Restructuring Hainan's Fiscal System

摘要

Hainan Island has developed for years within a centrally planned economic system.The Chinese government has decided to make Hainan a separate province and a special economic zone with a charter to build a market-oriented, outward-looking economy with mixed forms of ownership. The Note examines one aspect of the changes that the province must make in order to make a successful transition to a market-oriented economy: the fiscal structure. Right now, the fiscal structure of Hainan is designed primarily for a centrally planned economy, and the shifts needed in taxation, public expenditures, overall fiscal balance, autonomy, and accountability are discussed in the Note. In addition, the relationships between fiscal reform and other reforms are examined.