An update on fiscal reform

Wong, Christine

doi:10.22459/cyrd.07.2018.15

Cited by 5 publications

(8 citation statements)

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“…These are technical reforms in PFM that are mostly invisible to the public, but critical in building the institutions and mechanisms for modern budget management. These reforms typically take many years to implement and refine but have made significant progress over the past six years in improving government financial reporting and transparency, strengthening cash management and extending budget control over off-budget resources (Wong 2018(Wong , 2020. Tax reform has not been nearly as successful.…”

Section: Fiscal Reform In the XI Jinping Eramentioning

confidence: 99%

“…This mismatch was a legacy of the 1994 fiscal reform that recentralised revenues but left most expenditures with local governments. The imbalance grew worse through the rapid expansion of public services during the Hu Jintao-Wen Jiabao administration, since the increased spending on 'harmonious society' initiatives accrued almost entirely to local governments, enlarging the vertical fiscal gap and requiring more transfers (Wong 2018).…”

Section: Introductionmentioning

confidence: 99%

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The state of local public finance in China under Xi Jinping

Wong¹

2023

Dilemmas in Public Management in Greater China and Australia: Rising Tensions but Common Challenges

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The remarkable reconstruction of the role of government in the PRC since 1978 has required an overhaul of its public finance system. The process of fiscal reform, however, is still not complete. 1 An earlier version of this chapter was published as EAI Background Brief No. 1599, 9 July 2021, East Asian Institute, National University of Singapore. I thank Andrew Podger for excellent editorial suggestions. All remaining errors are my sole responsibility. DILEMMAS IN PUBLIC MANAGEMENT IN GREATER CHINA AND AUSTRALIA 198revenues and install mechanisms for controlling local government debt. Significant progress has since been made, including in financial reporting and transparency.Tax reform however has not been nearly so successful and little progress has been made on intergovernmental fiscal reform. As a result, instead of the intended move towards more equal standards of public services, recent developments favour the rich provinces and the fiscal position of local governments has deteriorated. Local fiscal problems have also begun to depress social spending, threatening to undermine the government's goals of improving public services and rebalancing the economy towards consumption.

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Section: Fiscal Reform In the XI Jinping Eramentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

The state of local public finance in China under Xi Jinping

Wong¹

2023

Dilemmas in Public Management in Greater China and Australia: Rising Tensions but Common Challenges

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“…45 off-budget resources. 46 Tax reform has had few notable achievements aside from the conversion of the value-added tax (VAT) to a consumption type and its extension to services. The impact of these reforms on the intergovernmental fiscal system will be discussed in later sections.…”

Section: The Third Decade: Comprehensive Reform Under XI Jinpingmentioning

confidence: 99%

Plus ça Change: Three Decades of Fiscal Policy and Central–Local Relations in China

Wong¹

2021

China

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In China's decentralised system, vital public services such as health, education and social welfare are provided by local governments. The intergovernmental fiscal system is critical to ensuring local governments are adequately financed. Since 1994, China has overhauled its public finances to create a system able to finance government operations, support economic growth and fund industrial policies and international initiatives. Its Achilles' heel remains a weak intergovernmental fiscal system that is unable to fund local governments efficiently and equitably. This article analyses local finance through three decades of reform. Despite a promise early in the Xi Jinping administration to realign central-local fiscal relations, local finances have deteriorated since 2015 due to slowing growth, tax cuts and pressures from tightened budget management. Local fiscal difficulties have caused a decline in social spending as a share of gross domestic product. If continued, this trend threatens to reverse recent gains in improving services and undermine other national policy goals.

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“…The first major fiscal reform came with the 1994 tax reforms. While replacing the complex old Soviet system, separating SOE arrangements from government revenues and repairing China's fiscal decline since the reform era began (Wong 2018a and2018b), these reforms had an enormous impact on intergovernmental financial relations. The introduction of the new system of taxes, including a national valueadded tax, greatly increased the revenues of the national government, beyond that needed for its own expenditures, giving the centre a lot more power and allowing the national government to transfer some revenues to sub-national governments; in so doing, the national government was also able to take steps towards horizontal fiscal equity, addressing some of the variations in revenue-raising capacity among the provinces and in their development needs, and also to place conditions on some of the transfers.…”

Section: Intergovernmental Financesmentioning

confidence: 99%

“…Not readily apparent from Table 11.1 is that the transfers to sub-national governments have not been nearly sufficient to allow them to meet their expenditure requirements without resort to (hidden) debts and unsustainable 'extra-budgetary revenues' particularly from land sales. The debts and implicit liabilities have remained a serious concern for future sustainable economic growth, even though the debts are mostly owed to domestic lenders (Ma 2012;Wong 2018aWong , 2018b.…”

Section: Intergovernmental Financesmentioning

confidence: 99%