Discussion On China's Proactive Fiscal Policy

Since 1998,our nation has carried out the active fiscal policy in order to increase our domestic demand and to enhance our economic development . Comparing with the western fiscal theory and practice ,we've adopt some different methods in which our government has increased the offering of national bond , public expenditure , and improved but not lessened tax at the same time .Moreover, through the leverage effect of increasing and financing , we've greatly advanced state-owned enterprises' technological level, we also invested a great slim of fiscal capital to construct the social securing system and to carry the policy of "free to tax ",I think that all of these belong to the special background we've met.Our deflation since 1998 resulted from the out-shock of Asia financial crises as well as the heavy inner inequilibrium of economic structure . So we should adjust our economic policy immediately . Because of the shortage of fiscal budgetary funds coming from the continual decrease of "the two proportions" since the opening-up and reform , our macro-regulation capacity is weakened . So we badly need active and efficient fiscal policy as the moneytary policy is inefficient . Confronting the improper market mechanism and the structural contradiction in economic area ,we should carry out the fiscal policy to improve investment ,widen our commercial market ,increase domestic demand , as well as to strengthen fiscal function ,adjust our economic formation and to enhance our economic restruction.With the execution of our active fiscal policy ,we've made great profits and resulted to many different points, such as if or not the active fiscal policy may bring "press-out effect", inflation and debt crise , if or not we should lessen tax in a large scale . I don't think so .But as the paper goes ,it's necessary to adjust the long-run active fiscal policy because of the negative effect .The key point of adjustment lies in the unification between the short-run policy , the long-run economic restruction and the proper design in our nation's economic development. Hence, the active fiscal policy in the future should meet demand .Firstly, it comes under the perfect national bond policy. Secondly, the policy of demand management should properly combine with the policy of supply management. Finally, we should strengthen the coordination between fiscal policy and moneytary policy .The proper includes four sections. The first section discusses the background, method and effect of AFP .The second one is to take over several problems in AFP .The third is the negative effect of AFP . The last one is to expect the future of AFP.