1、 The puzzle of establishing modern financial system
In 2013, the central government proposed to establish a modern financial system, highlighting the importance of China's financial modernization to achieve long-term stability of the country. However, there are also some puzzles in the practice of establishing a modern financial system.
（1） Cognitive disunity
Since the central government proposed to establish a modern financial system, theoretical circles have carried out discussions around modern finance, but the results of the discussion focus on modern finance? While the revenue system, modern budget system and modern intergovernmental fiscal relations, they have led to financial disputes in a wider range. The dispute mainly reflects the differences in the definition of basic theoretical issues such as the nature and attribute of Finance in the theoretical circle since the state distribution theory, especially with the continuous emergence of the disadvantages of the market economy model, this difference is expanding. From the perspective of China's actual national conditions, on the one hand, the demand for medium and high-speed economic growth is still urgent, and we also need to learn from the market economy model to develop the economy; On the other hand, the continuous accumulation of public crises, such as the lack of values and environmental pollution, also needs to be corrected from the perspective of public governance and ethics. It is a compromise for the financial theorists to outline the framework of modern financial system from the perspective of national governance. However, in terms of financial disputes, this compromise is obviously not enough, and the financial positioning is ambiguous, which can neither solve the traditional problems that finance has been paying attention to, nor comprehensively clarify the modern relationship between finance and national governance. This is also why since the central government proposed a modern financial system at the end of 2013, the discussion in the theoretical circle has not been satisfactory.
Moreover, nowadays, a more thorny problem is how to realize the effective connection between the research of public finance and the discussion of modern finance. Although the author has made an in-depth analysis of the relationship between public finance and modern finance, and believes that in the long run, modern financial reform is conducive to understanding the public nature of finance, but this is only a statement after all, It also needs to establish the logical connection between public finance and modern finance through in-depth discussion in the theoretical circle.
（2） Practical differences between the central and local governments
The practical attitude of the central and local governments towards modern finance is directly related to the changes in the allocation of central and local fiscal revenue and expenditure. In the early days of the founding of the people's Republic of China, the unified revenue and expenditure system ensured the stable financial resources of the central government. From 1953 to 1957, the central fiscal revenue accounted for an average of 78% of the national fiscal revenue. In 1958, the financial system was adjusted. Under the new system, the allocation ratio of central and local governments in fiscal revenue remained at 80% and 20%, but the allocation ratio of fiscal expenditure changed from 73% and 27% to 44% and 56%. The sudden enlargement of local revenue and expenditure gap prompted the financial system to continue to adjust in 1959, and the allocation of central and local revenues also changed to 24% and 76%. From 1959 to 1979, the central government's attempt to bear an average of 54% of fiscal expenditure with an average of 23% of fiscal revenue did not result in stable high economic growth. During this period, the average growth rate of national fiscal revenue was 7.2%, reaching 45.8% at the highest and -37.8% at the lowest. From 1980 to 1993, the average proportion of central fiscal expenditure fell to 40%, and the average proportion of fiscal revenue increased to 32%. The upside down of central revenue and expenditure has improved, and China's macro-economy began to grow in double digits. In contrast, under the long-term lump sum system, the national fiscal revenue and expenditure shrank due to the decentralization of powers, and the non tax fees increased due to the profits of operating enterprises, which seriously affected the overall operation quality of finance. In 1993, the proportion of national fiscal revenue in GDP fell to 12.3%, which is extremely disproportionate to the size of China's population and area. The reform of the tax sharing system is imperative.
In terms of effect, the tax sharing system effectively increased the two proportions, but at the same time, it continued the changes in the allocation of central and local fiscal revenue and expenditure under the lump sum system. From 1994 to 2012, the average proportion of central fiscal revenue continued to expand to 52%, and the average proportion of fiscal expenditure continued to decline to 26%. The main body of revenue and expenditure inversion was reversed from the central government to local governments. Moreover, with the tax sharing system, there is also the reform of the modern enterprise system. The reform requirements of "separation of government and enterprises" cut off the direct interest link between local governments and operating enterprises, objectively aggravating the situation of inverted revenue and expenditure of local governments. Therefore, in the process of deepening the tax sharing system, the central government, whose financial situation tends to improve, increasingly emphasizes the standardization of financial operation and the people's livelihood, while the local government, whose financial situation has deteriorated, focuses on obtaining financial revenue, and gradually solidifies to land management and debt financing in the process of practice.
Based on this understanding, it can be said that the modern financial system proposed at the end of 2013 has aggravated the different financial operation trends of the central and local governments to some extent. In the face of the complex development situation at home and abroad, the central government needs more standardized, people's livelihood, pluralistic and effective financial operation, which itself brings greater financial pressure to local governments.
（3） Systematic requirements contradict progressive reform
Looking at the fiscal and tax reform measures since the reform and opening up, the reform of the lump sum system has decentralized the management power and economic power in the name of interest transfer, which has expanded the scope of China's economic subjects. Although this is conducive to economic growth, it has also led to the non standardization of financial operation in the process of decentralization, such as the diversification of the form of the lump sum, non-standard financial competition among local governments, etc; The subsequent reform of the tax sharing system and the implementation of the active fiscal policy have made some achievements in the standardization of the fiscal system, but due to the mismatching of financial power, the non equalization of fiscal transfer payments, the single consideration of fiscal operation GDP and other reasons, China's finance has failed to solve the contradiction between the individual pursuit of economic interests and the overall realization of balance and stability, while at the same time, it has produced new contradictions between the central government and local governments, production and distribution, supply and demand, And then induce non-standard operations such as land finance, taxes and fees coexisting. In the 21st century, fiscal and tax reform focuses on the budget, trying to improve the standardization of the whole finance through the standardization of the budget system, so as to enhance the ability of finance to support social and economic development, especially economic development, but from the effect point of view, it has not changed the situation that the standardization and non standardization of the financial system coexist.
From the perspective of the government and the public, there is a certain reason for this defect of the gradual reform: from the perspective of the government, the gradual reform is easy to form solidified departmental and regional fiscal and tax interests, so that the follow-up fiscal and tax reform measures are blocked by vested interest groups. The longer the process of progressive reform is, the greater the resistance is. In turn, the slower the speed of progressive reform becomes, and the solidification of interests becomes the biggest obstacle to progressive reform; From the public perspective, the gradual reform makes individuals lack a clear understanding of the overall planning and long-term goals of fiscal and tax reform, so they are more concerned about short-term interests and are willing to exchange flexible non-standard fiscal and tax policies at the cost of the lack of public responsibility. Therefore, although the modern financial system integrating theoretical and practical innovation is consistent with the current situation at home and abroad and the development of finance itself, its systematic requirements conflict with the tension of maintaining the status quo inherent in the gradual reform, so it is naturally very difficult to establish. 2、 Specific suggestions for solving the confusion
In December 2015, the central economic work conference pointed out that it is necessary to strengthen the proactive fiscal policy, increase the fiscal deficit rate in stages, and ensure the expenditure responsibility that the government should bear. At the same time, the aiib was officially established in the context of the Fed's interest rate hike, marking the world's first multilateral financial institution initiated by China. The occurrence of this series of major cases reflects that the challenges and opportunities facing China's current development are accelerating. Based on this, we urgently need a more perfect modern finance as a solid backing. So, how to basically establish a modern financial system in 2020, the author believes that we can focus on the following breakthroughs.
（1） Deepen fiscal and tax reform
In terms of establishing a modern financial system, it is an effective way to promote reform and development through practice. In fact, since the central government proposed modern finance at the end of 2013, the reform of Finance and taxation has accelerated abruptly. The revision of the budget law, the replacement of business tax with value-added tax, the adjustment of consumption tax and resource tax, and the reform expectations of environmental tax, real estate tax and personal income tax have not only attracted the widespread attention of the public, but also invisibly promoted the innovation and development of China's financial theory. Starting from the goal of basically establishing a modern financial system in 2020, the fiscal and tax reform in the next few years should focus on the following aspects:
1. Adjust the central and local powers. First, both in theory and practice, we should pay attention to the ownership of powers, and change "determining expenditure by revenue" to "revenue and expenditure are equally important"; Second, the practice types of subdividing public goods or services, especially the scope of national public goods or services for which the central government is responsible, should be clearly defined, and on this basis, the central government's powers should be enlarged, so that the central government can play a major role in achieving harmonious and sustainable social and economic development, forming a unified and orderly market across the country, and promoting fairness and justice. At the same time, it can also effectively alleviate the expenditure pressure of local governments, improve the financial situation of local governments, and promote local governments to agree with the longer-term fiscal and tax reform goals in the process of fiscal modernization; Third, further improve the financial transfer payment system, control the scale of financial transfer payment, reduce the proportion of refundable and special transfer payment, and make the financial transfer payment focus on making up for regional financial differences.
2. Standardize the financial system. The standardization of the financial system is the reform goal that has been pursued since the tax sharing system, but the actual effect mainly focuses on macro-control, financial power division and budget supervision. Starting from the establishment of a modern financial system, we still need to achieve: first, to achieve the rule of law finance. Managing financial affairs according to law is the basic premise of financial modernization, that is to say, without a sound financial legal framework, no matter how efficient the financial system is, it cannot be called modern finance. This point has often been replaced by the flexibility of government affairs in the past financial operation process. We should take the establishment of a modern financial system as an opportunity to correct it, so that China's legal construction at the three levels of the constitution, the basic law of Finance and financial administrative regulations and rules can be improved. In addition, we should strictly regulate local financial legislation and strengthen supervision while maintaining a certain degree of local autonomy; Second, the tax structure adjustment. Since the reform and opening up, China's tax system structure has undergone several major adjustments, and some major tax adjustments have been uninterrupted. However, even so, if we proceed from the requirements of modern finance, the current tax system structure must be further adjusted. Moreover, the insufficient number of current taxes always turns the efforts of the central government to concentrate financial resources and improve revenue division into a squeeze on local financial resources, which is also an important reason for the continuous expansion of non-standard local fiscal revenue. Therefore, we should speed up the collection of property taxes, adjust the current income taxes, expand the collection scope and income proportion of direct taxes, integrate individual income, consumption and property capacity to share the tax burden, expand tax sources while practicing social equity, and establish a stable tax source structure at the central and local levels as soon as possible.
3. Deepen the budget system. Since 2000, China's fiscal and tax reform has mainly focused on the budget system. The successive implementation of departmental budget, centralized treasury payment, government procurement and revenue and expenditure classification reform has strengthened the planning, negotiation and supervision functions of budget management. However, as an important part of the modern financial system to be established, the current budget system still needs to deepen the reform from the following points: first, enhance the height and importance of budget. Vigorously publicize and popularize the concept of budget, so that the annual budget work becomes the top priority of the legislative bodies, administrative agencies, social intermediary organizations and the public; Second, standardize the double entry budget system. The double budget system, including the public budget, the state-owned assets operation budget and the social security budget, determined in the budget law implemented in 1995, is still of practical significance. If it can break through the local and departmental interests, unify and standardize the preparation and disclosure of the state-owned capital operation budget and the social security budget nationwide, it will lay a solid foundation for bringing all government revenues and expenditures into budget supervision; Third, clarify the requirements of each link of the budget cycle. A complete modern budget cycle involves four links: preparation, review, implementation and final settlement. Modern budget preparation requires precise refinement, budget review requires independent questioning, budget implementation requires timely standardization, and budget final settlement requires public performance. In comparison with these specific requirements, we should promptly correct the outstanding problems existing in all links of China's budget cycle, especially the overlapping of budget review and budget implementation, We should attach importance to it and solve it as soon as possible.
4. Consideration of innovative financial behavior. Fiscal and tax reform also needs to pay attention to the innovation of the consideration of fiscal behavior. After all, for local governments at all levels, a specific consideration index system is needed in practice, and the evaluation of the work performance of the government at the same level by the upper level also needs a specific consideration index system. Governments at all levels should focus on the concept of innovation, coordination, green, openness and shared development, and actively reform the financial behavior measurement index system, so that the modernization of China's finance can continue.
（2） Strengthen theoretical research
1. The orientation of financial discipline. The discipline of Finance under the theory of public finance is one of the branches of Applied Economics, which is consistent with the needs of China to establish a socialist market economic system in the 1990s. However, compared with the requirements of "finance is the foundation and important pillar of national governance" put forward by the Third Plenary Session of the 18th CPC Central Committee, the orientation of this discipline is somewhat narrow. Coupled with the research tradition of national distribution theory, it is reasonable to argue for the interdisciplinary positioning of the discipline of finance. However, as far as normative theoretical research is concerned, what are the interdisciplinary disciplines of finance, where are the intersections of these disciplines around finance, and under interdisciplinary disciplines? What is the framework of fiscal theory and other issues are very empty, so we need to make great efforts to carry out research in order to enrich the interdisciplinary theoretical content of finance.
2. The definition of fiscal essence, attribute and function under interdisciplinary. Accordingly, the basic theoretical issues of fiscal nature, attributes and functions from an interdisciplinary perspective should also be redefined. If we cross the understanding of government financial behavior in other disciplines, whether the nature of finance can be summarized as public finance theory, what attributes should finance beyond the economic scope have, and what functional system should finance meet the requirements of national governance use to replace Musgrave's three functional theory, all need to be repeatedly discussed and brainstormed by China's financial theory circles, so as to provide a more unified cognitive basis for the construction of modern financial system.
3. Connection with national distribution theory and public finance theory. Coincidentally, if we re-examine the dispute between national distribution and public finance from the interdisciplinary perspective triggered by modern finance, we will find that the connection between the two is greater than their differences, which also shows that the theoretical innovation around modern finance has a strong integration. This theoretical innovation process is not to deny the previous financial theory, but to follow the road of modernization since the founding of the people's Republic of China to achieve the inheritance and development of financial theory in different stages. Especially for the theory of public finance, it plays an important role in claiming the subject rights of rational individuals, forming limited government, responsible government, performance government and rule of law government, and will continue to play an important role in the future financial modernization. （3） Multi angle? U financial Modernity
Modern finance is a comprehensive topic. If you want to make it clear, modernity in the sense of philosophy, modernization in the sense of management, inheritance and innovation in the sense of history, and performance in the sense of economy all need to be discussed. This is also one of the reasons why the proposal of modern finance will cause the debate between interdisciplinary research of Finance and western economic research. However, if we refer to this understanding, we will find that the research perspective of modern finance in the past two years is relatively single, or there is a simple replacement with "modern finance" in western discourse, which leads to the weakening of the guidance of China's financial practice, which makes it difficult for practitioners and the public to have a deep understanding of modern finance. Therefore, to build a modern financial system, we need to solve the problem of the "Modernity" of China's finance through interdisciplinary research, so that the modern financial system basically established after 2020 can conform to China's national conditions and play the role of the foundation and important pillar of national governance.