In the long run, tax policy has affected the macro-economic stability. We always emphasize  the importance of stimulating domestic consumption in order to reduce our dependence on export demand. But how can China stimulate domestic consumption if the government is sucking up their disposable income? As a result, our economic development has been driven by foreign demand, resulting in a series of problems in the foreign exchange rate and a massive trade surplus.

In the past, China focused on concentrating financial muscle in order to see through massive construction projects, which led to the accumulation of a national fortune. While citizens missed the fruits of economic growth, waste and inefficiency spread in government investments-- bad debt in social security, medical care, and education. With citizens bearing more and more of the burdens, most of the national wealth is still concentrated in the halls and coffers of the government. Does this not contradict with the goal of constructing harmonious society?