Critical issues for fiscal reform in the People’s Republic of China part 1: revenue and expenditure management

This paper examines revenue and expenditure management in the People’s Republic of China (PRC) and recommends ways to cut risk and strengthen the resilience of the fiscal system. The paper outlines the PRC’s fiscal reforms and the impact of COVID-19. It notes the financing gap facing subnational governments that play a key role in providing public investment in infrastructure. The study discussed the PRC’s need to adjust its focus on economic growth to tackle its fiscal imbalance, improve the sustainability of local government finances, and address inequality and environmental degradation. This paper is the first of two on key aspects of fiscal reform in the PRC.