Reforming China's Public Finances to Sustain Growth

Abstract

China's public finance is characterised by a pro-growth taxation system, growth enhancing government expenditure and an expansionary fiscal policy. However, reforms are needed to tackle rising income inequality and worsening social and environmental problems, including more public spending and more progressive taxes. Measures are also needed to resolve rising local government debt. The recently concluded Third Plenum has made these its top priorities and announced various policy initiatives.