On the other hand, a relatively lax regulatory framework, combined with blurred responsibilities between the central government and local authorities, provide a hotplate for the consequences of bad spending to fester.
After the Sars epidemic, China adopted an expansionary fiscal policy including tax cuts to help the recovery of the sectors most affected. Today China is running large fiscal deficits, and thus has less room to apply fiscal stimulus as it did last time.
On one hand, China’s state-led economic growth model tends to create funding shortfalls between their fiscal expenditure and their limited sources of revenue, which drives local authorities to external and hidden sources for funds, or push them into debt.
On the other hand, a relatively lax regulatory framework, combined with blurred responsibilities between the central government and local authorities, provide a hotplate for the consequences of bad spending to fester.
Chinese President Xi seems to think a strong state sector is an element of control and is willing to pay a price in terms of slower economic growth in order to maintain that control.
Will_Gardner
On the other hand, a relatively lax regulatory framework, combined with blurred responsibilities between the central government and local authorities, provide a hotplate for the consequences of bad spending to fester.
Will_Gardner
After the Sars epidemic, China adopted an expansionary fiscal policy including tax cuts to help the recovery of the sectors most affected. Today China is running large fiscal deficits, and thus has less room to apply fiscal stimulus as it did last time.
Will_Gardner
On one hand, China’s state-led economic growth model tends to create funding shortfalls between their fiscal expenditure and their limited sources of revenue, which drives local authorities to external and hidden sources for funds, or push them into debt.
Will_Gardner 回复 @Will_Gardner：
On the other hand, a relatively lax regulatory framework, combined with blurred responsibilities between the central government and local authorities, provide a hotplate for the consequences of bad spending to fester.
Will_Gardner
Chinese President Xi seems to think a strong state sector is an element of control and is willing to pay a price in terms of slower economic growth in order to maintain that control.