ABSTRACT
Chinese budgets at the local and central levels are divided into current items and capital or construction items. Current items include expenditures for social development and welfare and expenditures for national defense, armed police, and administration. The state budget combines Central and provincial budgets. This chapter explores the budgetary figures for revenue and expenditure of Central and local governments. In 1994 a major reform was announced in the system of taxes and tax collection. Prior to the reform, local tax bureaus—under a "responsibility system"—had collected both taxes for both the Central government and for local governments. A salutary side-effect of the growth and variety of government debt issues has been the development of a vital secondary treasury securities market. This market, in time, will be instrumental in enabling the Central Bank to begin to exercise indirect control over the money supply and interest rates through open market operations.
