The era of the rapid financial revenue growth exceeding GDP growth in the past 20 years had come to an end. The financial revenue growth slowdown means not only the enlarging gap of the central government budget revenue and expenditure, but also the serious local financial difficulties. The slowdown is due to the impact of the transformation of the economic growth pattern and the driving force of economic growth, as well as the problems of the existing financial system. It is critical to optimize China's fiscal system reform. First, the government is supposed to reposition its role in the social economy and redefine the boundary between the government and the market. In different fields of resource allocation, the government needs to choose different roles to play, to advance or withdraw. Second, it is supposed to standardize the local revenue management while expanding the channels of financial revenue, deepening the reform of the provincial and sub-provincial financial system, so that local governments can have sustainable, stable and reliable sources of revenue, and cut down government administration cost.
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