## Modernizing China: Investing in Soft Infrastructure

_Books, January 14, 2017_

## Source details

**Canonical URL:** [Modernizing China: Investing in Soft Infrastructure](https://www.imf.org/en/publications/books/issues/2017/03/24/modernizing-china-investing-in-soft-infrastructure-43711)

## Other formats

- [Markdown version](/en/publications/books/issues/2017/03/24/modernizing-china-investing-in-soft-infrastructure-43711/index.md)
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## Bibliographic details
- Authors: Waikei R Lam, Markus Rodlauer, Alfred Schipke
- Published: January 14, 2017
- Series: Books
- DOI: https://doi.org/10.5089/9781513539942.071

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### Overview and central thesis
- China is at a critical juncture in its economic transformation as it tries to rebalance what is generally seen as an exhausted growth model.
- The transformation can no longer be achieved by raising the amount of physical investment and government direction of resource allocation.
- China is building a new set of policy frameworks—soft infrastructure—that will allow markets to function more effectively: not unfettered markets, but markets that work efficiently, in line with broad social and other policy goals, and in a sustainable way.
- Soft infrastructure is defined as the institutional plumbing that underpins and guides the functioning of markets as the key organizing principle toward achieving sustained economic and social progress.

### Key issues and areas of focus
- The volume provides information about policies and institutions in China today and looks at the road ahead and key principles to help navigate it.
- Primary topics addressed:
  - Tax policy and administration
  - Social security
  - State-owned enterprise reform
  - Medium-term expenditure frameworks
  - Role of local government finances
  - Capital account liberalization
  - Renminbi internationalization

### Policy implications and priorities
- As China moves toward a more price-based allocation of resources:
  - Strengthening monetary policy frameworks will be particularly important in channeling resources to the most productive sectors.
  - Strengthening financial sector regulation is needed to minimize the risks of financial sector stress.
- Upgrading statistical frameworks is critical for macroeconomic policymaking and for investors.

### Intended audience and utility
- The volume is aimed at policymakers, academics, and the public, offering valuable information about current policies and institutions and guidance on principles for future reforms.

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_Source: https://www.imf.org/en/publications/books/issues/2017/03/24/modernizing-china-investing-in-soft-infrastructure-43711_