Chinese Finance Policy for a New Era

Preface
Contents
List of Contributors
List of Figures
List of Tables
1 Upholding and Improving China’s Basic Economic and Distribution System
	1.1 Why Are These Systems Important
	1.2 Evolution of the Systems
		1.2.1 The Ownership of the Means of Production and the Distribution System in the Planned Economy Period (1949–1977)
		1.2.2 The Ownership of the Means of Production and Distribution System in the Transition Period (1978–2001)
		1.2.3 Basic Economic System and Distribution System in the Socialist Market Economy Period (2002 to Present)
	1.3 Primary Tasks
		1.3.1 Reaching Consensus in Theory
		1.3.2 Synergies in Practice
			1.3.2.1 First, Analysis of Corporate Structure
			1.3.2.2 Next, Analysis of Asset Structure
			1.3.2.3 Then, Analysis of Investment Structure
			1.3.2.4 Finally, Analysis of Urban Employment Structure
	1.4 Conclusions and Policy Recommendations
	References
2 Understanding the Principal Sources of Tension in Chinese Society in the New Era
	2.1 Understanding the Principal Sources of Tension in the New Era
		2.1.1 Sources of Social Tension in China in an Earlier Era Are Largely Eliminated
		2.1.2 Growing Prominence of Principal Social Tension in China in the New Era
			2.1.2.1 Increasing Urgency of Poeople’s Demand for Democracy and Rule of Law
			2.1.2.2 Uneven and Under Development as Serious Issues
	2.2 Understanding the New Requirements Imposed
		2.2.1 New Economic Requirements
		2.2.2 New Political Requirements
		2.2.3 New Cultural Requirements
		2.2.4 New Social Requirements
		2.2.5 New Ecological Requirements
	References
3 From a Moderately Prosperous Society in All Respects to a Great Modern Socialist Country
	3.1 The Historical Context of the New Goal
		3.1.1 China’s Modernization Process
		3.1.2 The Evolution of the Principal Tension of Socialism in China
	3.2 Understanding “a Powerful Socialist Modern Country”
		3.2.1 The New Characteristics of a Great Modern Socialist Country
		3.2.2 Comparison of International Indicators of “a Great Modern Country”
	3.3 Challenges in Building a Great Modern Socialist Country
	3.4 Construction of a Great Modern Socialist Country at Full Steam Ahead
	Reference
4 The Innovation-Driven Development and Nation-Building Strategy
	4.1 Understanding the Strategy
	4.2 How Far Does China Still Have to Go?
	4.3 How to Drive Economic Growth with Innovation?
	4.4 Building a Country of Innovators: Optimal Policy Mix and Institutional Guarantee
	Reference
5 Expediting the Creation of a Modern Public Finance System: Goals and Strategies
	5.1 Significance
	5.2 Goals
		5.2.1 Expediting the Creation of a System That Meets the Needs of a Great Modern Socialist Country
		5.2.2 Accelerating the Establishment of Special Finance Management Organization
		5.2.3 Accelerating the Development of Socialist Democracy in Finance
		5.2.4 Speeding Up the Development of the Rule of Law in Finance
		5.2.5 Speeding Up the Formation of Specialized Modern Financial Management Techniques
		5.2.6 Accelerating the Establishment of a System Meeting the Needs of Dynamic Financial Governance
	5.3 Strategies
		5.3.1 Comprehensively Expediting the Creation of a Modern Public Finance System
			5.3.1.1 Significant Progress Made in Fiscal and Taxation Reform
			5.3.1.2 Only by Further Accelerating the Reform of Fiscal and Taxation Reform Can Meet the Requirements of Comprehensively Deepening Reform
		5.3.2 Accelerating the Establishment of a Regulated Fiscal Relationship Between the Central and Local Governments
			5.3.2.1 Reform of the Fiscal Relationship Between Central and Local Governments Must Come First
			5.3.2.2 New Statement on the Fiscal Relationship Between the Central and Local Governments
			5.3.2.3 What Is the Fiscal Relationship Between the Central and Local Governments
		5.3.3 Speeding Up the Establishment of a Modern Budget System
			5.3.3.1 New Requirements for Budget Reform in the Report at the 19th National Congress of CPC
			5.3.3.2 Focus of Budget Reform
		5.3.4 Accelerating the Establishment of a Modern Tax System
			5.3.4.1 New Statement on the Tax System Reform in the Report at the 19th National Congress of CPC
			5.3.4.2 Focus of Tax System Reform
	References
6 Deepening Reform of the Tax System and Improving Local Tax Systems
	6.1 Socialism with Chinese Characteristics in a New Era Calls for Furthering Taxation Reform
	6.2 Changing Status of Tax Codes: Replacing Rules and Regulations with Legislation
		6.2.1 Replacing Tax Rules and Regulations with Tax Legislation
		6.2.2 Improving Administrative Regulations and Ministerial Rules on Taxation
		6.2.3 Improving the System of Taxation Judiciary and Judicial Interpretation
	6.3 Improving Tax Structure and Building a Fairer Tax System
		6.3.1 Main Problems in the Current Taxation Structure
		6.3.2 Promoting the Reform of Personal Income Tax System that Combines Comprehensive and Classified Tax Systems
		6.3.3 Promoting the Reform of Real Estate Tax
	6.4 Establishing a Modern Multiple Tax System Serving Different Objectives
		6.4.1 Further Improving the Value-Added Tax System
		6.4.2 Bringing into Better Play the Role of Taxation in Regulating Income Distribution
		6.4.3 Further Improving Preferential Tax Policies to Encourage Innovation and Entrepreneurship
	6.5 Improving Local Tax Systems and Central-Local Fiscal Coordination
		6.5.1 Local Tax System Improved in Combination with Taxation Reform
		6.5.2 A Sound Local Tax System Should Be Based on a Fiscal Relationship Between the Central and Local Governments Built Upon Clearly Defined Powers and Responsibilities
		6.5.3 Basic Idea for Improving the Local Tax System
	6.6 Establishing a Modern Tax Collection and Management System
7 Building a Transparent, Standardized, Scientifically Sound and Binding Budget System
	7.1 A Modern Budget System: Cornerstone of a Modern Public Finance System
	7.2 Making Budgets and Final Accounts More Standardized and Transparent
		7.2.1 Making Budget and Final Accounts More Comprehensive and Procedure-Based
		7.2.2 Making the Information on Budget and Final Accounts More Transparent
	7.3 Approaches to Preparing Scientifically Sound Budgets
		7.3.1 Paying Full Attention to Correlation of National Strategy and Budget
		7.3.2 Improving the Basic Expenditure Standard System
		7.3.3 Further Improving the Project Expenditure Standard System
	7.4 Strengthening Budgetary Constraint on Government Investment and Other Expenditure
		7.4.1 Strictly Implementing the Budget Law to Enhance the Constraints on Budget
		7.4.2 Collecting Financial Revenue in Strict Accordance with Laws and Regulations and in Combination with Law-Based Taxation
		7.4.3 Prevention and Control of Local Government Debt Risks
	7.5 Implementing Performance-Based Budget Management Nationwide
		7.5.1 Strengthening Performance Objective Management to Meet Demand
		7.5.2 Improving the Performance Indicator System
		7.5.3 Better Budget Execution Reporting
		7.5.4 Reform of Performance-Based Budget Management System
	References
8 Priorities of Financial Reform in the New Era
	8.1 The Financial Sector Must Serve the Interest of the Real Economy
	8.2 Improving Financial Regulation to Reduce Systemic Risks
	8.3 Deeping Comprehensive Financial Reform and Pursuing Greater Openness
9 Deeping Pricing System Reform and Managing Price Expectations
	9.1 Challenges of Pricing System Reform
		9.1.1 New Challenges in Adjusting the Overall Price Level in the Context of New Normal
		9.1.2 The Price Reform Is in the Deep-Water Zone and Its Impacts Are Uncertain
		9.1.3 Market Environment Needs to Be Improved for Fair Competition
		9.1.4 The Long-Term Mechanism to Stabilize the Prices of Essential Goods Is not Sound
	9.2 Explorations and Innovations in Pricing Regulation
		9.2.1 Clarifying the Role of Price Supervision in Price Management
		9.2.2 Balancing Price Supervision and Price Regulation
		9.2.3 Clarifying the Goal of Price Supervision
		9.2.4 Ideas and Suggestions on Price Supervision
	9.3 Deepening Pricing System Reform in Resource and Energy Sectors to Promote Green Development
		9.3.1 Suggestions on Deepening the Reform of Oil and Natural Gas Industry Systems
		9.3.2 Principles of Deepening the Price Reform of Electric Power and Suggestions of Relevant Policies
		9.3.3 Improving the Price Mechanism and Facilitating the Strategy of Green Development
	9.4 Pricing Reform for Key Commodities and Stabilizing CPI
		9.4.1 Optimize the Pricing Mechanism for Agricultural Products
		9.4.2 Suggestions on the Policy of Medicine Price Reform
		9.4.3 Providing Institutional Guarantee for Price Stability and Assistance for Low-Income Residents
10 Consumption: Mainstay of the Economy and Key Driver of Growth
	10.1 Changing Role of Consumption in Economic Growth
		10.1.1 The Development of China’s Consumer Market Since the 18th National Congress of the Communist Party of China
		10.1.2 Consumption Plays an Increasingly Significant Role in Promoting Economic Growth
	10.2 Main Features of China’s Consumer Market
		10.2.1 The Gap of Consumption Growth Rate Between Urban and Rural Areas Widens Again, and the Potential of Rural Consumption Is Huge
		10.2.2 The Scale of Online Retail Market Continues to Expand, and the Online and Offline Markets Integrate to Develop
		10.2.3 Consumption of Services Increases Significantly, and Goes Hand in Hand with Consumption of Goods
		10.2.4 Quality Consumption, Green Consumption, and Health Consumption Are Becoming Hot Spots
		10.2.5 Residents Are Optimistic in Consumption and Consumers’ Confidence Index Hits New High
	10.3 Main Issues in Consumption Growth in China
		10.3.1 Effective Supply Is Still Insufficient
		10.3.2 The Consumption Environment Needs to Be Improved
		10.3.3 The Consumption Infrastructure Is Still Inadequate
	10.4 Policy Recommendations
		10.4.1 Expand Effective Supply
		10.4.2 Enhance the Quality of Consumption
		10.4.3 Improve Consumption Environment
		10.4.4 Building a Credit System and Improving Consumption by Making Use of Financial Tools
11 Creating More and Better Jobs
	11.1 Employment as the Bedrock of Survival and Living Standard
	11.2 Optimizing Match Between Labor Supply and Demand and Improving Quality of Employment
		11.2.1 Labor Supply
		11.2.2 Labor Demand
		11.2.3 Labor Market Matching
			11.2.3.1 Quantity Equilibrium
			11.2.3.2 Quality Improvement
	11.3 New Employment Trends
	11.4 New Employment Challenges
		11.4.1 Tension Between Employment Expansion and Uneven and Insufficient Economic Development
		11.4.2 Tension Between Institutional Obstacles of the Labor Market and Employment Expansion and Better Employment Quality Achievement
		11.4.3 Tension Between Job Opportunities and Employment Quality
		11.4.4 Tension Between Diversified Approaches of Employment and Coverage of Social Security
		11.4.5 Tension Between a More Severe Labor Shortage and Human Capital Investment
	11.5 Policy Recommendations
		11.5.1 Applying a New Vision of Development and Maintaining Coordinated and Steady Economic Growth
		11.5.2 Continuing Household Registration System Reform to Improve Urbanization
		11.5.3 Combining Proactive and Remedial Labor Market Policies to Expand Employment and Improve Employment Quality
		11.5.4 Speeding Up Reform of the Social Security System Represented by Bringing the Pension Scheme Under National Unified Management
		11.5.5 Creating a Talent Cultivation Mechanism and Further Strengthening Human Capital Investment
		11.5.6 Promoting All-Round Employment Services
	References
12 Facilitating Rural Rejuvenation by Addressing Key Sources of Tension
	12.1 Problems and Challenges in Agricultural and Rural Development in the New Era
		12.1.1 Principal Tension in the Development of Agriculture and Rural Areas in the New Era
		12.1.2 Why “Rural Area” Not “Village”?
	12.2 Rural Development: A Matter of National Interest
		12.2.1 Urban–Rural Dual System Established Since the Founding of the PRC
		12.2.2 Flow of Factors Between Rural Areas and Urban Areas Under the Market Economy Since the Launch of Reform and Opening Up
	12.3 Ten Relationships Crucial to Rural Development
13 Openness as the Cornerstone of the New Economic System
	13.1 Framework and Approaches
		13.1.1 Three Major Areas: Institutional Innovation Is the Key
		13.1.2 Regional Landscape for Further Opening Up: Expand Domestic and International Space
		13.1.3 Guarantee Mechanism for Further Opening Up: Establish and Improve the Support and Security Mechanisms
	13.2 Pathway and Achievements
		13.2.1 The Shanghai and Other Pilot Free Trade Zones
		13.2.2 The Beijing Comprehensive Pilot Project for Further Opening Up the Service Industry
		13.2.3 Comprehensive Pilot Projects of Establishing New Systems for an Open Economy
		13.2.4 Service Trade Liberalization in Guangdong, Hong Kong, and Macao
	13.3 Future Directions and Reform Measures
		13.3.1 Approaches to Building an Open Government
		13.3.2 Approaches to Building a New System for an Open Trade
		13.3.3 Approaches to Building a New System for an Open Investment and Finance
		13.3.4 Approaches to Building a New System for an Open Social Governance
14 Digital Trade: Strategic Significance and Policy Recommendations
	14.1 If Not Now, When?
		14.1.1 Technological Advances Are Changing Traditional Trade Models
		14.1.2 Social and Economic Development in the New Era Provides Favorable Conditions for Digital Trade
		14.1.3 Transition to High-Quality Development Entail New Objectives for Digital Trade Development
	14.2 Problems and Challenges
		14.2.1 The Statistics System Is Not in Line with International Standards
		14.2.2 Weak Voice in the International Rule-Making
		14.2.3 Insufficient Telecommunications Infrastructure
		14.2.4 Supervision Is Not in Line with the Development of Digital Trade
	14.3 Experiences of Other Major Economies
		14.3.1 Development of Digital Trade Among APEC Members
		14.3.2 Digital Trade in the US, the UK, and Japan
		14.3.3 Digital Trade in the European Union
	14.4 Conclusions and Development Strategies
		14.4.1 Basic Conclusions
		14.4.2 Development Strategies
	Reference
15 Tourism in China: Fresh Aspiration in a New Era
	15.1 A New Historical Phase
		15.1.1 Take Off Stage: Opening Up and Early Reform
		15.1.2 High-Speed Development: Opening Internally and Deepening Reform
		15.1.3 High-Quality Development: Two-Way Opening Up and Deepening of Reform
	15.2 Two Basic Principles
		15.2.1 The Supporting Role of Tourism in Building a Moderately Prosperous Society in All Respects and Socialist Modernization
		15.2.2 Unique Role of Tourism in Participating in Global Governance and Building a Community with a Shared Future for Humanity
	15.3 Maxmizing the Contribution of Tourism Toward National Development and Socialist Modernization
		15.3.1 From Economic Functions to Comprehensive Functions
			15.3.1.1 Affirming the Dual Role of Tourism
			15.3.1.2 Identifying Major Tasks in the Development of Tourism
			15.3.1.3 Adjusting Tourism Development Approach
		15.3.2 From the Pillar Industry of Strategic Significance to the Propeller of Socialist Modernization
			15.3.2.1 Symbol for a Better Life
			15.3.2.2 Cement for Social Integration
			15.3.2.3 A Breakthrough for Deepening Reform
			15.3.2.4 Frontier For Opening Up
			15.3.2.5 Connector of Regional Development
			15.3.2.6 Innovator of Modern Economy
			15.3.2.7 Leader in Ecological Civilization Development
			15.3.2.8 Reflection of Modern Governance