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The Chinese Government

Government structure Taxation State-owned enterprises Subsidies and supports Government intervention

Government of China
All power within the government is divided among several bodies/branch: political: Communist Party of China executive: State Council legislative: National Peoples Congress judicial: Supreme Peoples Court/Procuratorate / military: Peoples Liberation Army via the Central Military Commission The primary organs of state power are the National People's Congress, the President, and the State Council

Central and local government

Taxes provide the most important revenue source for the government Tax is a key economic player of macro-economic regulation, and greatly affects China's economic and social development After the tax system reform in 1994 and the fine-tuning of it in subsequent years, China has preliminarily built up a tax system adaptable to the socialist market economy

Taxation system
State administration of taxation Local tax bureaus

Chinese Enterprises Face Heavy Tax Burden

According to a 2013 report from Chinas Ministry of Finance Taking various taxes, government funds, administrative fees, and social security payments into account, the combined tax rate for Chinese enterprises has amounted to around 40%, surpassing the average level of OECD member countries Experts remarked that social security payments contributed the largest part to enterprises tax burden, especially for labor-intensive companies

China's Superior Economic Model

Thursday, December 1, 2011

State-owned Enterprises (SOEs)

Author: Gao Xu, from the World Bank

State-owned Assets Supervision and Administration Commission

Fortune500: Read the article: State-Owned Enterprises 2013

The Changing Role of Chinas SOEs

The dominance of the giant SOEs has been associated with high prices and low efficiency in many industries

However, they have undergone a dramatic transformation over the past decade. While their share of economic output has declined, their influence has not. In fact, in several of Chinas most strategic sectors, state-run firms are sharpening their management skills and transforming their operations so they can compete globally

The state advances as the private sector retreats

Barack Obama has limited ability to shape US economic policy as a result of the separation of powers. Not so their Chinese counterparts, who, thanks to the overarching role of the Communist Party in both government and business, enjoy almost unrivalled influence over the countrys direction More than 1900 of the 2047 listed firms in the countrys two stock exchanges are majority-owned by the government.
~ from

Subsidies in China

Government subsidies in China rose approximately 23 percent to 13.83 billion dollars in 2012 . They include cash for research and development, and environmental reform, both of which are also heavily subsidized in the United States.

But policymakers from other countries regard many Chinese government policies as giving Chinese companies unfair competitive advantages. These advantages include a currency that many analysts believe is under-valued, cheap land sales, loan rebates, tax breaks, cash hand outs, and subsidies.

Government and Trade Protection

US Abandons Free Trade with Huawei
By Global Times, 2013-5-15

Huawei's businesses can be found all over the world and has been locked in intense competition in different countries. When competitions involve local companies, governments may show a bias. However, most of them will exercise restraint in doing so because such actions violate the rules of free trade. The US is the largest economy in the world. It was the strongest promoter of the principle of free trade last century. However, the US has caused the most trouble in preventing Huawei from entering its domestic market.

Trade Protectionism is the economic policy of restraining trade between states through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations. This policy contrasts with free trade, where government barriers to trade are kept to a minimum.

Cisco Systems and other US tech companies urged Congress into investigating Chinese companies Huawei and ZTE for security concernsPoliticians It's not because Huawei's products are not advanced are concerned the tech giants will use enough, but because the US government eliminates the their systems to help expand the Chinese possibility of competition between Huawei and its US government's spying networks into the US. peers using the excuse that Huawei may threaten US Earlier this week, the US Intelligence information security. Chinese companies have just about Committee said the duo shouldn't be heard every excuse when being kicked out of a market allowed to operate in the U.S. for security reasons. But the only proof of those claims are held Read more at secret in classified reports.

Government Subsidies to Consumers

Sending Home Appliances to the Countryside
A government-funded project aims to expand sales of household electric appliances in the countrys vast rural areas at prices 13 percent lower than those in cities.

200712 2009 2013 20 6020129 2.756600 201212 2.987204 TCL

Government Subsidies to Consumers

Subsidies for fuel-saving cars
The government allocated more than 6 billion yuan to subsidise consumer purchases of fuel-saving cars in 2012 China waives sales taxes on electric and fuel cell cars (a total of 49 models) made domestically

This battery electric vehicle cost him 140,000 yuan, including a tax and insurance. Normally, such a car costs 200,000 to 300,000 yuan. A rebate of up to 60,000 yuan by the central government is offered to buyers of batterypowered cars Shanghai municipal government is offering an extra subsidy of up to 40,000 yuan and a free license plate. Beijing unveils policies for electric vehicles in 2013: a subsidy of up to 120,000 yuan and the option to obtain license plates without participating in the citys plate lottery So there are regional disparities

Government intervention

It is reasonable for the government to step in when the market does not work. It is regulatory actions taken by a government in order to affect or interfere with decisions made by individuals, groups, or organizations regarding social and economic matters. The government announced detailed plans on deepening economic reform on May 6, 2013 , fulfilling its pledge to cut government interventions that hinder a more robust growth It has canceled or delegated power to lower levels concerning 133 items that were previously subject to central government administrative approval

The Most Expensive Cigarettes

: RMB850/pack : RMB270/pack


Price cap regulation

200816800 / 1000/

Prices of imported tabacco:

price cap regulation and legal issues caused

200816800 / 1000/

Prices of imported tabacco:

Price cap regulation and legal issues caused

2010 730 12239 699 200

200020093006806 7001400 20062006 2006532006 15%308200716%358 200722%4392009 13%499 2010 753850 89989 20013881600

China bans luxury advertising in Beijing

Beijing has moved to ban billboards promoting a luxurious lifestyle over concerns that the endless advertisements are reminding people of the wealth gap. Read more:

China bans ads for pricey gifts in anti-corruption push

Chinese radio and television stations have banned advertisements for expensive gifts such as watches, rare stamps and gold coins, as part of a push by the government to crack down on extravagance and waste. Read more:

China is banning officials from using public funds to buy mooncakes, pastries offered as gifts during the Mid-Autumn Festival, as part of President Xi Jinping's fight against corruption

Regional Protectionism
Typical methods of protectionism are import tariffs, quotas, subsidies or tax cuts