Achieving Fiscal Sustainability
Qichun Zhang and Shufang Li
Fiscal decentralization has been established in the People’s Republic of China (PRC), but crises emerge at the local government level due to remaining problems of the fiscal administration system of tax allocation and the impact of replacing the business tax with a value added tax. The PRC taxation system requires readjustment and local governments have begun to focus on innovative financing models. The main path to stable and sustainable government finances is to maintain the general public budget and the government fund budget. The present chapter shows that use of innovative fundraising and financing channels will lead to the upgrading of local government infrastructure and public services. Suggestions for enhancing local government fiscal stability and sustainability include: reducing the fiscal burden at the local level by standardizing and legalizing outlay establishing a modern taxation system; establishing a standardized and predictable transfer payment system by introducing block transfer payments and prioritized transfer payments as a basis for a stable growth mechanism for general transfer payments; promoting public–private partnership legislation to encourage participation of social capital and maximize the multiplier effect of public expenditure; and improving the mid-term budget and debt-annexed budget and establishing a government planning mechanism for investment and debt financing of major infrastructure construction projects.
Lixian Fan, Xinlu Li, Sijie Zhang and Zimeng Zhang
With increasing trends in globalization and international trade, the demand for transportation of goods by sea has been growing at an unprecedented rate. This has motivated the industries to build more vessels of greater size and better efficiency, which will enable the shipping industry to provide transport services at lower cost. Notwithstanding the importance of shipping market study in investment decision making, there are relatively few empirical studies modeling the dynamics between shipping demand and fleet supply by considering the incremental trend in vessel size. This chapter examines the nature of the shipping market and then provides a simultaneous model of ship orders, earnings and capacity decisions, and tests it using data. The primary findings point to the impact of vessel size on new investment and fleet development; and order book volume is a significant factor for capacity development which could lead to overcapacity in the market if not well organized.