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Does a Tax-Sharing System Make Sense? Understanding China’s Growth Miracle

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End of Hyper Growth in China?

Abstract

This chapter illustrates the mechanism that motivates China’s economic growth over the past 20 years, and finds that the current growth mechanism is largely the result of institutional reforms and fiscal recentralization that occurred in 1994 under the leadership of Premier Zhu Rongji. Being allowed to have their own source of tax revenue, Chinese regional governments are motivated to pursue the goal of economic growth through industrialization. Such a motive results in a Tibout-type regional competition in the sense that inefficient use of resources would be substantially eliminated by the strategic behavior of regional governments being more attractive to foreign direct investment. Such competition makes the regional governments preserve and use the markets rather than replace them.

第二章 理解中国经济快速发展的机制:朱镕基可能是对的

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Authors and Affiliations

  1. Fudan University, Shanghai, China

    Jun Zhang

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  1. Jun Zhang
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Zhang, J. (2016). Does a Tax-Sharing System Make Sense? Understanding China’s Growth Miracle. In: End of Hyper Growth in China?. Palgrave Macmillan, New York. https://doi.org/10.1057/978-1-137-53718-8_2

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  • DOI: https://doi.org/10.1057/978-1-137-53718-8_2

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  • Publisher Name: Palgrave Macmillan, New York

  • Print ISBN: 978-1-137-53717-1

  • Online ISBN: 978-1-137-53718-8

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