Public Policy for a Modernizing China: The Challenge of Financing Services for a Footloose Society (Christine Wong)

IN THE COURSE OF ITS TRANSITION from a planned to a market economy, China has had to rebuild the existing system of public finances, since the previous one was embedded in the central planning institutions and wholly unsuitable for a mixed economy. The end of economic planning also required major reform of budget institutions, as the budget became increasingly the government’s primary tool for allocating resources. This process has proved tricky, and in some critical areas it has conspicuously failed: extra-budgetary resources have persisted,  and the government has been unable to curb the tendency toward excessive public investment.  In this context, Professor Wong examines the challenges of financing basic services for a China in the midst of rapid modernization.