ABSTRACT
In China, the Ministry of Finance (MOF), the National Development and Reform Commission (NDRC), and, the State Council all play important but different roles in managing fiscal policy. In the United States, the U.S. Treasury is primarily responsible for fiscal policy. In any economy, investors, suppliers of labor, and the institution that we know as the government are the three critical stakeholders in the production process. China's central government shares its tax revenues with the provinces based on a strict formula. This limits the amount of risk sharing that is possible across provinces. At the national level, it is noted that while the U.S. government relies mostly on personal income tax as a source of revenue, the Chinese government relies mainly on value-added taxes and sales taxes for the bulk of its revenue. Government consumption represents expenditures for providing current services, including the acquisition of goods and services from the private sector and employment of the civil service.
