THE EVOLVING ROLE OF TAX POLICY IN CHINA

Market-oriented economic reforms in centrally planned economies have altered the functions and the objectives of key policy instruments, particularly in the case of fiscal policy. As a result of reform, economic management requires the use of indirect levers to regulate the behavior of increasingly autonomous economic agents. In this respect, fiscal policy becomes central and its macroeconomic role is enhanced. This paper studies the recent Chinese experience, reviewing fiscal developments and analyzing the effectiveness and the appropriateness of tax policies in performing their newly enhanced macroeconomic role. © 1990.