China's Fiscal System: A Work in Progress

41 Pages Posted: 15 Jan 2006  

Richard M. Bird

University of Toronto - Joseph L. Rotman School of Management; Georgia State University - Andrew Young School of Public Policy

Christine P.W. Wong

University of Washington

Date Written: October 2005

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. The evidence available is generally consistent with this pessimistic reading. China's fiscal future thus rests to some extent on reforms to key aspects of its fiscal system especially its intergovernmental finances. 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

JEL Classification: H11, H70, O53, P21

Suggested Citation

Bird, Richard M. and Wong, Christine P.W., China's Fiscal System: A Work in Progress (October 2005). Rotman School of Management Working Paper No. 07-11. Available at SSRN: https://ssrn.com/abstract=875416 or http://dx.doi.org/10.2139/ssrn.875416

Richard Miller Bird (Contact Author)

University of Toronto - Joseph L. Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6
Canada
905-274-8841 (Phone)

Georgia State University - Andrew Young School of Public Policy

International Studies Program
Atlanta, GA 30303-3083
United States

HOME PAGE: http://www.aysps.gsu.edu

Christine P.W. Wong

University of Washington ( email )

Seattle, WA 98195
United States

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