Reflection Of China's Proactive Fiscal Policy

Since 1998, to fight against Asian Financial Crisis and negative influence brought by world economic recession, and to find a solution to internal seriously low demand, our government adopted macro-control policies stressing proactive fiscal policy. The implementation of these policies have played an important role in overcoming the adverse effects of Asian Financial Crisis, stimulating domestic demand, and maintaining a sustained, rapid, and sound development in economy. After a few years' implementation, they have achieved remarkable success, while some problems were revealed. Therefore, it is necessary to reflect upon its effects, its sustainability and so on. Meanwhile, the fruitful research work that many experts and scholars have done made it possible for me to further the study and thought over the proactive fiscal policies.Introducing and analyzing western financial theories and linking the economic interference of implementing fiscal policies in a few typical countries, this article aims to make a thorough investigation over the effects and the sustainability of the proactive fiscal policies China has adopted in the recent years with hope to get insightful enlightenment.This article contains 50,000 words and four chapters.Chapter One includes two sections. Section One gives a brief review of western financial theories and the policy development. The development of western finance is divided into three stages: finance before classical school, finance of classical school, and various schools of Keynesianism and after Keynesianism. Section Two targets on economic analysis of Keynesianism. Our present proactive fiscal policies absorbed what is sensible in this theory to a large extent. Mainly in accordance with financial theory of Keynesianism, this section analyzes the influence fiscal policies exert on macro-economy from two aspects of total demand and total supply.Chapter Two mainly introduces the practice of fiscal macro-control in three typical countries of US, Japan and Korea with hope to get some insightful enlightenment for our implementation of proactive fiscal policies. This chapter is divided into three sections. Section One gives some facts on the practice of fiscal macro-control in developed countries of US and Japan. Section Two gives some facts on the practice of fiscal macro-control in developing country of Korea. Section Three summarizes the success and failure of the three countries and thus obtains someenlightenment that includes: accurately estimate the situation, and implement fiscal policy in a proper time; keep its continuity and coordinateness, and make timely shift of policies when necessary.Chapter Three explicates the practice of China's fiscal macro-control. There are two sections in this chapter. Section One discusses the practice of China's fiscal macro-control from 1979 to 1998. During this period, the government has undertaken four times of fiscal macro-control. The first time began in 1979, the second in 1985, the third in the end of 1988, and the last from the next half of 1993 to 1996, which is also the only time to succeed and thus make "soft landing" realized. Section Two introduces the proactive fiscal policies implemented since 1998 from three aspects of background, contents and effects.Chapter Four mainly reflect upon China's proactive fiscal policies. This chapter is the key chapter of the article. It is divided into three sections. Section One reflects upon the effects of the proactive fiscal policy from both a macro level and a micro level. The reflection leads to the following conclusion: economic prosperity in macro level'benefits from proactive fiscal policy, while economic slump in micro level explains that China's economy is not able to grow independently; fiscal policy should not fade out for any rash decision but be adjusted when necessary. Section Two gives some thoughts on the sustainability of China's proactive fiscal policy. It draws on the experience of financial macro-control at home and abroad and makes a thorough analysis on p...