Six Systemic Reforms with which China Must Press Ahead

Lou Jiwei
Additional contact information
Lou Jiwei: China Investment Corporation

Chapter 3 in The Chinese Economy, 2012, pp 60-74 from Palgrave Macmillan

Abstract: Abstract After thirty years of reform and opening up, a socialist market economy framework has taken hold in China. Two characteristics feature prominently- first, resource allocations are market-driven. Prices are determined in a market system, with the exception of selective infrastructure services. China has shifted from a planned economy in which output quotas were state-directed to a market economy guided by masterplans formulated on a five-year basis. The market is free to decide how much is to be produced and consumed. As China is an open economy and its currency is convertible under the current account, the international market plays a key role in resource allocation. The second characteristic is institutional guarantees that underpin the stability of the macro economy. China practices a revenue-neutral tax regime and maintains effective tax collection and management. Fiscal revenue is witnessing strong and steady growth and fiscal conditions remain sound. China’s central bank and regulatory authorities are working with efficiency and competency. These institutional strengths empower China to rise above a situation of either inflation or deflation. Admittedly, there are many other factors at work, but these two are the most fundamental in that they facilitate market-driven resource allocation and help deliver macroeconomic stability, thus maximizing the well-being of the people.

Keywords: Local Government; Central Bank; Central Government; Institutional Reform; Capital Account (search for similar items in EconPapers)
Date: 2012
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:intecp:978-1-137-03429-8_4

Ordering information: This item can be ordered from
http://www.palgrave.com/9781137034298

DOI: 10.1057/9781137034298_4

Access Statistics for this chapter

More chapters in International Economic Association Series from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().