Public Finance in China

Description

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.

Informations

• Publié par: world-bank-publications
• Publié le: 31 janvier 2008
• Nombre de lectures: 8
• EAN13: 9780821369289
• Langue: English
• Poids de l'ouvrage: 1 Mo

Extrait

Public Finance
in China
Reform and Growth
for a Harmonious
Society
Edited by
Jiwei Lou
Shuilin WangPFIC_i-xxviii.qxd 1/15/08 9:15 PM Page i
PUBLIC FINANCE
IN CHINAPFIC_i-xxviii.qxd 1/15/08 9:15 PM Page iiPFIC_i-xxviii.qxd 1/15/08 9:15 PM Page iii
PUBLIC FINANCE
IN CHINA
Reform and Growth for a Harmonious Society
Edited by
Jiwei Lou
Shuilin WangPFIC_i-xxviii.qxd 1/15/08 9:15 PM Page iv
© 2008 The International Bank for Reconstruction and Development / The World Bank
1818 H Street, NW
Washington, DC 20433
Telephone: [phone]
Internet: www.worldbank.org
E-mail: [e-mail]
All rights reserved
1 2 3 4 11 10 09 08
This volume is a product of the staff of the International Bank for Reconstruction and
Development / The World Bank. The findings, interpretations, and conclusions
expressed in this volume do not necessarily reflect the views of the Executive Directors
of The World Bank or the governments they represent.
The World Bank does not guarantee the accuracy of the data included in this work.
The boundaries, colors, denominations, and other information shown on any map in this
work do not imply any judgement on the part of The World Bank concerning the legal
status of any territory or the endorsement or acceptance of such boundaries.
Rights and Permissions
The material in this publication is copyrighted. Copying and/or transmitting portions or
all of this work without permission may be a violation of applicable law. The International
Bank for Reconstruction and Development / The World Bank encourages dissemination of
its work and will normally grant permission to reproduce portions of the work promptly.
For permission to photocopy or reprint any part of this work, please send a request
with complete information to the Copyright Clearance Center Inc., 222 Rosewood
Drive, Danvers, MA 01923, USA; telephone: [phone]; fax: [phone];
Internet: www.copyright.com.
All other queries on rights and licenses, including subsidiary rights, should be
addressed to the Office of the Publisher, The World Bank, 1818 H Street, NW,
Washington, DC 20433, USA; fax: [phone]; e-mail: [e-mail].
ISBN: 978-0-8213-6927-2
eISBN: 978-0-8213-6928-9
DOI: 10.1596/978-0-8213-6927-2
Library of Congress Cataloging-in-Publication Data
Public finance in China : reform and growth for a harmonious society / edited by
Jiwei Lou, Shuilin Wang.
p. cm.
Includes bibliographical references and index.
ISBN 978-0-8213-6927-2 — ISBN 978-0-8213-6928-9 (electronic)
1. Finance, Public—China. 2. China—Social policy. I. Lou, Jiwei, 1950-
II. Wang, Shuilin.
HJ1401.P83 2007
336.51—dc22 2008019064PFIC_i-xxviii.qxd 1/15/08 9:15 PM Page v
Contents
Foreword by James W.Adams . . . . . . . . . . . . . . . . . . xiii
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv
Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . xvii
Contributors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xix
Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxvii
1 Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Shuilin Wang
Part I: Role of the State and Public Finances
2 Public Finances, the Role of the State, and Economic
Transformation, 1978–2020 . . . . . . . . . . . . . . . . . . . . 13
Athar Hussain and Nicholas Stern
3 Intergovernmental Fiscal Reforms, Expenditure
Assignment, and Governance . . . . . . . . . . . . . . . . . . . 39
David Dollar and Bert Hofman
4 Fiscal Policy and Reforms: Toward Realizing a
Harmonious Society . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Teresa Ter-Minassian and Annalisa Fedelino
vPFIC_i-xxviii.qxd 1/15/08 9:15 PM Page vi
vi Contents
Part II: Fiscal Reform and Revenue Assignments
5 Expenditure Assignments in China: Challenges and
Policy Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Jorge Martinez-Vazquez, Baoyun Qiao, Shuilin Wang,
and Heng-Fu Zou
6 Taxation Reforms and the Sequencing of
Intergovernmental Reforms in China: Preconditions
for a Xiaokang Society . . . . . . . . . . . . . . . . . . . . . . . . . 95
Ehtisham Ahmad
Part III: Intergovernmental Relations and
Fiscal Transfers
7 Fine-Tuning the Intergovernmental Transfer System
to Create a Harmonious Society and a Level Playing
Field for Regional Development . . . . . . . . . . . . . . . . . 129
Anwar Shah and Chunli Shen
8 The Reform of Intergovernmental Fiscal Relations
in China: Lessons Learned . . . . . . . . . . . . . . . . . . . . . 155
Jiwei Lou
9 Creating a Regulatory Framework for Managing
Subnational Borrowing . . . . . . . . . . . . . . . . . . . . . . 171
Lili Liu
Part IV: Education and Innovation Financing
10 Financing Lifelong Learning . . . . . . . . . . . . . . . . . . . 193
Carl Dahlman, Douglas Zhihua Zeng, and
Shuilin Wang
11 Strengthening China’s Technological Capability. . . . . 223
Shahid Yusuf and Kaoru NabeshimaPFIC_i-xxviii.qxd 1/15/08 9:15 PM Page vii
Contents vii
Part V: The Public Health System: Access, Service
Delivery, and Financing
12 Funding Public Health . . . . . . . . . . . . . . . . . . . . . . . 255
David B. Evans and Ke Xu
13 Health Reform in Rural China: Challenges
and Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265
Adam Wagstaff and Magnus Lindelow
Part VI: Social Security
14 Notional Defined Contribution Accounts: A Pension
Reform Model Worth Considering . . . . . . . . . . . . . . 289
Jiange Li, Mark Dorfman, and Yan Wang
15 Realizing the Potential of China’s Social Security
Pension System. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309
Martin Feldstein and Jeffrey Liebman
Part VII: Growth, Inequality, and Fiscal Reform
16 Does the Di Bao Program Guarantee a Minimum
Income in China’s Cities? . . . . . . . . . . . . . . . . . . . . . 317
Martin Ravallion, Shaohua Chen, and Youjuan Wang
17 Growth, Inequality, and Fiscal Policy from a Historical
Perspective: Are There Lessons for China?. . . . . . . . . . 335
François Bourguignon
Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 357
Boxes
6.1 Piggybacking versus Tax Sharing . . . . . . . . . . . . . . . . . . . . . . . 116
10.1 Deepening the Reform of Financing Mechanisms for
Compulsory Rural Education . . . . . . . . . . . . . . . . . . . . . . . . . . 205PFIC_i-xxviii.qxd 1/15/08 9:15 PM Page viii
viii Contents
10.2 Characteristics of an Effective Legal and Regulatory Framework
for Education and Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211
10.3 Expanding Enrollment in Zhejiang Province through
Education Vouchers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
10.4 Characteristics of Good Student Loan Schemes . . . . . . . . . . . . . . 218
14.1 Measuring the Performance of Multipillar Reforms . . . . . . . . . . 297
Figures
2.1 Rural/Urban Income Inequality, 1978–2005 . . . . . . . . . . . . . . . . 31
3.1 Within-Province Disparities in per Capita Expenditure
across Counties, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
3.2 Per Capita Expenditures by Province, and Minimum National
Standards under Current and Perfect Equalization, 2003 . . . . . . . . 44
3.3 Relation between Investment Climate and Social and
Environmental Conditions in China, 2005 . . . . . . . . . . . . . . . . . . 49
4.1 Central Government Fiscal Revenues, Expenditures,
and Balances, 1998–2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.1 Central, Local, and Total Government Revenues, 1980–2005 . . . . 98
6.2 Provincial Revenue Losses from C-VAT Reform,
Base-Case Scenario . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
6.3 Provincial Revenue Losses from Extension of VAT
to Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
6.4 Incremental VAT Shares, by Province . . . . . . . . . . . . . . . . . . . .109
6.5 Provincial Revenue Losses from C-VAT Reform, Allowing
for Revenue Returned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
7.1 China’s Layer-Cake Model of Intergovernmental Grant Flows . . 130
7.2 Distribution of Total per Capita Transfers from the Central
Government, by Province, 2004 . . . . . . . . . . . . . . . . . . . . . . . . 134
7.3 Central-Provincial Transfers, 1995–2004 . . . . . . . . . . . . . . . . . . 137
7.4 Composition of Transfers at Different Levels of
Government, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
8.1 Central Government Revenue as a Percentage of Total
Government Revenue and Total Government Revenue
as a Percentage of GDP, 1984–92 . . . . . . . . . . . . . . . . . . . . . . . 156
8.2 Total Government Revenue as a Percentage of GDP and Central
Government Revenue as a Percentage of Total Government
Revenue, 1993–2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
8.3 Percentage of Government Expendit