A pilot scheme to replace business tax with value-added tax in several provinces could help ease the tax burden for service-sector companies.

A proposed revision to China’s Budget Law that would have enabled local governments to issue bonds directly has been delayed, generating heated debate among economists and academics

A number of Chinese provinces missed their 1H12 fiscal revenue targets, raising concerns about the impact on local government finances and fixed-asset investment

Since late 2011, banks have been quietly rolling over maturing loans to local government financing vehicles (LGFV) in response to recognition from top-level policymakers in Beijing that mass defaults by LGFVs would cause severe shocks to economic growth and disrupt this year’s all-important leadership transition (CC Nov 3 2011, Financial China).

On May 7, the government of Yangzhou, a municipality in Jiangsu province, announced that it will reward citizens who purchase fully furnished housing within a year from July 1 with 0.4% to 0.6% of the housing contract price according to the size of the house. The policy was the latest in a series of housing plans issued by local governments to help local real estate. Many such initiatives by local governments have subsequently been blocked by the central government, but Yangzhou has so far escaped sanction and an official at the Ministry of Housing said there will not be any action against the city.

It is clearly time for China’s policymakers to act to avert what has until now been a gentle slowdown from turning into a slump. In our view, Beijing has options but time is short

The imperative to boost local property sales is a motivator behind city government moves to increase local residency permits, but fiscal constraints may hinder their effectiveness and sustainability.

Despite the slow progress of social housing projects in several cities and some creative accounting, on-the-ground evidence points to a greater buildout this year than in 2011.