HOW REFORM WORKED IN CHINA
jing gong
jingyu zhang
shinji fukumoto
siqi long
zherong feng
Content
- Basic information
- FOUR successes
- ONE failure
- Conclusion
BASIC INFORMATION
- author: Yingyi Qian
- Issue: William Davidson Working Paper, 473 (2002)
- What does this article describe? 1) Why China has succeeded over the end of 20th from our aspects, although some other developing countries have not? 2) One Failure
1st success
Dual Track
- What is it?
- Influence
What is it?
- Plan track - Planned price
- Market track - Free market price
Influence
- Political - Without loser
- Economical - Improve efficiency
2nd Success
Township-Village Enterprises (TVEs)
- What is the TVEs?
- Why the TVEs exists?
- How does the TVEs influence on China?
What is the TVEs?
- Country - Province - City - County - Village
- Rural community firms
Why the TVEs exists?
- Huge territorial area
- Control the revenue
- The absence of law - More secure
How does the TVEs influence on China?
- Improve revenue income
- Provide bigger budget
- Corruption
3rd Success
Productive Fiscal Federalism
- Fiscal system between central and local government
- Effects
Fiscal system between central and local government
-
Local governments have authority over expenditure
SYSTEM
Revenue
Central revenue
Local revenue
Central government
Local government
Province Retain
90% of local revenue
70% provinces residual claimants
Effects
- Central government provides local government with incentives to build up local economics
Central government
Local government
Get a certain cash flow
Spend most local revenue
Support productive local business
Local revenue
“This incentive effects do exists and are significant”
4th Success
Anonymous Banking System
- Why was Anonymous Banking System existing?
- How did Anonymous Banking System work?
Why was Anonymous Banking System existing?
HANDBOOK - Anonymous Banking System
a. Information Opaqueness
- Reducing information available
- Same flat tax rate
b. Government fiscal revenue
- International capital flow & domestic interest rates
- collect quasi-fiscal revenue
The Failure
An Example: Reform of Large State-Owned Enterprise
Sichuan Province - Oct. 1978
Problems:
- Party Control
- Corruption
- Government Policies
politicized, secretive and complicated
through bureaucratic rather than market channels
neither the ability nor the incentives
- readjustment of the layout of the state economy
- the diversification of ownership structure
Conclusion
- China has reformed about political and economical system from 1978.
- China has succeeded, although some other developing countries have not.
- There are 4 successes and 1 failure.
THANK YOU
Q&A