China's economy has developed rapidly since the economic reforms in 1978, but public finance reforms have proceeded more slowly. This book looks at three major policy options addressing the underlying imbalance between revenues and expenditures at the local level in China. This is a valuable resource for anyone interested in local fiscal issues in China.

This work offers a detailed and authoritative guide to financial reform in China since 1979: the book outlines the process of change, compares these changes to the earlier mono-banking system and shows the problems which remained.

Since 1980, China's economy has been the envy of the world. Is annual growth rate of more than 9 percent during this period makes China today the world's fourth-largest economy. And this sustained growth has reduced the poverty rate from 60 percent of the population to less than 10 percent. However, such rapid growth has also increased inequalities in income and access to basic services and stressed natural resources. The government seeks to resolve these and other issues by creating a 'harmonious society' -- shifting priorities from the overriding pursuit of growth to more balanced economic and social development. This volume compiles analyses and insights from high-level Chinese policy makers and prominent international scholars that address the changes needed in public finance for success in the government's new endeavor. It examines such key policy issues as public finance and the changing role of the state; fiscal reform and revenue and expenditure assignments; intergovernmental relations and fiscal transfers; and financing and delivery of basic public goods such as compulsory education, innovation, public health, and social protection. And it offers concrete recommendations for immediate policy changes and for China's future reform agenda. Public Finance in China' is a must-read for specialists in public finance and for those seeking an understanding of the complex and daunting challenges China is facing.

China's economy has developed rapidly following the 1978 implementation of economic reforms that facilitated investment, expanded trade, and introduced market mechanisms and practices. However, reforms of China's public finances have proceeded more slowly and with less publicity. The major reform (a tax sharing system) implemented in 1994 shifted a large share of fiscal revenues from local governments to the central government, but did not substantially reassign expenditure responsibilities back to the center. Following the 1994 reform, local governments had 46 percent of revenues but responsibility for 77 percent of public expenditures. This revenue shortfall motivated local governments to exploit new sources, and revenue from the conversion of land from rural to urban use has been one of the most important extra-budgetary sources. Conversion involves compensating farmers for their land based on its agricultural use value, and then converting the land to urban use and selling it for development at a much higher value. The difference in land values accrues to the local government. The revenue from land sales has been a major source of funding for investment in infrastructure capital, often required to provide services to the newly converted urban land. In areas where urban land is in short supply revenues have been significant, and the incentive to produce more revenue has led to excessive land conversions. This practice has created low-density development in the periphery of some metropolitan areas while leaving large areas of urbanized land undeveloped. Three major policy options explored in this volume can address the underlying imbalance between revenues and expenditures at the local level in China: (1) institute new sources of local revenue, such as a property tax; (2) reform and enhance revenue transfers from the central government to local governments, a promising approach that could also address cross-provincial disparities; and (3) revisit the assignment of expenditure responsibilities from local governments to the central government to align revenues and expenditures at the same level. The end result is likely to be a mix of all three options as part of an incremental reform. This book presents the proceedings of a conference cosponsored by the Lincoln Institute and the Peking University-Lincoln Institute Center for Urban Development and Land Policy in May 2008, plus two additional chapters. It will be a valuable resource for government officials, public finance practitioners, academic researchers, university faculty and students, and others concerned with government tax and expenditure policies and practices in China. This volume will be translated into Chinese and published in association with the Peking-Lincoln Center in Beijing.

The transformation of China's economy has involved major changes in the financial sector. This book offers a detailed and authoritative guide to financial reform in China since 1979. Bank loans replaced budgetary grants as the most important source of funds for investment. A two-tier financial structure, consisting of a central bank and a newly created specialised commercial bank, developed. Nonbank financial institutions also mushroomed. The book outlines the process of change, compares these changes to the earlier mono-banking system, and shows the problems which remained - including the lack of a proper financial control mechanism. There is a detailed case-study of the Shanghai financial markets.

China's transition from a planned economy to a market economy has succeeded in producing more than a decade of phenomenal growth. Whilst similar reforms in countries of Central and Eastern Europe and the former Soviet Union have seen an initial downturn in production, usually with a significant rise in unemployment, the success of the approach taken by China has been remarkable. However, China embarked upon the process, without a well-designed blueprint at the outset. The resulting piecemeal, partial, incremental, and often experimental approach has proved complicated to implement - requiring a complex melding of politics and economics, internal and foreign affairs, government and market. How the difficult task of balancing the diverse array of often competing concerns has been achieved is the subject of this book, which examines the dismantling of the centrally planned system and the mechanism of institutional change in Chinese transition.