Fiscal revenue growth depicts China’s industrialization steps

CHEN Jiagui

Director and Research Fellow, Economics Studies Department, Chinese Academy of Social Sciences

Abstract:

China has entered the mid to late phase of industrialization and evolved from a major agricultural country into a major industrial country as it has accelerated the pace of industrialization. The fiscal revenue structure and expenditure structure have changed significantly along with substantial changes in economic conditions. Before launching the reform and opening-up policy, China relied on agriculture to accumulate construction funds and support industrial construction by exploiting the “scissors difference;” since then, especially since the turn of the new millennium, China has registered rapid and stable fiscal revenue growth and built considerable financial strength as the pace of industrialization has quickened. During the era, fiscal revenue has mainly relied on taxes collected from the secondary industry, particularly the industrial sector. As a result, the state has repealed agriculture taxes and boosted investment in areas related to agriculture, rural areas and farmers. Since then, China has entered a new development phase in which industry supports agriculture and urban areas support rural areas.

Key Words: Industrialization process, fiscal revenue structure, fiscal expenditure structure

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