This work provides a critical review and discussion of studies that have been conducted in the past regarding the fiscal policy and soft budget constraints of China. The author explains the concept of fiscal sustainability and reviews some of the fiscal policies adopted by China to realise fiscal sustainability. The author also evaluates the challenges towards attaining fiscal sustainability in China and discusses the the concept of soft budget constraint and how it has been cultivated into China’s fiscal policies.
Inhaltsverzeichnis (Table of Contents)
- LITERATURE REVIEW
- Fiscal sustainability in China
- 'Soft' budget constraints (SBC) in China
- Literature summary and research hypotheses
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This literature review critically examines the concept of fiscal sustainability and the presence of soft budget constraints (SBC) in China. It aims to provide a comprehensive understanding of these issues and their implications for Chinese fiscal policy.
- Fiscal Sustainability in China
- Soft Budget Constraints (SBC) in China
- The Impact of SBC on Fiscal Sustainability
- The Role of State-Owned Enterprises and Local Governments
- Fiscal Decentralization and its Effects
Zusammenfassung der Kapitel (Chapter Summaries)
- Fiscal sustainability in China: This section defines fiscal sustainability and examines the challenges faced by China in achieving this goal. It analyzes the role of fiscal decentralization and the impact of local government initiatives on fiscal sustainability.
- 'Soft' budget constraints (SBC) in China: This section explores the concept of soft budget constraints and how they have manifested in China's fiscal policies. It discusses the role of state-owned enterprises and local governments in fostering SBC and the consequences for the banking sector and overall fiscal health.
Schlüsselwörter (Keywords)
This literature review focuses on the keywords: fiscal sustainability, soft budget constraints, China, state-owned enterprises, local government, fiscal decentralization, public finance, and debt management. These keywords are crucial in understanding the complex relationship between fiscal policies, government finances, and economic growth in China.
Frequently Asked Questions
What is the concept of "Soft Budget Constraints" (SBC) in China?
SBC refers to the expectation that the state will bail out struggling entities, such as state-owned enterprises or local governments, reducing their incentive to be fiscally disciplined.
How does fiscal decentralization impact China's fiscal sustainability?
While decentralization can drive local growth, it also creates challenges like local government debt and uncoordinated spending that may threaten long-term fiscal stability.
What are the main challenges to attaining fiscal sustainability in China?
Key challenges include managing the debt of local governments, the financial health of state-owned enterprises (SOEs), and balancing economic growth with stable public finances.
What role do State-Owned Enterprises (SOEs) play in China's fiscal policy?
SOEs are central to China's economy but are often the primary beneficiaries of soft budget constraints, which can lead to inefficiencies and banking sector risks.
What is the purpose of this literature review?
The review critically discusses past studies on China’s fiscal policy to understand how sustainability is managed and how SBCs are integrated into the system.
- Quote paper
- Difrine Madara (Author), 2019, The fiscal policy and soft budget constraints of China, Munich, GRIN Verlag, https://www.grin.com/document/520216
