Administration for Industry and Commerce, tax registration and, 100

Administrative assessment, of tax administration, 83

Administrative Measures for the General Anti-Avoidance Rules, of SAT, 81n10

Administrative reviews, for SAT, 106, 106n44

Age dependency, 28t

• social security and, 17–18, 143

Agricultural Bank of China, 281

Agriculture

• taxation of, 78n5

Air pollution, 10

• taxation on, 66–67

Alcohol, taxation of, 61

Alibaba, 24, 285

Alipay, 285–86

AMCs. See Asset management companies

AML/CFT. See Anti-money laundering and counterterrorism

Annual Report on Exchange Arrangements and Exchange Restrictions (AREAER), 21, 216, 216n5, 260, 263

Ant Financial, 285

Anti-money laundering and counterterrorism (AML/CFT), 271

Arbitrage

• capital flow liberalization and, 228, 242

• nontraditional lenders and, 292

• WMPs and, 292

AREAER. See Annual Report on Exchange Arrangements and Exchange Restrictions

Arrears collection, by SAT, 104–5

Asset management companies (AMCs), 282, 291

• private sector and, 284

Association of Southeast Asian Nations, 124

Atkinson, A. B., 61

Audits

• for local government finances, 171

• by SAT, 103–4

• of VAT, 103, 103n42

Augmented debt

• GDP and, 8, 181

• IMF and, 118n1

• local government finances and, 181

Bad loans, 284

Bai, C. E., 194–95, 195n1

Balanced-budget rules, 186–87

Balance of payments, 27t

• PBC and, 20, 198

• SDR and, 275

Balance of Payments and International Investment Position Manual (BPM6), by IMF, 343, 343n7

Bankers’ acceptances, 295–96

Bank for International Settlements (BIS), 254–55

Banking system. See Financial sector

Bank of China, 281

Barnett, S., 70

Base erosion and profit shifting (BEPS), 96

Basel III, 241

Benefit formula, for pensions, 144, 145t, 155, 159

Benefit tax principle, recurrent property tax and, 70

BEPS. See Base erosion and profit shifting

BIS. See Bank for International Settlements

Blinder, A. S., 193

Bond markets, 300–302

• corporate, 209, 301

• inflation and, 209

• RMB in, 253–54

• See also Local government bonds

Bond yields, 209

• interest rates and, 20, 197, 199–201, 200t, 201t

• reserve requirement and, 198

Bottom-up baseline expenditure forecasting, in MTEF, 17, 122, 128, 129, 131, 139

BPM6. See Balance of Payments and International Investment Position Manual

Brazil

• DGI and, 353f

• local government finances in, 188

• SOEs in, 312t

• tax revenues in, 37f

Brazil, Russia, India, China, and South Africa (BRICS), 223, 225f

Budget Law

• local government finances and, 19, 164, 171–75, 291

• MTEF and, 16

• revisions to, 181, 182t–185t, 185

• transparency and, 19

Businesses

• compliance risk management for, 113

• lump-sum taxes for, 102

• property tax on, 70

• See also Corporations; Private sector; State-owned enterprises

Business turnover tax, 29, 33, 36

• VAT from, 33, 60, 60n11

Canada

• DGI and, 353f

• environmental taxes in, 63f

• M1 in, 193

Capital buffers

• for capital flow liberalization, 234

• LGFV and, 172

Capital flow liberalization, 21–22, 22t, 215–44

• arbitrage and, 242

• binding of controls for, 223–29

• capital buffers for, 234

• capital inflows and outflows and, 223–24, 227f

• cases for and against further measures toward, 230–32

• convertibility and, 216–29, 216n6

• cross-border portfolio investment and, 220

• currency-based controls for, 240

• de facto integration and, 216n6, 224f, 233

• de jure measures of, 216, 218f

• depreciation and, 233

• domestic and international impact of, 238, 239t

• exchange rates and, 230f, 232–33

• FDI and, 217, 217n7, 218, 223–24, 226t, 232, 237

• financial sector and, 233–34

• foreign exchange markets and, 223, 233

• future options for, 232–43

• history of, 217

• inflow surges with, 240–42

• liquidity buffers for, 234

• macroprudential policy and, 234, 241–42, 241n28

• monetary policy and, 233

• net errors and omissions with, 228, 229f

• outflow surges with, 242–43

• PBC and, 233, 234

• present situation with, 216–29

• quotas and, 235

• removing controls for, 234–40

• residency-based controls for, 240

• risks of, 240–43

• RMB internationalization and, 221–23

• schemes to ease portfolio investment controls, 218, 221t

• supporting policies for, 232–34, 236t–237t

Capital gains

• in selected countries, 186f

• SOEs and, 320t

• taxation of, 44, 53, 57f, 59

Capital income, taxation of, 43, 49–50, 54, 71

Capital markets, 285

• RMB internationalization in, 260, 263

Carbon emissions, 10

• taxation for, 65–66, 65n12, 66n13

• trading scheme for, 15, 29

CBRC. See China Banking Regulatory Commission

Central government

• debt of, 350

• MTEF and, 135

• Pensions for Urban Workers and Staff and, 144

• taxes of, 36–37, 77

• tax sharing by, 8, 37, 39t–40t, 41f, 165f–167f, 168, 179t

Child tax credit, 51

China Banking Regulatory Commission (CBRC), 295

• PBS and, 347

• on WMPs, 296–97

China Construction Bank, 281

China Development Bank, 281

China Insurance Regulatory Commission, 304

China Interbank Bond Market (CIBM), 263, 267, 268

China Securities Regulatory Commission (CSRC), 220, 301

China Tax Administration Information System (CTAIS), 84–85, 107–8

China Utility-Based Energy Efficiency Finance program, 206

Chinese Academy of Environmental Planning, 62

CIBM. See China Interbank Bond Market

City commercial banks, 281

• lending and deposits of, 286

Clements, Benedict, 149n9

Climate change, 10

Coal industry, 25

• environmental taxes for, 64f, 67–68

Cobb-Douglas production function, 329

Communication, improvements in, 12–13

Communist Party, 13

• SOEs and, 25, 318–20, 321

Compliance risk management

• for SAT, 98–99, 98n36, 99n37

• for small businesses, 113

Consumer price index (CPI), 195, 195n1, 338, 339

• SVAR and, 193, 195, 211–12

Consumer-to-consumer transactions, 87n16

Consumption

• rebalancing of, 7

• tax, 78n6

Convertibility, capital flow liberalization and, 216–29, 216n6

Coordinated Direct Investment Survey, 343

Coordinated Portfolio Investment Survey, 343

Corporate bond market, 209, 301

Corporate income tax, 56f–57f

• current situation of, 55–58

• investment projects and, 55, 55n6

• proposed reform for, 58–59

• for SMEs, 57–58, 58t

• tax rates for, 55–56, 55n5, 58n8

Corporate taxation, 33

• shared by central and local government finances, 37

Corporations, multinational, 16, 97

CPI. See Consumer price index

Credit growth, 8, 9f

Credit information system, interest rates and, 206, 209

Cross-border portfolio investment, capital flow liberalization and, 220

CSRC. See China Securities Regulatory Commission

CTAIS. See China Tax Administration Information System

Currency-based controls, for capital flow liberalization, 240, 240n24

Currency internationalization, 250–52

• private sector and, 250

• See also Renminbi internationalization

Currency swap agreements, 251

• PBC and, 270

• with RMB, 254

• RMB internationalization and, 270

Data Gaps Initiative (DGI), of G20, 26, 333, 337, 345, 353f

Debt, 118, 118n1

• of central government, 350

• in local government finances, 30, 175, 186–89, 187f

• of SOEs, 314

• See also Augmented debt

Debt-swap program, 172, 208

Debt-to-GDP ratio, for local government bonds, 175n6

Decision-making phase, for MTEF, 129–31

De facto integration, capital flow liberalization and, 216n6, 224f, 225f, 233

Default assessments, by SAT, 105

De jure measures, of capital flow liberalization, 216, 218f

DENG Xiaoping, 3, 217

Dependency ratio, 17–18, 28t

Deposits

• of financial sector, 286–88

• insurance for, RMB internationalization and, 269

• of JSCBs, 286

• rates of, interest rates and, 197

• of rural banks, 286

• of state-owned banks, 286

Depreciation

• capital flow liberalization and, 233

• of RMB, 264–65, 265f–266f

Development and policy banks, 281

Development Research Center, 86n15

DGI. See Data Gaps Initiative

Digital HR initiative, 107, 109

Direct tax reforms, 38–59

• See also Corporate income tax; individual income tax

Dispute resolution, by SAT, 105–6

Dividends

• efficiency, 130

• taxation of, 44, 50, 52–53, 52n4

Dollar, 251n1

• in IMS, 272

• RMB and, 268

Dollar, D., 329

Domestic demand, rebalancing of, 6, 7f

DSGE. See Dynamic stochastic general equilibrium

Dual income tax system, 15, 49–50, 52, 71

Dynamic stochastic general equilibrium (DSGE), 196

• loan-to-deposit ratio and, 198

• quantitative loan limits and, 199

• reserve requirement and, 198

EBS. See Electronic Broking Services

e-commerce, 87, 87n16

Economic indicators, 27t

Education, 28t

Efficiency

• dividend, 130

• versus equity, 42

• of tax system, 42

e-GDDS. See Enhanced GDDS

Eichengreeen, Barry, 231

e-invoicing. See Electronic invoicing

Electronic Broking Services (EBS), 255, 274–75

• foreign exchange markets and, 257

Electronic invoicing (e-invoicing), 108

Endowments, lump-sum taxes on, 61

Energy prices, environmental taxes and, 68

Enhanced GDDS (e-GDDS), 336

Enterprise Income Tax Law of 2008, 55, 81

Entrusted loans, 295

Environment

• social indicators for, 28t

• tax system and, 10

Environmental Protection Law, 66

Environmental taxes, 15, 33, 61, 63f–64f

• current situation for, 62–65

• energy prices and, 68

• proposed reforms for, 65–68

Equity, versus efficiency, 42

Equity markets, 23, 302–4

• volatility in, 4f

Exchange rates

• capital flow liberalization and, 228–29, 230f, 232–33

• RMB internationalization and, 269

Excise tax, 78n6

Expenditure baseline, for MTEF, 128–29

Export-Import Bank of China, 281

Exports and imports, China’s share of, 335f

Exterior sector statistics, 343–44

FDI. See Foreign direct investment

Financial Activities Tax, 62

Financial Crisis Response Group, 234

Financial frameworks. See Monetary and financial frameworks

Financial sector

• AMCs in, 282, 284, 291

• bad loans in, 284

• bankers’ acceptances in, 295–96

• capital flow liberalization and, 233–34

• city commercial banks in, 281, 286

• deposits of, 286–88

• development and policy banks in, 281

• entrusted loans in, 295

• foreign banks, 281

• fund management companies in, 282

• fund management subsidiaries in, 282

• insurance companies, 285, 291, 303

• interbank funding in, 299–300

• interest rates and, 201–2

• intermediating products in, 292–93

• Internet banking, 285–86

• investment receivables in, 294–95

• JSCBs, 281, 286

• lending by, 286–88

• nontraditional lenders in, 288–300, 289f

• rapid change in, 279–305

• reforms in, 29

• rural banks in, 281, 286

• shadow banking, 292, 293t, 297

• state-owned banks in, 286, 291

• structure of, 279–86, 280f, 283f

• VAT and, 62

• wholesale funding in, 299–300

• See also Bond markets; Capital markets; Equity markets; Wealth management products

Financial sector governance

• communication and transparency in, 12

• monetary and financial frameworks for, 23–24

• rebalancing of, 8–10

• staffing for, 14

Financial Sector Program, of IMF, 14

Financial soundness indicators (FSIs), 347–48

Fiscal deficit, 8, 10f

Fiscal forecasting, MTEF for, 137

Fiscal policy frameworks

• for local government finances, 18–19

• MTEF for, 16–17, 117–40

• reforms for, 29–30

• for social security, 17–18

• tax administration, 16

• tax policy, 15–16

• tax system and, 36

• trends in, 119f–120f

Fiscal policy objectives, for MTEF, 127–28

Fiscal risks, local government finances and, 163–78

Fiscal rules, for MTEF, 133–34

Fiscal space, 125, 125f

Fixed asset investment, 28

Fixed MTEF, 134

Foreign banks, 281

Foreign direct investment (FDI), 87, 87n17

• capital flow liberalization and, 217, 217n7, 218, 223–24, 226t, 232, 237

• reserve requirements and, 228n15

• RMB and, 252–53

• SOEs and, 218, 218n8

• URR and, 237

Foreign exchange markets

• capital flow liberalization and, 223, 233

• currency depreciation and, 265

• EBS and, 257

• RMB and, 270

• volatility in, 4f

Foreign exchange reserves, 334f

France

• capital flow liberation and, 239

• DGI and, 353f

• e-commerce of, 87

• environmental taxes in, 63f

• local government finances in, 188–89

• pensions in, 154n18

Freshwater resources, 28

Friedman, B. M., 192–93

FSIs. See Financial soundness indicators

Fund management companies, 282

Fund management subsidiaries, 282

G20. See Group of Twenty

Gasoline taxes, 64f

GDDS. See General Data Dissemination System

GDP

• augmented debt and, 8, 181

• bond yields and, 200

• capital flow liberalization and, 21, 218, 223, 224, 228

• China’s share of global, 250f, 334f

• corporate income tax and, 55

• debt-to-GDP ratio, 175n6

• environmental taxes and, 62

• financial sector and, 24

• local government finances and, 8, 19

• M2 and, 20, 194–95, 195f

• macroeconomic statistics and, 26

• MTEF and, 118, 128, 133

• national accounts and, 338–39, 339n3

• pensions and, 18, 152–54, 152n11, 156n23

• Pensions for Civil Service and Public Unit Workers and, 144, 146, 153

• Pensions for Urban and Rural Residents and, 144, 146, 153, 153n13, 156

• Pensions for Urban Workers and Staff and, 144, 153

• recurrent property tax and, 69

• revisions policy for, 340–41, 340t, 341f, 342t

• service sector and, 86n15

• social security and, 18, 143

• SOEs and, 24, 309

• tax administration and, 76, 77t, 78, 79f

• tax policy and, 15

• tax system and, 36

GDP per capita, 28t

General Data Dissemination System (GDDS), 336

General Department, of IMF, 275

General Funds Budget

• MTEF and, 124

• pensions and, 157–58

General Resources Account, 275

Germany

• currency internationalization and, 250

• DGI and, 353f

• e-commerce of, 87

• environmental taxes in, 63f

• insolvency framework for, 12f

• pensions in, 154n18

GFSM. See Government Finance Statistics Manual

Gini coefficient, 11f, 28

• tax system and, 36

Global financial crisis, 5

• domestic demand and, 6

• local government finances in, 291

• tax evasion and compliance in, 86n14

Global income tax systems, 49–50, 49n3

Globalization

• RMB and, 260f

• tax administration and, 87–88

• See also Internationalization

Global output, China’s share of, 2f

Global trade, China’s share of, 2f

Golden Tax Project (GTP), 84–85, 107–8

Government borrowing. See Debt

Government Finance Statistics Manual (GFSM), 344–45, 344n8

Government-Managed Funds Budget, 124

Granger causality test, 193

Green growth, rebalancing of, 10

Greenhouse gas emissions, 68

Group of Seven, corporate income tax and, 55

Group of Twenty (G20), 11

• BEPS and, 96

• Data Gaps Initiative of, 26

• DGI of, 333, 337, 345, 353f

• MTEF and, 121

Growth targets

• credit growth and, 8

• local government finances and, 19

GTP. See Golden Tax Project

High-speed rail system, 3

Hong Kong

• Mutual Recognition of Funds and, 30

• RMB in, 253, 267, 268

• Shanghai-Hong Kong Stock Connect, 220, 267

• Shenzhen-Hong Kong Stock Connect, 30

• state-owned banks in, 281

Hukou (household registration)

• reforms for, 29

• tax system and, 36

Human resources, for SAT, 83–84, 106–7

IMF. See International Monetary Fund

IMS. See International monetary system

Inclusive growth, rebalancing of, 11, 11f

Income inequality, 11, 36n1

• tax system and, 36

Income tax, 15–16

• dual system for, 15, 49–50, 52, 71

• global systems for, 49–50, 49n3

• theory of, 42–43

• See also Corporate income tax; individual income tax

Indexation, of pensions, 155

India

• in BRICs, 223, 225f

• DGI and, 353f

• local government finances in, 188

• SOEs in, 312t

• tax revenues in, 37f

Indirect tax reforms

• policy guidance from, 61

• to tax policy, 60–70

• See also Environmental taxes; Recurrent property tax; Value-added tax

Individual commodity taxation, 61

Individual income tax

• annual assessment of, 51–52

• current situation of, 43–49

• income distribution for, 46f

• proposed reforms for, 49–54

• rates of, 43t, 44t, 50–51, 52

• share of income by source, 47f

• social security and, 44, 45f, 47f, 54

• targeted allowances for, 51

• tax units for, 50

• tax wedge for, 46f

• threshold for, 51

• for urban households, 48f

Industrial Commercial Bank of China, 281

Inflation

• bond markets and, 209

• efficiency dividend and, 130

• M1 and, 193

• money supply and, 191

• MTEF and, 135

• PBC and, 20

• SVAR and, 193, 195

• See also Consumer price index

Inflow surges, with capital flow liberalization, 240–42

Information technology

• for SAT, 84–85, 90, 107–8

• for VAT, 108

Innovation, rebalancing of, 7

Insolvency framework, 12f

Insurance companies, 285, 291, 303

Interbank funding, 299–300

Interest income, taxation of, 44, 50, 53–54

Interest rate corridor, 207–8

• by PBC, 203–4

Interest rates, 8

• bond yields and, 20, 197, 199–201, 200t, 201t

• capital flow liberalization and, 228

• credit information system and, 206, 209

• deposit rates and, 197

• financial sector and, 201–2

• institutional constraints on, 197–206, 198t

• lending rates and, 197, 202

• LGFV and, 192, 208–9

• liberalization of, 20–21

• loan-to-deposit ratios and, 198–99, 208

• on local government bonds, 19, 171n3

• M2 and, 207

• macroeconomic statistics for, 348–49

• maturity mismatch and, 205

• measuring effectiveness of, 199

• in monetary policy framework, 191–212, 194f

• in perfect regime, 196–97

• policy recommendations for, 206

• quantitative loan limits and, 199, 208

• reserve requirements and, 198, 208

• risk preferences mismatch and, 205

• RMB internationalization and, 269

• shadow banking and, 199

• small bank regulatory restrictions and, 205

• SOEs and, 192, 208–9

• soft budget constraints and, 100, 202–3

• specialized guarantee agencies and, 205–6

• SVAR and, 211–12

• volatility of, 194f, 196

• See also Lending rates

Intergovernmental relations, with local government finances, 177–78, 185–86, 186f

Intermediate targets, for monetary policy, 192–96, 193t

Intermediating products, in financial sector, 292–93

International balance of payments, 198

International Finance Corporation, 206

Internationalization

• of air pollution tax, 66–67

• of currency, 250–52

• See also Renminbi internationalization

International Monetary Fund (IMF)

• AREAER of, 21, 216, 216n5, 260, 263

• augmented debt and, 118n1

• BPM6 by, 343, 343n7

• capital flow liberalization and, 21, 215

• Financial Sector Program of, 14

• General Department of, 275

• macroeconomic statistics coordination with, 351–52, 351f

• nondiscriminatory measures of, 240n25

• SDDS of, 25, 333, 336

• Statistics Department of, 348n11

• tax administration and, 76–77

• See also Special drawing rights

International monetary system (IMS)

• dollar in, 272

• RMB internationalization and, 271–73, 272t

International Transaction Reporting System, 343

Internet

• banking, 285–86

• users, 28

Investment programming, for MTEF, 137

Investment projects, corporate income tax and, 55, 55n6

Investment receivables, 294–95

Japan

• capital gains in, 186f

• DGI and, 353f

• e-commerce of, 87

• environmental taxes in, 63f

• MTEF in, 121–22

• tax revenues in, 37f

Joint Ministerial Committee, 234

Joint-stock commercial banks (JSCBs), 281

• lending and deposits of, 286

Korea

• capital gains in, 186f

• DGI and, 353f

• environmental taxes in, 63f

• spillovers to, 4f

• tax revenues in, 37f

Labor income

• annual assessment of, 51–52

• taxation of, 50–52

Labor market, 27t

• indicators for, 342

• pensions and, 153n15

Land use, by SOEs, 316n12

Laoren, 147

Large Business Department, of SAT, 93, 93n27, 94–95, 95nn30–31

Law on the Administration of Tax Collection, 80

Legislative Affairs Office, of State Council, 92

Lending

• bad loans, 284

• entrusted loans, 295

• by financial sector, 286–88

• by JSCBs, 286

• P2P, 285

• Pledged Supplementary Lending, 301

• quantitative loan limits, 199, 208

• quotas for, 20

• by rural banks, 286

• by state-owned banks, 286

• See also Nontraditional lenders

Lending rates, 208

• interest rates and, 197, 202

LGFV. See Local government financing vehicles

Life expectancy, 3, 28t

• pensions and, 151, 154, 154n18

• retirement age and, 154

LI Keqiang, 1–3

Liquidity buffers, for capital flow liberalization, 234

Literacy rate, 3, 28t

Loan-to-deposit ratios, 8

• interest rates and, 198–99, 208

Loan-to-value ratio, macroprudential policy and, 241n28

Local government bonds, 172n4, 173f–174f

• debt-to-GDP ratio for, 175n6

• impediments to, 175

• interest rate on, 19, 171n3

• liquidity and credit discipline for, 176

• pilot program for, 171, 171n2

• regulation and oversight of, 176, 177t

• resolution framework for, 176

Local government finances, 38n2, 169f–170f

• audits for, 171

• augmented debt and, 181

• in Brazil, 188

• Budget Law and, 19, 164, 171–75, 291

• debt in, 30, 175, 186–89, 187f

• distribution of fiscal revenues in, 189t

• fiscal policy frameworks for, 18–19

• in France, 188–89

• in global financial crisis, 291

• in India, 188

• intergovernmental relations with, 177–78, 185–86, 186f

• international experience with, 185–89, 186f

• MTEF and, 16, 19, 120–21

• nontraditional lenders for, 290–91

• off-budget expenditures and, 178

• private sector and, 10

• rebalancing of, 8, 10f

• recent measures to strengthen, 171–75

• recurrent property tax for, 33, 69–70

• shared taxes with central government, 37, 39t–40t, 41f

• strengthening sustainability of, 175–78, 177t

• structural features of, 164–71

• tax administration of, 77, 77n3

• tax and nontax revenue in, 165f–166f

• tax sharing and, 8, 37, 39t–40t, 41f, 165f–167f, 168, 179t

• tax system and, 37–38

• transparency in, 187

• WMPs for, 291

Local government financing vehicles (LGFV), 168, 170f, 291

• bond market and, 300–301

• capital buffers and, 172

• interest rates and, 192, 208–9

• PPPs and, 171

• risk weight for, 172

• soft budget constraints and, 100, 202–3, 203n4

Local Tax Services, 78, 82

Lump-sum taxes

• on endowments, 61

• for small businesses, 102

M1. See Monetary target 1

M2. See Monetary target 2

Macroeconomic statistics

• challenges for, 348–49

• IMF coordination with, 351–52, 351f

• for national accounts, 338–39

• for policymaking, 25–26

• price statistics, 339, 342

• recent developments in, 335–48

• upgrading, 333–51

Macro forecasting, MTEF for, 131–32, 136–37

Macro-Prudential Assessment Framework, of PBC, 208

Macroprudential policy

• capital flow liberalization and, 234, 241–42, 241n28

• loan-to-value ratio and, 241n28

• reserve requirements and, 241n28

MAP. See Mutual agreement procedure

Market allocation, of resources, 11–12

Master-files, for SAT, 96, 96n34

Material Product System (MPS), 335–36, 336n2

Maturity mismatch, interest rates and, 205

Medical insurance, taxation for, 49

Medium-Term and Standing Lending Facilities, 301

Medium-term budget framework (MTBF), 126–27, 127f

• fixed and rolling, 134

• real and nominal, 135–36

Medium-term expenditure framework (MTEF), 122n2

• background of, 121–23

• for baseline estimates of expenditure programs, 138

• bottom-up baseline expenditure forecasting in, 17, 122, 128, 129, 131, 139

• Budget Law and, 16

• budget process for, 123–26

• central government and, 135

• coverage of, 132–33

• decision-making phase for, 129–31

• design choices for, 131–36

• development responsibility for, 136–38

• embedding in budget process, 134–35, 135n3

• expenditure baseline for, 128–29

• for fiscal forecasting, 137

• for fiscal policy framework, 117–40

• fiscal policy objectives for, 127–28

• fiscal rules for, 133–34

• globally represented for 2008, 121f

• how it works, 126–31

• inflation and, 135

• investment programming for, 137

• local government finances and, 19, 120–21

• for macro forecasting, 131–32, 136–37

• multiyear fiscal policy with, 137

• private sector and, 117

• for reconciliation of resource envelopes, 138

• sequencing introduction of, 138–39

• stages of, 131, 132f

• time horizon for, 17, 122, 124, 126, 134, 140

• top-down forecasting for, 128

• types of, 126, 127f

Medium-term fiscal framework (MTFF), 126, 127f

Medium-term program framework (MTPF), 126, 127, 127f

Middle class, 3, 4

Migrants, from rural areas, 3

Ministry of Finance, 14

• debt-to-GDP ratio and, 175n6

• GFSM by, 344–45, 344n8

• local government bonds and, 171, 175, 175n6

• MTEF and, 16, 122, 123, 124, 131–32, 133, 136, 137, 138

• SOEs and, 308

• TCL and, 92

• VAT and, 60n11

Ministry of Land and Resources, 70

Mirrlees, James, 42

Monetary and financial frameworks, 19–24

• capital flow liberalization, 21–22, 22t

• for financial sector governance, 23–24

• monetary policy framework, 20–21

• RMB internationalization, 22–23

Monetary and Financial Statistics Manual, by PBC, 345–48, 345n10

Monetary gradualism, 193

Monetary policy framework, 20–21

• capital flow liberalization and, 233

• interest rates in, 191–212, 194f

• intermediate targets for, 192–96, 193t

Monetary target 1 (M1), 193

Monetary target 2 (M2), 20–21, 193

• GDP and, 194–95, 195f

• interest rate corridors and, 204

• interest rates and, 207

• SVAR and, 195

Money demand, 196, 196n2, 207, 207n5

Money supply

• inflation and, 191

• SVAR and, 193

• in United States, 192–93

• volatility of, 194f, 195–96

MPS. See Material Product System

MSCI Emerging Markets Index, 303

MTBF. See Medium-term budget framework

MTEF. See Medium-term expenditure framework

MTFF. See Medium-term fiscal framework

MTPF. See Medium-term program framework

Multi-lateral Convention on Mutual

• Administrative Assistance in Tax

• Matters, 97n35

Multinational corporations, 16

• tax administration for, 97

Mutual agreement procedure (MAP), 97

Mutual funds, 30

Mutual Recognition of Funds, Hong Kong and, 30

National accounts, macroeconomic statistics for, 338–39

National Audit Office, 301

National Bureau of Statistics (NBS), 80, 334

• labor market indicators and, 342

• MTEF and, 122

• price statistics and, 339, 342

• real sector statistics and, 342–43

• tax registration and, 100

National Development and Reform Commission (NDRC)

• MTEF and, 16, 117, 122, 131, 136–37

• SOEs and, 308

National People’s Congress

• local government financing and, 185

• MTEF and, 16, 122, 133

• press conferences and, 13

• Work Program and, 12

National Summary Data Page, 339

National Tax Administration Standards, 99

National Tax Service, 78, 82

NBS. See National Bureau of Statistics

NDRC. See National Development and

• Reform Commission; National

• Development Research Council

Nitrogen oxide, 66

Nominal MTEF, 135–36

Nontraditional lenders

• arbitrage and, 292

• in financial sector, 288–300, 289f

• for local government finances, 290–91

• risks with, 292, 293t

• WMPs as, 289f, 290, 292

OECD. See Organisation for Economic Co-operation and Development

Off-budget expenditures

• local government finances and, 178

• MTEF and, 131

Office of the Leading Group on Economic and Financial Affairs, 13

One-child policy, 29

Order flow, 274, 274n7

Organisation for Economic Co-operation and Development (OECD), 33

• BEPS and, 96

• capital gains and, 53

• corporate income tax and, 55–56

• environmental taxes and, 62, 65

• individual income taxes and, 44, 50

• MTEF and, 136

• pensions and, 149

• retirement age and, 154n17

• social security and, 54

• tax administration and, 106

• tax system and, 36

Outflow surges, with capital flow liberalization, 242–43

P2P. See Peer-to-peer lending

Paris Agreement, 10

Partnerships, taxation of, 58

PBC. See People’s Bank of China

PE. See Permanent establishment

Peer-to-peer lending (P2P), 285

Pensions, 155nn19–21

• baseline projections and sustainability of, 151–53, 152t

• benchmarks for, 150f

• benefit formula for, 144, 145t, 155, 159

• discounted expenditure values for, 158, 158f

• GDP and, 18, 152–53, 152n11, 153–54, 156n23

• General Funds Budget and, 157–58

• increasing contributions to, 155–56

• indexation of, 155

• international perspectives on, 149–51

• labor market and, 153n15

• life expectancy and, 154, 154n18

• old age schemes for, 18

• population aging and, 149–50, 149n9

• portability of, 157

• reform options for, 153–58, 154t, 156t

• retirement age and, 151, 153–55, 153n16, 156n23

• system of, 144–49, 145t

• taxation and, 44–49

• time horizon for, 149n9

• See also Social security

Pensions for Civil Service and Public Unit Workers, 144–48, 145n2, 145t, 147n8

• contributors to, 155

• GDP and, 144, 153

• number of pensioners for, 148f

Pensions for Urban and Rural Residents, 145t, 146–47, 147n5, 147n6

• GDP and, 144, 153, 153n13, 156

• number of pensioners for, 148f

• raising benefits for, 156

• universal coverage for, 151

Pensions for Urban Workers and Staff, 145t, 146, 155n19

• contributors to, 149f, 151

• expenditures per pensioner for, 148f

• GDP and, 144, 153

• number of pensioners for, 148f

• reducing contribution rates for, 156

People’s Bank of China (PBC), 12

• balance of payments and, 20, 198

• bond market and, 301

• capital flow liberalization and, 233, 234

• CBRC and, 347

• currency swap agreements and, 270

• exchange rates and, 269

• inflation and, 20

• interest rate corridor by, 203–4

• interest rates and, 20

• Macro-Prudential Assessment Framework of, 208

• Monetary and Financial Statistics Manual by, 345–48, 345n10

• monetary policy framework and, 20

• quotas and, 235

• reserve requirements of, 198, 208

• RMB internationalization and, 263, 267, 268

• staffing for, 14

Performance measurement system, for SAT, 109, 109n46

Permanent establishment (PE), 97

Plan to Deepen Reform of the National and Local Tax Administration System, 88

Pledged Supplementary Lending, 301

Political economy of reforms and institutions, 13–14

Pollution

• air, 10, 66–67

• social indicators for, 28

• water, 10

• See also Environmental taxes

Population aging, 124, 124n3

• MTEF and, 118

• pensions and, 149–50, 149n9

• social security and, 17–18, 143

Population growth, 28t

Portfolio rebalancing, 21–22

Poverty reduction, 1, 3, 5, 11

PPI. See Producer price index

PPPs. See Public-private partnerships

Price statistics, 339, 342

Principal Global Indicators, 342

Private sector

• AMCs and, 284

• capital flow liberalization and, 230

• currency internationalization and, 250

• MTEF and, 117

• rebalancing of, 10

• resources and, 6

• SOEs and, 10, 318, 327

Producer price index (PPI), 338, 339

Productivity, rebalancing of, 7

Property rights, reforms for, 29

Property tax. See Recurrent property tax

Public-private partnerships (PPPs), 19

• emerging risks with, 175

• for infrastructure projects, 172

• LGFV and, 171

• monitoring risks with, 177

• MTEF and, 131

Pupil-student ratios, 28t

QFII. See Qualified Foreign Institutional Investor

Qualified Domestic Institutional Investor (QDII), 217, 220, 221t, 263

Qualified Foreign Institutional Investor (QFII), 220, 221t, 263, 302

Quality and Technology Supervision Bureau, 100

Quantitative loan limits, interest rates and, 199, 208

Quotas

• capital flow liberalization and, 235

• for lending, 20

• SAFE and, 218, 220

Railway infracture, 28

Ramsey, F. P., 61

Real estate boom, 19

Real MTEF, 135–36

Real sector statistics, 342–43

Rebalancing, 5–11

• of consumption, 7

• of domestic demand, 6, 7f

• of financial sector governance, 8–10

• of green growth, 10

• of inclusive growth, 11, 11f

• of innovation, 7

• of local government finances, 8, 10f

• of portfolios, 21–22

• of private sector, 10

• of productivity, 7

• returns on investment and, 6f, 7

• to services sector, 7

• of sustainable leverage, 8

Recurrent property tax, 69n14

• current situation for, 69

• for local government finances, 33, 69–70

• proposed reforms for, 69–70

Renminbi (RMB)

• currency swap agreements with, 254

• depreciation of, 264–65, 265f–266f

• dollar and, 268

• exchange rates for, 228–29, 230f

• FDI and, 252–53

• foreign exchange markets and, 270

• foreign holdings in, 254

• globalization and, 260f

• in Hong Kong, 267, 268

• in offshore bond markets, 253–54

• offshore deposits in, 253, 253f

• offshore trading in, 254–57, 256f, 257f, 258f

• repatriation channels for, 267–68

• in SDR, 30, 222n11, 249, 270, 274–76

• Shanghai Free Trade Zone and, 268

Renminbi (RMB) internationalization, 22–23, 30, 249–76

• capital flow liberalization and, 221–23

• in capital markets, 260, 263

• cross-border payments infrastructure and, 269–70

• currency swap agreements and, 270

• deposit insurance and, 269

• domestic financial reforms for, 268–69

• exchange rates and, 269

• IMS and, 271–73, 272t

• interest rates and, 269

• lower regulatory barriers for, 263

• offshore liquidity and, 269–70

• PBC and, 263, 267, 268

• policy measures to promote, 260–70, 261t–262t

• progress in, 258–59, 259f, 260f

• reserve averaging and, 269

• shadow banking and, 269

Renminbi Qualified Institutional Investor (RQFII), 220, 221, 267

Rental income, taxation of, 44, 50, 53–54

Reserve averaging, RMB internationalization and, 269

Reserve requirements

• FDI and, 228n15

• interest rates and, 198, 208

• macroprudential policy and, 241n28

• of PBC, 198

• URR, 237, 239

Reserves Data Template, 344

Residency-based controls, for capital flow liberalization, 240

Residential property price index (RPPI), 339, 342

Resolution framework, for local government bonds, 176

Resources

• market allocation of, 11–12

• misallocation from SOEs, 314–15, 315nn8–10, 317f

• private sector and, 6

Retirement age, 18

• life expectancy and, 154

• OECD and, 154n17

• pensions and, 151, 153–55, 153n16, 156n23

• Third Plenum and, 153n16

Returns on investment, rebalancing and, 6f, 7

Risks

• of capital flow liberalization, 240–43

• for LGFV, 172

• local government finances and, 163–78

• with nontraditional lenders, 292, 293t

• with PPPs, 175, 178

• preference mismatch of, interest rates and, 205

• with shadow banking, 293t

• See also Compliance risk management

RMB. See Renminbi

RMB Cross-border Interbank Payment System, 270

Rolling MTEF, 134

Royalties, taxation of, 53–54

RPPI. See Residential property price index

RQFII. See Renminbi Qualified Institutional Investor

Rural banks, 281

• lending and deposits of, 286

SAFE. See State Administration of Foreign Exchange

Sales tax, on vehicles, 68

SASAC. See State-Owned Assets

• Supervision and Administration

• Commission

SAT. See State Administration of Taxation

Savings rate, 7, 27t

SDDS. See Special Data Dissemination Standard

SDDS Plus, 336, 339n4, 349

SDR. See Special drawing rights

Securities companies, 282

Self-assessment, for tax administration, 83

Service sector, 3

• GDP and, 86n15

• rebalancing to, 7

• taxation of, 78n5

Shadow banking

• interest rates and, 199

• risks with, 293t

• RMB internationalization and, 269

• trusts and, 292

• WMPs and, 297

Shanghai Free Trade Zone, 268

Shanghai-Hong Kong Stock Connect, 220, 267

Shenzhen-Hong Kong Stock Connect, 30

Shocks, spillovers from, 4f

Small and medium-sized enterprises (SMEs)

• corporate income tax for, 57–58, 58t

• interest rates and, 209

• WMPs and, 298

Small banks, regulatory restrictions on, 205

SMEs. See Small and medium-sized enterprises

SNA. See System of National Accounts

Social indicators, 28t

Social safety nets, 15

• proposed reforms to contributions to, 54

• reforms in, 29

Social security, 17–18

• current situation with contributions to, 54

• employer contributions to, 29

• individual income tax and, 44, 45f, 47f, 54

• MTEF and, 118

• reform for sustainability and equity, 143–59

• taxation for, 49

• tax wedge for, 54, 157f

Social Security Fund Budget, MTEF and, 124

SOEs. See State-owned enterprises

Soft budget constraints

• interest rates and, 100, 202–3

• LGFV and, 100, 202–3, 203n4

Sole proprietorships, taxation of, 58

Song, Zheng, 153n14

Special Administrative Region (SAR). See Hong Kong

Special Data Dissemination Standard (SDDS), of IMF, 25, 333, 336

Special drawing rights (SDR)

• balance of payments and, 275

• RMB in, 22–23, 30, 222n11, 249, 270, 274–76

Specialized guarantee agencies, interest rates and, 205–6

Spillovers, from shocks, 4f

Spring Breeze Project, 100

State Administration of Foreign Exchange (SAFE), 216, 216n6, 220, 263

• exterior sector statistics by, 343–44

State Administration of Taxation (SAT), 14, 16

• Administrative Measures for the

• General Anti-Avoidance Rules of, 81n10

• administrative reviews for, 106, 106n44

• aligning organizational structure with modernization strategy, 93–95

• arrears collection by, 104–5

• audits by, 103–4

• compliance risk management for, 98–99, 98n36, 99n37

• critical skills gap in, 90

• default assessments by, 105

• dispute resolution by, 105–6

• emerging challenges and opportunities for, 85–90

• extending national and international reach of, 95–98, 95nn32–33

• filings and payments to, 101–2

• globalization and, 87–88

• human resources for, 83–84, 106–7

• information technology for, 84–85, 90, 107–8

• installment arrangements with, 104, 104n43

• Large Business Department of, 93, 93n27, 94–95, 95nn30–31

• master-files for, 96, 96n34

• new legislation for, 88

• organizational stresses in, 89, 94

• organization of, 11, 82–83, 83t

• performance measurement system for, 109, 109n46

• process enhancement for, 99–106

• processes of, 83

• strengthening, 75–111

• structural changes in economy and, 86–87

• tax evasion and compliance and, 77, 78–79, 81, 81n10

• tax liens of, 104–5

• taxpayer registration and, 100

• taxpayer services of, 100–101

• TCL and, 81, 92

• uniformity of administration in, 89–90

• VAT and, 60n11

State Budget, 16

• MTEF and, 124

State capital investment, in SOEs, 318, 326f

State Council

• Development Research Center of, 86n15

• economic decisions by, 12–13

• Legislative Affairs Office of, 92

• local government financing and, 185

• monetary policy framework and, 20

• MTEF and, 16, 122, 135n3, 138

• PPPs and, 171

• SASAC of, 308, 308n2

• SOEs and, 25

• TCL and, 92

State-Owned Assets Supervision and Administration Commission (SASAC), 308, 308n2

State-owned banks, 291

• lending and deposits of, 286

State-Owned Enterprise Fund Budget, 124

State-owned enterprises (SOEs), 5

• assessment of current reform plans, 320–22

• bad loans of, 284

• in bond market, 301

• capital flow liberalization and, 218

• capital gains and, 320t

• case studies of, 328–29

• classification of, 318, 323n19

• competition in, 323

• corporate leverage and, 309–14, 312t, 313f, 314f

• credit growth and, 8

• current reform plans for, 316–20, 319t–320t

• debt of, 314

• entrusted loans and, 295

• FDI and, 218, 218n8

• framework for, 24–25

• implicit support for, 315–16, 317f

• improving efficiency of, 318

• inefficiency of, 308–9, 309f, 310f–311f

• interest rates and, 192, 208–9

• key indicators of, 312t

• land use by, 316n12

• macroeconomic statistics and, 26

• misallocation of resources by, 315–16, 315nn8–10, 317f

• parameterization of data for, 330

• pilot programs for, 321, 321t

• private sector and, 10, 318, 327

• reform of, 307–30

• reforms for, 29, 324f, 330t

• soft budget constraints and, 100

• state capital investment in, 318, 326f

• tax administration and, 77n1, 83

• unemployment and, 327, 327f

Statistics Department, of IMF, 348n11

Steel industry, 25

Stiglitz, J. E., 61

Structural vector autoregressive models (SVAR), 194–95, 195n1

• interest rates and, 211–12

• for yield curves, 200

Sulfur dioxide, 66

Sustainable leverage, rebalancing of, 8

SVAR. See Structural vector autoregressive models

System of National Accounts (SNA), 334–35, 334n1

Targeted allowances, for individual income tax, 51

Tax administration, 16, 92nn23–26

• administrative assessment of, 83

• aligning organizational structure with modernization strategy, 93–95

• background of, 76–80

• critical skills gap in, 90

• current situation for, 80–85

• emerging challenges and opportunities for, 85–90

• future reform priorities for, 90–100

• GDP and, 76, 77t, 78, 79f

• globalization and, 87–88

• human resources for, 83–84

• information technology for, 84–85, 90, 107–8

• of local government finances, 77, 77n3

• for multinational corporations, 97

• new legislation for, 88

• organizational stresses in, 89, 94

• organization of, 82–83, 83t

• process enhancement for, 99–106

• processes of, 83

• self-assessment for, 83

• slowing economic growth and, 85–86

• SOEs and, 77n1, 83

• strengthening, 75–111

• structural changes in economy and, 86–87

• taxpayer population and, 81, 82t

• uniformity in, 89–90

• United States and, 88n19

• See also State Administration of Taxation

Taxation

• on air pollution, 66–67

• of capital gains, 57f, 59

• of capital income, 49–50, 71

• by central government, 36–37

• on consumption, 78n6

• lump-sum, 61, 62

• pensions and, 44–49

• on property, 70

• on vehicles, 68

• See also Business turnover tax; Corporate income tax; Recurrent property tax; Value-added tax; individual income tax

Tax Collection Law (TCL), 80–81, 90

• amendments to, 91–93, 104, 105

Tax evasion and compliance, 75–78, 77n2

• in global financial crisis, 86n14

• SAT and, 77, 78–79, 81, 81n10

• with VAT, 78, 78n8, 79f

• See also Compliance risk management

Tax liens, 104–5

Taxpayer population, 81, 82t

Taxpayer Services Department, of SAT, 93

Tax policy, 15–16

• changes to, 77n1

• direct tax reforms to, 38–59

• indirect tax reforms to, 60–70

• modernizing, 33–71

• reforms to, 34t–35t

Tax sharing, 8, 37, 39t–40t, 41f, 165f–167f, 168, 179t

Tax system

• air pollution and, 66

• efficiency of, 42

• environment and, 10

• human resources and, 106

• overview of, 36–38, 37f–38f

• simplification of, 50

• taxpayer satisfaction with, 80t, 89

• See also State Administration of Taxation

Tax treaties, 97, 97n35

Tax wedge

• for individual income tax, 46f

• for social security, 54

• social security and, 157f

TCL. See Tax Collection Law

Third Plenum, 5, 12

• MTEF and, 117

• pensions and, 156

• retirement age and, 153n16

• SOEs and, 24–25

• tax administration and, 91, 91n20

13th Five-Year Plan, 5

• capital flow liberalization and, 215n2, 232

• environmental taxes and, 62

• macroeconomic statistics and, 348

• monetary policy and, 191

• MTEF and, 117

• SOEs and, 24–25

• tax administration and, 91

• tax policy and, 33

Time horizon

• for MTEF, 17, 122, 124, 126, 134, 140

• for pensions, 149n9

Tobacco, taxation of, 61

Top-down forecasting, for MTEF, 128

Total social financing (TSF), 346, 347

Trade surplus, tax administration and, 77n1

Transfer pricing rules, 96

Transparency

• Budget Law and, 19

• improvements in, 12–13

• in local government finances, 187

Triffin’s dilemma, 271

Trusts, 282, 282nn2–3, 291

• as intermediating product, 292–93

TSF. See Total social financing

Unemployment, 27t

• from SOE reform, 327, 327f

Unemployment insurance, 156n25

• taxation for, 49

Uniform Social Credit Code, 100

Unirule Institute of Economics, 315n8

United Kingdom

• DGI and, 353f

• e-commerce of, 87

• insolvency framework for, 12f

United States

• bond yield in, 20, 200, 201t

• capital gains in, 186f

• DGI and, 353f

• dollar of, 251n1, 268, 272

• e-commerce of, 87

• environmental taxes in, 63f

• insolvency framework for, 12f

• money supply in, 192–93

• MTEF in, 121–22

• specialized guarantee facilities in, 205–6

• tax administration and, 88n19

• tax system and, 36

• tax treaties with, 97n35

Unremunerated reserve requirement (URR), 237, 239

Urban households, individual income tax for, 48f

Urbanization, recurrent property tax and, 70

URR. See Unremunerated reserve requirement

Value-added tax (VAT), 15, 16, 36, 77n1

• audits of, 103, 103n42

• from business turnover tax, 33, 60, 60n11

• current situation for, 60

• filings and payments to, 101–2, 101n40, 102n41

• financial sector and, 62

• GTP for, 84

• information technology for, 108

• proposed reform of, 60–62

• refund mechanism for, 60

• registration threshold for, 62

• shared by central and local government finances, 37

• tax evasion and compliance with, 78, 78n8, 79f

• tax rates for, 60

• transition to, 60–62

Vehicle taxes, 68

Voluntary Trading Arrangements, 275

Water pollution, 10

Wealth management products (WMPs), 285–86, 296–98

• arbitrage and, 292

• bond market and, 300

• CBRC on, 296–97

• equity markets and, 303

• for local government finances, 291

• as nontraditional lenders, 289f, 290, 292

WEN Jiabao, 5

Wholesale funding, 299–300

WMPs. See Wealth management Products

Work Program, 12

World Bank

• credit information systems and, 206

• environmental taxes and, 62

• MTEF and, 126

World exports and imports, China’s share of, 335f

World Health Organization, 10

• environmental taxes and, 62

World Trade Organization (WTO), 5, 13

• capital flow liberalization and, 217

• RMB and, 252

• SOEs and, 321

WTO. See World Trade Organization

Xiaokang, 3

XI Jinping, 13, 320

Xinren, 147

Yield curves, 200

Yu’ebao, 285–86

Zhongren, 147