pub, nep-sea and nep-tra
Date: 2005-10
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Working Paper: China's Fiscal System: A Work in Progress (2005)
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Persistent link: http://EconPapers.repec.org/RePEc:ttp:itpwps:0515

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