IMF Working Papers

Fiscal Policy and the Government Balance Sheet in China

By Waikei R Lam, Marialuz Moreno Badia

August 4, 2023

Download PDF Order a Print Copy

Preview Citation

Format: Chicago

Waikei R Lam, and Marialuz Moreno Badia. Fiscal Policy and the Government Balance Sheet in China, (USA: International Monetary Fund, 2023) accessed December 9, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

In this paper, we present the most comprehensive estimates of China’s government balance sheet to date. Based on these estimates, we show how major shifts in fiscal policy over the last two decades have shaped the health of the public sector prior to the Covid-19 pandemic. We find that, at US$12.5 trillion, China has the largest stock of financial assets in the world. However, its net financial worth as a percent of GDP—though still higher than the large majority of countries—has declined over the last decade. This trend can be traced back to the turn of the century when China undertook a major restructuring of its state-owned enterprises but left important shortcomings in the intergovernmental fiscal system unaddressed. Compounding these risks, reform momentum stalled in the aftermath of the global financial crisis leading to high leverage and falling profitability among state-owned enterprises.

Subject: Economic sectors, Financial statements, Fiscal policy, Public debt, Public enterprises, Public financial management (PFM), Public sector

Keywords: Balance Sheet, Balance sheet estimation, China, Cross holdings, Debt, Deficit, Estimation methodology, Financial statements, Global, Government balance sheet, Infrastructure, Local government, Public enterprises, Public finance, Public sector, SOE reform, State-owned Enterprises

Publication Details

  • Pages:

    55

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2023/154

  • Stock No:

    WPIEA2023154

  • ISBN:

    9798400248221

  • ISSN:

    1018-5941