International Monetary Fund. External Relations Dept.
Industrial countries have made very different fiscal policy choices over the past 30 years, which have been manifested in differences in their budget balances, size of government (ratio of total expenditure to GDP), and composition ofrevenue and expenditure. In a recent IMF Working Paper, Politics, Government Size, and Fiscal Adjustment in Industrial Countries, Anthony Annett explores whether political and institutional factors can shed light on these differences.
China’s economic reforms over the past two decades have brought tremendous economic transformation, rapid growth, and closer integration with the global economy. Real income per capita has increased fivefold, raising millions of Chinese out of poverty. Despite these achievements, difficult reforms—involving the state-owned enterprises and the financial sector—must still be completed, while social pressures from rising unemployment and income inequalities need to be addressed. China’s recent accession to the World Trade Organization (WTO) will not only bring further economic transformation but could also prove to be a watershed for the reform process. Wanda Tseng, Deputy Director of the IMF’s Asia and Pacific Department, talks with Gail Berre of the External Relations Department about China’s reforms, its successes, and future challenges.