Redesigning the Dragon Financial Reform in the Peoples Republic of China — страница 4

  • Просмотров 6579
  • Скачиваний 279
  • Размер файла 21
    Кб

assigned to governments above. Numerous conflicts of interest can appear to reduce incentives to enforce the tax at the local level.[17] To address these changes, China in 1994 initiated the setting up of a centrally-managed National Tax Service. This would replace the contract system with a national “tax system,” based on uniform rules of tax assignment and tax sharing. Certain assignments will be assigned to local governments, and others to central government; others will be shared according to predetermined formulas. Interestingly, in 1995, a special police unit was set up to protect tax collectors under this new program.[18] A potential obstacle to tax reform comes from local governments. Local governments have traditionally supported reforms. But this is because the

reforms have usually given them greater autonomy. The tax system reforms need to restore some control over investment and spending back to the central government, which could encounter local opposition. Allowing local governments some discretion over local tax rates can give them some of the autonomy they desire, and provide greater incentive for intergovernmental cooperation. Few reports exist at present on the implementation of these reforms. Certainly, the spirit and scope of the reforms has been well-received by analysts, though more changes are advocated. But it will take several more years to determine the success of the reform of tax collection structures at the local level. Intergovernmental Fiscal Relationships A product of economic reforms in transitional economies is

often a shift in intergovernmental fiscal relationships. In the transition from centralized economy to market economy it is often from a relationship where the local or provincial government is the receiver of the “plan” to the local or provincial government proceeds with a greater autonomy. The evolution of this relationship in the PRC has been very similar. However, the provincial or local governments were at an advantage over many other transitional economies because the Chinese system had the following characteristics 1)local implementation capacity was already established in the rural areas 2)China in most areas has a high ethnic homogeneity and 3) there was much to gain by inter-province trading[19] The very nature of Chinese economic reforms, gradual and incremental,

allowed “scaffolding” of behavior. Partial reforms provided the environment to learn behaviors that could then be applied to the next level of reform. Chinese economic reform was also structured on the idea of decentralization. The establishment of Special Economic Zones (SEZs) encouraged the local areas to develop their own strategies to attract business and allowed them the freedom to implement the strategies. The very earliest reforms, breaking up of farm communes, were also carried out at the local level. Many of the SEZs are doing very well and people living in these areas are enjoying a higher standard of living than they had previously enjoyed. However, tax collection still remains a difficult endeavor with compliance at only 70%. In order to improve the poorest areas

in China, policies and programs that are able to move this revenue to the poorer areas will be needed. This can take the form of a better accounting system to ensure that all taxes due the central government for infrastructure development actually arrive there. Banking Reforms, State Owned Enterprises and the Social Safety Net In order to put current economic reforms in perspective, understand the recommendations made by the international economic community, and fully address the quagmire of State Owned Enterprises (SOEs), a more in depth look at the interconnectedness of the SOEs and the banking system must be taken. We will attempt to do just that using the context of bank development in the PRC, monetary policy, and ongoing reforms to SOEs. Reform of the banking system in the

PRC has taken on similar characteristics to reform in other areas: i.e., gradual and experimental. At the beginning of reforms the financial sector in the PRC could hardly be called a financial sector[20]. Financial sector development and implementation is a complex undertaking which should include the development of institutions, instruments and markets[21]. Currently in the PRC, banking reform lags behind other areas of reform[22]. This is due to a complex array of policy decisions. No discussion of banking reform in the PRC would be complete without an examination of the current state of SOEs restructuring. Many macroeconomic initiatives are being put on hold in order to bolster a failing state sector and postpone the social upheavals that may be associated with the needed