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After 25 years of reform and opening-up, the development of China in the early 20th century (2 1) attracted the world's attention. That is, what kind of environment, opportunities, challenges and possible prospects will China's economic development face in the new century after China's entry into WTO? This is a problem that everyone, whether at home or abroad, government enterprises, theorists or practitioners, are very concerned about. This paper attempts to divide the hot issues of China's macro-economy into ten traditional areas and make a more in-depth and comprehensive analysis.

First, the economic aggregate will continue to maintain long-term rapid growth.

Since 1979, China's economy has been growing rapidly. 1979-2002, China's GDP grew at a high speed, with an average annual growth rate of 9.4%, which is twice the world average growth level and twice that of developed countries, as shown in the figure 1, showing the obvious characteristics and vitality of the world economy. This makes the proportion of China's economy in the world economy increase steadily, continuously and remarkably.

Source: Relevant data published by the National Bureau of Statistics.

1979 The core reason for China's rapid economic growth lies in China's reform and opening up. That is, the traditional planned economy will be gradually reformed into a market economy, and people's production and consumption behavior will be adjusted according to market prices; On this basis, we will carry out more market-oriented foreign exchanges and cooperation.

In rural areas, the focus is on reforming the land contract system, while encouraging the development of township enterprises and farmers to work in cities. In cities, the reform of state-owned enterprises began first, and after the 1990s, we began to explore and promote market-oriented reforms in all directions, such as the establishment and development of the capital market. This makes China's two production resources play a more efficient role. That is, first, the dominant production resources, such as land and factories; The second is the more important and core hidden production resources, that is, people's enthusiasm, initiative and creativity.

The perfect combination of internal and external factors has contributed to the unprecedented economic prosperity of China in the past 25 years. That is, the internal cause is that China's production resources are more efficient; The external causes are a large number of exchanges between China and foreign countries, a huge economic gap, and a late-comer advantage on this basis.

Over the past 25 years, China's economic development has shown obvious stage characteristics: in the first half of the 1980 s, the focus was on solving the shortage of agricultural products; In the second half of the 1980s, the focus was on solving the shortage of industrial products. In the first half of 1990s, the key point was to solve the "bottleneck" problem of raw materials and infrastructure. In the second half of the 1990s, the focus was on solving the contradictions and optimizing the economic structure. In the first few years of 2 1 century, more consideration may be given to the international integration of joining WTO.

Looking back on the course of 25 years, we may notice four significant historical starting points or signs: first, the rural economic system reform that began at 1978; Second, the urban economic system reform started from 1984; Third, Xiao Ping's southern tour speech at the beginning of 1992; Fourth, China formally joined the WTO at the end of 2000/KLOC-0.

Because the economic structure between China and the world will not change fundamentally for a long time, such as 20-30 years, China's economy will continue to grow at a high speed in the past 25 years. For example, by the end of 2002, the per capita GDP of China was only $65,438+$0,000, which was less than $65,438 +0/30 of that of developed countries. Although there may be some differences in the micro-influencing factors or structure between the two periods, such as the stronger institutional release in the early stage and the stronger market regulation in the later stage, there may be no substantial difference in the growth potential between them. At present, this view is generally accepted or recognized by China economic experts. For example, see table 1. Most experts predict that the economic growth in the later period will be around 7%, which may be more due to their stable psychology and lack of sufficient confidence in whether they can reach 9% in the early period.

The Federal Reserve predicts that the potential growth rate of the US economy will be 3% in the next 10 year. The World Bank predicts that from 200 1 to 20 10, the annual GDP growth rate of the United States will be 2.7%, that of the European Union will be 2.4%, and that of Japan will be 2%. Therefore, in the coming period, the economic development gap between China and developed countries will be further narrowed.

Of course, we will also face a series of arduous tasks in the future development. For example: 1, the state-owned economy needs to deepen reform. At the end of 2002, the total assets of state-owned and state-controlled industrial enterprises were 4.27 trillion, accounting for 50% of the total industrial assets in China and about 65% of industrial loans, but only 35% of the industrial output value was created. 2. The rural market should be started. At present, the population living in rural areas accounts for 65% of the total population in China, but the rural consumer goods market only accounts for 25% of the national consumer goods market; Efforts to promote the benign interaction and circulation of rural economy, income and education are undoubtedly of great historical significance for improving the overall level of economic development in China.

At the same time, it will also face a series of risks and need to be more cautious and serious. For example: 1, social risk. Widening income gap, increasing laid-off workers and imperfect social security may breed certain social stability risks. 2. Economic risks. For example, the huge accumulation of non-performing loans in state-owned commercial banks is still increasing, which may cause certain harm to the healthy operation of the overall financial system and even the economic system.

Second, the price trend will show a long-term low-speed wandering.

In 1980s, China experienced two serious inflation and economic overheating. But its background is the macro-environment in which the supply of goods is in short supply. At present, the economic situation in China may have great similarity and inheritance with the phenomenon of oversupply of commodities since 1990s. See figure 2.

Source: Relevant data published by the National Bureau of Statistics.

Since 1990s, China's price trend-inflation can be clearly divided into two periods: one is the high inflation period of 1992- 1996; The second is the deflation period from 65438 to 0998-2002.

1992 Xiaoping's southern tour speech is an important milestone in comprehensively promoting and deepening China's economic system reform. Because China's economy has been depressed for two years before, and the central government lacks sensitive control means and mechanisms for local governments and enterprises, China's economy has rapidly experienced an overheated construction climax under the encouragement of huge interests. Economic growth rate and inflation rate soared.

1In June, 1993, the Opinions of the Central Committee of the State Council on the Current Economic Situation and Strengthening Macro-control was issued, referred to as "Article 16", to comprehensively and vigorously control the overheating of economic construction. Among them, the most critical three items are: tightening credit, opening warehouses to release grain, and compressing projects.

After more than three years of macro-control, China's economy has basically achieved a "soft landing", and both economic growth and inflation have entered a reasonable range in the medium and long term.

The economic overheating in the first half of 1990s has brought a series of significant impacts on the macro-economic development of China. For example, during the Eighth Five-Year Plan period, China's investment grew at an average annual rate of 36.5%, much higher than 19.5% during the Sixth Five-Year Plan period and 16.5% during the Seventh Five-Year Plan period. Professor Lin Yifu estimates that this has tripled or even more the productivity of China's national economy.

According to the statistics of the Commercial Information Center of the former Ministry of Internal Trade, in the first half of 1997, among the 605 main commodities in China, 72.2% were in excess of demand, and 27.8% were basically balanced in supply and demand, with no shortage. This can be regarded as the historical beginning or starting point of China's economy from a short supply-supply-constrained economy to a fully supply-demand-constrained economy. At the same time, it is also one of the most important macro environments in which China's economy has been under the shadow of deflation.

1The Asian financial crisis broke out in July, 1997, which made China's economy feel the great pressure of insufficient demand immediately after a "soft landing".

From 65438 to 0998, the macro-control policy changed from "moderately tight" to a new combination of "active fiscal policy and prudent monetary policy"; At the same time, 270 billion yuan of special treasury bonds will be issued to supplement the capital of wholly state-owned commercial banks and enhance their lending capacity. From 65438 to 0998 to 2002, the central government issued 660 billion yuan of long-term construction bonds for infrastructure and ecological environment construction, which led to a total social investment of 3.2 trillion yuan.

Through various efforts to expand demand, the consumer price index of China from 1998 to 2002 only hovered between slight inflation and austerity.

There are many reasons for this situation, among which the following four factors may need special attention. Namely: 1, insufficient demand: including the increase of people's precautionary savings due to the reform, the lack of favorite consumers, and the failure to effectively realize the investment demand. 2. Supply exceeds demand: including simple and repeated production competition and the proliferation of counterfeit and shoddy products; The lack of effective constraints on the supply of funds may have contributed to this tendency. 3. Labor factor: the infinite growth of labor supply and the continuous improvement of its efficiency may have a greater downward pressure on prices. 4. International integration: including the transfer of industries to developing countries, the application of new technologies and materials, and market-oriented reforms to improve the efficiency of resource allocation.

In recent years, the international community has been talking about "China's export deflation". To some extent, this is also an excessive public opinion reaction to China's increasing production capacity and its share in the world economy.

Third, employment will always face greater pressure.

Due to the sustained and rapid population growth, the number of workers and employees in China has also increased rapidly in recent years. For example, in 1979, the total number of urban and rural employees in China was 4 10/00000, and it increased rapidly to 737 million in 2002. See Figure 3 (in which 1989- 1990, the total number of employees has been adjusted).

At the same time, the registered unemployment rate in cities and towns has also risen rapidly in recent years-it basically remained at around 3. 1% in the second half of 1990s, rose to 3.6% in 2006, rose to 4.0% in 2002, and the policy goal in 2003 was to control it within 4.5%.

On the whole, the employment problem in China will remain a prominent and severe problem in the future. Because from the supply point of view, it includes 8 million registered unemployed people in cities and towns,100000 laid-off workers,150000000 rural rich labor force, and new labor force100000 every year. From the demand point of view, according to the economic growth rate of 8% and the employment elasticity coefficient of 0. 15, only about100000 jobs can be added every year; In other words, the gap between supply and demand of China's labor force is still very large, and the employment pressure in the future will be even heavier. This is also the core reason why some scholars call on China to implement the "employment-centered" growth model.

Figure 3: Changes in the total number of urban employees and registered unemployment rate in China.

Source: Relevant data published by the National Bureau of Statistics.

While the total number of employed people is growing steadily, the employment structure in China is also undergoing tremendous and profound changes. The two most important and outstanding features are:

1. Changes in employment industry structure. That is, the proportion of employees in the primary industry in the total employment decreased from 65,438+69.8% in 0979 to 50.0% in 2002, with an average annual decrease of 0.86 percentage points; In the same period, the proportion of tertiary industry employment increased from 12.6% to 28.6%, with an average annual increase of 0.7 percentage points; The secondary industry rose significantly in the 1980s, reaching a relative peak of 23.7% at 1997, and declined in recent two years. See figure 4.

Judging from the current trend and international comparison, the proportion of employment in the primary industry will continue to decline, while the proportion of employment in the tertiary industry will continue to rise. For example, in 2002, China's tertiary industry accounted for 28.6% of employment and 33.7% of output value, while the indicators of developed countries in the same period were 60-75% and 70-80% respectively; The gap and potential are huge and obvious.

Figure 4: Changes in the employment structure ratio of primary, secondary and tertiary industries since1979.

Source: Relevant data published by the National Bureau of Statistics.

2. Changes in employment ownership structure. That is to say, the number of employees in urban state-owned and collective units and their proportion in the total number of urban employees decreased significantly, from 99.2% in 1980 to 33.4% in 2002, with an average annual decrease of 2.99 percentage points; At the same time, after experiencing rapid growth in the 1980s and the first half of the 1990s, the proportion of urban individual and private employees in the total urban employment and the proportion of township enterprises in the total rural employment have maintained an obvious upward trend in recent years. See figure 5.

Figure 5: Changes in employment ownership structure since 1980 Unit:%

Source: Relevant data published by the National Bureau of Statistics.

Among them, under the background of the rapid rise of the total number of employed people in cities and towns, the absolute number of employed people in state-owned and collective units in cities and towns is rapidly declining. For example, 199 1- 1996, the number of employed people in urban state-owned and collective units has remained at the peak of1400,000, and then it has continuously dropped to 83 million in 2002. The core reason is the system transition or release.

Judging from the current situation, after a period of digestion and consolidation, the number of employees in individual and private enterprises in China, whether in absolute number or relative number-proportion, whether in towns or villages, will continue to increase substantially.

At present, the severe employment problem in China has attracted great attention from the government and society. Theoretically, the existence of partial unemployment may be very necessary for the healthy development of the economy. Including: 1, water storage demand of economic structure change. 2. The labor force has more time to update and improve itself. 3. It is also a catfish effect to make the on-the-job labor force work harder and more effectively.

Objectively speaking, the severe employment problem may be of great significance to the transformation of China's labor force or the improvement of market concept. Of course, the premise is a sound social security system.

Fourthly, after China's accession to the WTO, foreign investment and foreign trade will have greater integration and development.

From the situation of China's utilization of foreign capital since 1983, it can be seen that 1992, China's foreign direct investment surpassed foreign borrowing and became the main form of China's utilization of foreign capital; In 20001and 2002, China's foreign loans were zero, because China's foreign exchange reserves had reached the scale of 200 billion US dollars in the same period, and it was still growing rapidly at the rate of about 35% per year. See figure 6.

Judging from the amount of foreign direct investment, there are two important points from 1983: first, in the three years from 1992 to 1994, it has successively reached three steps of one billion dollars. After 1993, the amount of foreign direct investment in China has always ranked first among developing countries. Second, in 2002, it reached $52.7 billion, surpassing the United States to become the country attracting the most foreign direct investment in the world. The main reasons are as follows: First, China's economy continues to grow steadily and rapidly; Second, "9 1 1" and Enron and WorldCom events have made people more worried about the investment environment in some developed countries.

From the industrial distribution of foreign direct investment: in the 1980 s, it may be more inclined to high-end hotels and restaurants; In the first half of 1990s, this policy actively guided foreign investment into the "bottleneck" sectors of the national economy, such as energy, transportation and raw materials. Since the second half of 1990s, both policies and foreign businessmen may pay more attention to the breakthrough in the technical field.

Figure 6: Actual utilization of foreign capital in China since1983 Unit: one billion dollars.

Source: Relevant data published by the National Bureau of Statistics.

From the form of foreign direct investment, it has shown a diversified pattern. For example: a number of domestic enterprises listed overseas; This policy actively encourages foreign investors to participate in equity mergers and acquisitions and asset restructuring of listed companies and state-owned enterprises, as well as participating in fund brokers. The latter includes the Notice on Issues Concerning the Transfer of State-owned Shares and Legal Person Shares of Listed Companies to Foreign Investors, the Interim Provisions on the Restructuring of State-owned Enterprises with Foreign Capital, and the approval of the establishment of the first Sino-foreign joint venture fund company-Guoan Fund Company.

At present, foreign-invested enterprises have occupied an important position in the macro-economic operation of China. By the end of 2002, China had approved the establishment of 424,000 foreign-invested enterprises, and the actually used foreign capital amounted to US$ 448 billion. The direct employment of foreign-invested enterprises is nearly 23 million, accounting for10% of the urban employment in China; The export volume of foreign-invested enterprises accounts for 52% of China's total export volume, and even accounts for 80% of high-tech products.

At present, the main problems faced by foreign direct investment in China are: first, the degree of legalization and standardization of policies is not enough; Second, the coexistence and contradiction between "high national treatment" and "low national treatment". For example, on the one hand, foreign direct investment enjoys the tax preference of "two exemptions and three reductions", on the other hand, there are many restrictions on industry access.

According to the analysis of the Tenth Five-Year Plan for Utilization of Foreign Capital and Overseas Investment issued by the former State Planning Commission, there will be four major changes in the utilization of foreign capital in China in the future: the focus will shift from introducing foreign capital to introducing foreign advanced technology, modern management and professional talents; The field has been vigorously promoted from processing industry to service industry; The way is to attract foreign direct investment and expand attracting foreign investment in various ways; Government management will change from administrative examination and approval to standardization, guidance and supervision according to law. The summary of these four aspects is very penetrating and thorough. Of course, at the same time, we can also add that the total amount of foreign capital utilized will still have a long period and greater growth in the future forecast.

Since 1979, China's foreign trade has grown rapidly, that is, the total import and export volume has risen rapidly from $29.33 billion in that year to $620.77 billion in 2002, an increase of 2 1.2 times, with an average annual growth of 14.2%. See fig. 7.

Figure 7: China's foreign trade import and export situation since1979 Unit: US$ 100 million.

Source: Relevant data published by the National Bureau of Statistics.

At the same time of the rapid growth of the total volume, China's foreign trade structure also presents three remarkable operational characteristics: First, the developed eastern coastal areas always occupy a leading position. For example, in 2002, the import and export volumes of Guangdong, Jiangsu and Shanghai were US$ 225.4 billion, US$ 74.5 billion and US$ 72.8 billion respectively, accounting for 60.0% of the country's total import and export volume. Second, the industrial or technological structure of import and export is constantly optimized. For example, the export of mechanical and electrical products accounted for 29.5% in 1995, 4 1.4% in 2000 and further increased to 48.2% in 2002. Third, foreign-invested enterprises and collective private enterprises are increasingly occupying a core position in foreign trade. For example, in 2002, the export volume of foreign-invested enterprises and collective private enterprises in China was $2027 1 billion, an increase of 32.6% over the previous year, accounting for 62.3% of China's total export volume in the same period, and an increase of 4.9 percentage points over the previous year.

The core part of the gradual reform of China's foreign trade system in the past 25 years is to break through the restrictions of the foreign trade agency system, that is, to give more foreign trade management rights to local governments and enterprises. For example, 1999 1, 2000 1 and 200 1 were reformed three times, and finally the examination and approval system for import and export business qualifications was abolished and changed to the registration and approval system, so that the private economy could enter the foreign trade field more smoothly.

By the end of 2002, 40,000 private enterprises in China had obtained the right to operate foreign trade.

Looking back on the development of China's foreign trade theory in the past 25 years, perhaps the most noteworthy one is Wang Jian's theory of "International Grand Cycle" from 65438 to 0988. At the same time, it has also had a sensational and far-reaching impact because it has been highly adopted by the policy-"two heads are outside, big in and big out".

According to statistics, by the end of 2002, China's total import and export volume accounted for 4.7% of the world trade from 200/kloc-0, making it the fifth largest trading country in the world.

Five, enterprise investment will gradually move towards the equality of market participants.

Looking back on the investment history of China's economy for more than 20 years, there are four remarkable features that may attract more attention. Namely:

First, private investment has increased significantly. Before the reform and opening up, China's investment was mainly state-owned, with little collective investment and little private and foreign investment. With the gradual liberalization of the policy, the investment of collective, private and foreign investors has increased steadily. For example, according to statistics, from 65438 to 0980-2002, private investment in China increased by 23% annually, 6 percentage points higher than that of state-owned investment. If we consider the effectiveness and sustainability of investment, the role of private investment in the economy should undoubtedly be evaluated for a long time and at a higher multiple.

Second, 1992- 1994, taking Deng Xiaoping's speech on his southern tour as an opportunity, China's investment in fixed assets has rapidly jumped to a new level for several years, as shown in Figure 8, and at the same time, the investment concept has also achieved a great breakthrough or change, although the real estate speculation in Hainan and other places has also left a painful lesson for China.

Figure 8: 198 1: National fixed assets investment units since 100 million yuan.

Source: Relevant data published by the National Bureau of Statistics.

Thirdly, since 1998, in order to combat the impact of the Asian financial crisis, China has issued an average of132 billion yuan of government bonds every year for five consecutive years, expanding infrastructure construction and promoting the increase of investment in the whole society, so as to maintain the moderate growth of total social demand and avoid or alleviate the greater employment pressure during the transition period. During this period, China's investment in fixed assets increased rapidly from less than 3 trillion yuan to more than 4 trillion yuan per year. Of course, there will be some problems in the quality and efficiency of government investment projects, so a proactive fiscal policy may cause long-term controversy in academic circles.

Fourth, the western development strategy was officially launched in 2000. At present, the state has arranged to invest 600 billion yuan. Among them, the Qinghai-Tibet Railway, West-East Gas Transmission, West-East Power Transmission and a number of hydropower projects have entered the stage of comprehensive construction; Ecological construction projects such as returning farmland to forests, protecting natural forest resources, controlling sandstorms in Beijing and Tianjin, and restoring natural grasslands are being actively promoted. This will greatly and profoundly affect and change the regional structure of China's investment and even the overall economic development.

Of course, at the same time, the development zone construction, the second board establishment dispute, domestic enterprises' foreign investment and so on. It is also a matter of great concern to the domestic investment community.

From the perspective of establishing a standardized market-oriented investment system in China, the two problems at present may have great theoretical and practical significance. Namely:

First, economic entities face different industry access systems. At present, the commonly used quantitative evidence is the survey results in Dongguan. That is, all 80 industries in Dongguan are open to state-owned enterprises, while only 62 are open to foreign-funded enterprises and only 42 are open to private enterprises. This situation is particularly obvious or serious in some low-risk and high-yield service areas.

Second, economic entities face different resource acquisition capabilities. Such as steel, energy, land, listing, loans and other quotas or indicators. According to statistics, from 1997 to 2002, the proportion of loans granted by Chinese financial institutions to private investors was less than 10%. Private enterprises mainly rely on their own effective investment and accumulation to achieve continuous development and growth.

According to statistics, among the 37 industrial categories, non-ferrous metals, textiles, furniture, chemical raw materials, etc. 16 industries account for more than 50% of the added value of the private economy. It shows the strong vitality and vigor of the private economy.

Therefore, it still has great institutional space or potential to effectively reconfigure the existing production resources in China and make them play a greater role. At the same time, China's current high economic growth rate, savings rate and total savings provide extremely favorable conditions or background for the sustained and rapid growth of investment in China.

Of course, the reform and construction of the system have also greatly changed the scale and structure of investment in China. For example, from 65438 to 0998, the state decided to reform the housing distribution system. By the end of 2002, the national real estate personal loans reached 700 billion yuan, and the proportion of individual purchases was as high as 95%. This is an important reason for supporting the China real estate market and its sustained prosperity in recent years.

Sixth, there are structural contradictions and conflicts in the growth of total consumption.

Due to the rapid economic growth, the consumption level of China residents has also increased rapidly since the reform and opening up. See fig. 9.

Figure 9: Equal growth rate of total retail sales of consumer goods in China since1979 Unit:%

Source: Relevant data published by the National Bureau of Statistics.

That is to say, in terms of total volume, the average annual growth rate of total retail sales of social consumer goods in China started from 1979, reaching a relatively high growth rate of 14.5%, and the average annual growth rate of savings balance of urban and rural residents even reached a relatively high growth level of 28.3% in the same period.

Looking back on the evolution of consumption characteristics in China in the past 25 years, it can be roughly divided into four stages: in the first half of the 1980 s, agricultural products became rich and expensive; In the second half of 1980s, ordinary color TV sets, refrigerators and washing machines gradually entered the family. Throughout the 1990s, the quality of life improved in an all-round way. For example, large-screen color TV sets, high-end refrigerators, multi-function washing machines and other household appliances began to upgrade. 2 1 century, mass consumption such as cars and houses began to appear and led the trend of the times. At the same time, electronic communication, computers and tourism have gradually become popular consumption hotspots.

Judging from the internationally accepted indicators reflecting residents' living standards, China's Engel's coefficient-the proportion of food expenditure in all living consumption expenditure has also steadily declined in the past 25 years. For example, in 1980, Engel's coefficients in rural areas and towns were 6 1.8% and 56.9%, respectively, and decreased to 46.2% and 37.7% in 2002, showing an obvious downward trend.

However, with the overall rapid development, we should also see that there are a series of big problems in China's consumption structure at present. This is reflected in the following aspects:

1, and the consumption rate or tendency is low. Since 1990s, the consumption rate of developed countries has been close to 80%, while that of China has been hovering around 60%. The reasons are as follows: First, the system reform has increased people's expected expenditure on medical care, education and housing. Second, the widening income gap has led to the precipitation or lag of more expenditures. Since 1995, relevant institutions and scholars in China have basically calculated or considered that China's Gini coefficient has exceeded the internationally recognized income distribution warning line of 0.4. Third, the system or habit of consumer credit has not yet formed. For example, consumer credit in the United States is twice that of corporate credit, while that in China is only 10%. This is an important reason for China's sluggish demand, sluggish growth and deflation in recent years.

2. The gap between urban and rural areas is still widening. Although from 1979-2002, the per capita net income of rural households increased by 7.2% annually, which was higher than the per capita disposable income of urban households by 6.7% annually, the growth of rural income was mainly concentrated during the Sixth Five-Year Plan period, and then-except for 1995- 1997, the growth of rural income was basically See figure 10. This has led to the continuous expansion of the income gap between urban and rural areas in the past 18 years; However, the rural areas, which account for the vast majority of China's population, are far from harmonious or consistent with the modern mainstream urban economy in terms of supply and demand.

Figure 10: 1979 Per capita disposable income growth rate unit:%

Source: Relevant data published by the National Bureau of Statistics.

3. The regional development gap still exists, and it is obvious. From 1979 to 2002, the contribution rate of the eastern region to the national GDP was 58%, the central region was 28%, and the western region was only 14%. Even after the implementation of the western development, the retail sales of social consumer goods in the eastern, central and western regions increased by 1 1%, 10% and 9% respectively in 2002. The gap is obvious and widening.

Although in order to solve the problem of total consumption and structure, the policy continues to make a lot of efforts in standardizing the market system. Such as rural tax and fee reform, improving social security system, encouraging the development of private economy, absorbing foreign direct investment, and speeding up the development of the western region, have been fully launched this year. However, while fully affirming the extraordinary achievements of the past 25 years, we may also be soberly aware that there are many economic and even social contradictions and problems.

Seventh, strive to shape the financial market-oriented operation system.

Before 1990s, the growth rate of fiscal revenue and corresponding fiscal expenditure in China was very slow. This is because the economic system reform in the same period is centered on decentralization and profit-making. Since 1994, China has carried out the tax-sharing reform, initially dividing the central and local powers, financial rights and budget constraints. At the same time, due to the rapid growth of the macro economy for many years, the growth rate of fiscal revenue and expenditure has been higher than the economic growth rate since 1996. See figure 1 1.

Figure 1 1: 1979 Changes in China's fiscal revenue and expenditure Unit: 100 million yuan.

Source: Relevant data published by the National Bureau of Statistics.

From 1979, China's fiscal revenue accounted for 28.4% of GDP, and fell to the lowest point-10.7% in 1995; After that, it increased year by year, reaching the relative peak 18.5% in 2002. According to the statistics of the International Monetary Fund, or with extra-budgetary funds, the proportion of China's fiscal revenue to GDP may have basically reached the average level of 25% in developing countries.

Since 1998, China has focused on promoting the reform of fiscal expenditure system, including departmental budget reform, treasury management system reform and government procurement reform, forming a basic pattern of fiscal revenue and expenditure reform going hand in hand.

But overall, China's financial system is dominated by construction finance, and the proportion of public finance is still small. For example, for more than 20 years, the proportion of social security expenditure in China's fiscal expenditure has been below 2%, far below the proportion of more than 30% in developed countries in the same period. In this year's crisis of dealing with SARS, this problem is more obvious and prominent.

The proactive fiscal policy implemented since 1998 has not only effectively stimulated economic growth, but also placed a heavy debt burden on the central government, and its cost-benefit ratio has also attracted much attention. In particular, the policy of reducing state-owned shares in 200 1-2002 may be criticized more and more clearly.

Professor Li Yang believes that there are four kinds of offside phenomena in China's fiscal expenditure: some enterprises tap the potential and transform funds and operating funds are borne by public finance; Excessive subsidies; Various business expenses are complicated; And the burden of administrative expenses is too heavy. The three kinds of vacancies are as follows: insufficient support for social security; The supply of social welfare undertakings is weak; Investment in urban public facilities construction is less.

On June 1 day, 2006, China Economic Times published an article "We should strive to follow objective economic laws when formulating fiscal policies". The article holds that there are three basic principles in formulating fiscal policy-equal efficiency in the use of marginal funds between the government and society, fiscal balance and fair tax burden; Therefore, the formulation of fiscal policy must strive to follow the objective economic laws, otherwise it will lead to various consequences of inefficient use of social resources. This may be a revolutionary breakthrough and significance for the development of public finance theory system at home and abroad.

Finance is the core of modern economy, so it has corresponding complexity and profundity.

China's financial system reform can be said to have been officially launched from 1993. This can also be regarded as the reform of China's economic system, from 1979- 1984 focusing on rural land contracting, 1985- 1992 focusing on urban industrial system, to 1993 focusing on state funds.