Report on China' s Public Finance in English is a crystallization of the　collective wisdom of the Center for Public Policy Studies of Shanghai Universi-　ty of Finance and Economics. Major contributors to the current English ver-　sion are Song Jianmin and Sun Yue ( Chapter 1 ), Zhao Yongbing ( Chapter　2, 4 and 5), Gong Yangshu (Chapter 3 ) and Zhu Ping (the Attachment),　mainly writers of relative chapters in Chinese. Adapted by Song Jianmin, it　was finally translated into English by Vei Nanhai, Shen Jun, Kong Yah and　Yang Haiyan.

In 2008，the global financial crisis swept through the world.After analyzing historical events such as the Great Depression in 1930's in the US，the economic stagnationin Japan duringthe 1990’S，andtheAsian financial！crisis，this report lists the policies adopted by various governments in response to these crises.After comprehensive analysis of these policies，especially the fiscal ones employed by various governments in history,we conclude that the current global financial crisis did not fundamentally alter the primary trend of econonlic growth inChina.However,this crisis doespose challengesin boththe virtual economy and the real economy.In addition，this report notes that the economic downturn induced by external turmoil has uncovered several internal problems in Chinese economy.Excessive dependence on exports and the export-oriented industrial structure necessarily result in excess production capacity once the external consumption demand in Europe and the North America contracts.At the same time，the domestic income inequalityandthelack of a sophisticated systemof social securityand other factors prevent the domestic consumption demand from offsetting the decrease in external demand.Consequently,the excess production capacity is left unutilized.Therefore，we believe that policies that restructure the industrial composition and the income distribution，policies that shift the way how the economy grow,and policies that enhance the domestic consumption demand are the important ways to defend the Chinese economy against large fluctuations.

Preface

1 An Overview of China' s National Economic Performance in 2008

 1.1 As the Economy Entered a Period of Adjustment, the Trend of Indus- trial Restructuring has Taken in Shape While the Overall Arrange- ment for Steady and Rapid Development has Remained Unchanged

 1.2 Agricultural Economy Kept a Steady Growth with Increase in Rural Incomes

 1.3 Value Added of Industrial Production Slowed down with a Drop of Profits Made by Enterprises, but the Internal Structure was Opti- mized and the Situation was Improved at the End Of the Year

 1.4 Investment in Fixed Assets Kept a Rapid Growth witl~ Improved In- vestment Structure and Declined Growth Rate of Investment in the Real Estate Development

 1.5 The Growth Rate of Imports and Exports Dropped, but the Relation- ship with Major Trade Partners were Developed Stably and the Policy to Stimulate Export Began to Take Effect

 1.6 Despite the Growth Rate of Prices Showed the Pattern of Rise and Down, Due to Rapidly Increased Domestic Sales of Consumer Goods, Consumption Contributed More to the Economic Growth

 1.7 The Turnover Shrunk on the Stock Market and Market Value of the Stocks Dramatically Dropped, but the Financial Market Kept a Steady Growth Generally

 1.8 The Financial System Worked Smoothly and Foreign Exchange Re-serves Continued to Increase

 1.9 The Overall Employment Situation Was Grim, but Urban and Rural Incomes Kept Growing

2 China' s Fiscal Revenue and Expenditures in 2008

 2.1 China' s Fiscal Revenue in 2008

 2.2 China' s Fiscal Expenditures in 2008

3 Performance of Treasury Bonds in 2008

 3.1 Treasury Bonds Issued in 2008

 3.2 Circulation of Treasury Bonds in 2008

4 Analysis of Major Policies on Fiscal Revenue in 2008

 4.1 Policies on Value-added Tax Reform

 4.2 Policies on Income Tax

 4.3 Tax Policies on Imports and Exports

 4.4 Tax Policies ON Energy Conservation and Emissions Reduction

 4.5 Fiscal Policies ON Promoting Development of Small and Medium-sized Enterprises

 4.6 Other Tax Policies

5 Analysis of Major Fiscal Expenditure Policies in 2008

 5.1 Fiscal Expenditure Policies in Support of Agriculture，Rural Areas and Farmers

 5.2 Fiscal Expenditure Policies Improving People’s Lives

 5.3 Proactive Fiscal Exlolenditure Policies to Expand Domestic Demands and Maintain Economic Growth

 5.4 Rethinking the Proactive Fiscal Expenditure Policies

Attachment An Empirical Analysis of Domestic Demand Driven up by Government Investment in China，S Proactive FiscaI Policies Since 1998

 I.Sizes and Options of Investment by the Chinese Government Since 1998

 II.Positive Economic E蕾fects of Government Investment during China's Implementation of Proactive Fiscal Policies Since 1998

 III.Pmblems in Govemment Investment Backed by Proactive Fiscal Policies Since 1998 and Their Negative Impacts on China’s Economy