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Reform: Centralism Still Rules
The state media has been gloating over two development thus far this week:
(i) the performance of public enterprises and (ii) a planned, new fiscal
system.
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The fiscal system is primarily intended to strip taxation authority from
local governments. All revenues are to be deposited into national treasury
accounts. Provincial and municipal offices then submit budgets, which are
filled as the central government desires. There are benefits to this system;
in particular, it will crimp corruption among local officials. But it will
also concentrate power even further in the hands of a few cadres in Beijing.
Another bragging point is a 10.6 percent growth rate in the value of
state-owned assets last year, well exceeding GDP growth of 7.1 percent. But
this makes a lie of constant claims that the importance of the public sector
is waning while that of the private sector is waxing. In fact – as should be
expected when growth has been driven largely by government spending – the
state sector accounted for a greater proportion of the economy in 1999 than
1998. Where's Deng Xiaoping when you need him?
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China
E-Bytes
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| Mexico's foreign minister said today a market access agreement with China
is imminent, leaving Switzerland as the only country that has not endorsed
the mainland's WTO membership. |
| Japan has allocated $156 million in loans for railroad and airport
projects in the PRC. In a related note, the firm that operates Beijing's
airport is planning to merge with Tianjin's airport operator. The combined
company will have assets of $2.4 billion and be listed in Hong Kong. |
| The stock market may suffer a blow later this year, if Morgan Stanley's
Capital International (MSCI) indices switch from weighting by market
capitalization to weighting by trading volume. This would de-emphasize large
firms which have most of their shares set aside by the government. |
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| Keep
up with the fast changing business environment in
China, the world's biggest and fastest-growing emerging
economy. Sinomania! recommends Orbis
Publications, Experts in Emerging Markets, for
a full range of in-depth coverage on China including
daily/weekly/monthly reports and more. |
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