From ancient times, Chinese civilization was famous in construction: its hard workers built grand cities and palaces, its talented architects and engineers skillfully designed canals and dams, its professional bureaucrats and officials organized the construction of fortresses and walls. The Great Wall of China can rightly be attributed to the wonders of the world. Over the course of many thousands of years, China has developed and perfected a unique skill to build, construct, create. China has the ability to create, not only material objects, but also the living landscape, the activities coordination system for a large number of people, the concentration of efforts on individual goals is a prominent feature of the Chinese people.The world leader is one who is able to create and propose new ideas to others. These ideas are recognized, among communities and countries, if they are borrowed and copied. Today, China is proposing an idea that is becoming more and more a role model - the idea of building shared economic growth for all countries in the world.Chosen by the China’s leaders option of building their own development is the object of comprehensive analysis and modeling of scientists and experts. Most often it is considered as a kind of export-oriented growth strategy, adapted from an adjusted successful experience of other East Asian countries - Japan, South Korea. In many ways, China’s path is characterized by the hyperbolization of borrowed state governance techniques. The structure of its national economy, analyzed by components of GDP, also includes significantly more exports, more government presence and more investment. The main acceleration of the Chinese growth model gained in the 1980s from the heavy pumping of investment into the system: initially in the form of private money from households and initial accumulation of capital. In the 1990s it was supported by foreign direct investment from abroad, and in the 2000s it was pumped with giant public investment in infrastructure.By means of expansive investment policies, China has rapidly expanded its merchandise exports and actively integrated toward the global value chains, becoming a “global factory”. The low cost of manpower allowed investors to make large profits and made it attractive to reinvest them in the economy. The state actively supported export-oriented business, developed state-owned enterprises and made massive investments in infrastructure, which allowed to provide fabulously fast economic growth for a long time period.The logic of such action was simple: to create a multiplicative effect from invested funds, and to ensure the economic acceleration. The economic systems of developed countries are open to the commodity and investment flows movements, have freely convertible currencies and have accumulated large amounts of debt, which allows researchers to deduce the low efficiency from the state stimulus policy for them (Christiano et. al., 2011; Ilzetzki et. al., 2011). Instead, China, as a country with a high propensity for savings, controlled positive balance of foreign trade, a fixed exchange rate, and a moderate level of national debt, is devoid of all these shortcomings, and can therefore count on a tangible result from an increase in investment. In the 7 decades of development, China has elaborated an alternative model that relies on elements that are difficult to coordinate: continuous reform, permanent growth and internal stability.The evolution of the public sector design of the PRC has taken place over a long period of complex and interconnected changes that have been driven by: i) transition from a command-administrative economy to a mixed-type system, ii) from a traditional economy to an industrial one, iii) from a rural to an urban society, iv) from semi-barter forms of interaction to formal monetized exchange between economic entities, v) from a regionally fragmented national economy to a tightly integrated domestic market, vi) closed from the rest of the world type of economy, aimed on import substitution, to integration into the global economy through the export promotion strategy and active use of the comparative advantage in international trade (Hussain and Stren, 2008, p. 14).At the center of the Chinese growth model is a strong state that, to ensure growth, relies on a specific public (government) sector in the economy, which is secured by a special system of administration. During the reforms, it formed the financial system of central authorities and the financial system of local authorities, which is common to many other countries in the world. Unlike the latter, China’s public sector has retained the leading role of state-owned enterprises, which was lost during the transformations in post-socialist countries.In the late 1980s and early 1990s, countries in Central and Eastern Europe, which had a structure similar to the Chinese economy, chose an distinct way of reforming it. It was outlined by World Bank Specialist J. Williamson in an article (Williamson, 1990) and was named the “Washington Consensus”. Its main parts are well known - the liberalization of the goods markets, as well as labor and capital markets, the change of the dominant form of ownership from the public to the private and radical reform of the public sector. In order to prevent inflation, it was envisaged to introduce rigid fiscal discipline. In the structure of public expenditures, the subsidies for inefficient production support were cut, and tax reform aimed at expansion of the tax base was implemented.Following the liberalization of the economy and the release of prices, some countries (Poland, Czech Republic, Slovakia, Hungary) managed to stabilize the budget quickly by reducing the share of subsidies to state-owned enterprises in it. The space for reorganization of public expenditures, called by L. Balcerowicz “window of opportunity,” was initially wide enough as a result of the disorientation of the lobby, that supported sectoral interests and had not yet adapted to radically new conditions (Balcerowicz, 1995). Central European countries took advantage of this “window”: in Poland, the share of government subsidies was reduced from 13% of GDP in 1989 to 2% in 1993, in Hungary - from 12% of GDP to 5% in the same period. In the post-Soviet countries, where the transition process has been stretched, new opportunities have not been utilized effectively, as traditional lobbies have retained more influence and had adapted to changes.Washington Consensus ideology suggested that privatization of state-owned enterprises, abandonment of ineffective planned mechanisms of resource allocation, and liberalization of economic relations would automatically provide the conditions for market forces to work in a classic manner and restore economic growth. Instead, due to a lack of infrastructure, demanded by market agents, lack of experience and government support, national savings and investment declined sharply, production volumes collapsed, and instead of rapid economic growth, a prolonged recession began.As the state’s revenues fell sharply, there was a significant imbalance of public finances during the transformation time in these countries. The inactive state-owned enterprises reduced production that has led to a decrease in tax revenues and growth of unemployment, which has forced additional spending on social protection programs. Attempts to finance them were significantly limited by narrowed state resources, which provoked a new phase of budgetary instability. As a result of “shock therapy”, the economic crisis has swiftly engulfed both the private and public sectors of post-socialist countries, and their citizens have suffered from deep impoverishment. The high price paid by population of post-socialist countries for reforms carried out in accordance with the Washington Consensus shows the falsity of the transformation algorithm contained therein.From the beginning, the PRC focused on its own path of reforming the national economy, aimed not on the reduction but on modernization of the public sector role in it. That is why the structure of China’s public sector differs from the ordinary Western model of the state, which has another functions - to provide the population with public goods and to eliminate market failures. In addition to the central government and local authorities (narrow understanding of the public sector), state-controlled enterprises, banks and financial companies play an active role in China’s finances. Functions (and the funds needed to fulfill them) are distributed asymmetrically between hierarchical levels of administration: social expenditures are shifted to the lower levels of the administrative vertical, and most of the financial resources are concentrated at the higher tiers.The size of China’s public sector remains small even today: the aggregate share of central and local governments is about 21% - 22% of GDP. This is half the level observed in developed countries when they were at similar stages of per capita income development (US 1948, UK 1955, Germany 1961, France 1964). To a certain extent, this is due to the peculiarity of the evolution of the fiscal system of the country, which has evolved, on the basis of finding a compromise between the interests of macroeconomic actors: the central government, local administrations, large state-owned enterprises and the private sector. As a consequence, the tax burden on the economy in dynamics exhibits a U-shaped trajectory: it dropped from 70% of GDP in the 1970s to about 10% in the 1990s, then rebounded to 20% in the late 2000s.The public sector-guaranteed security of economic growth and the strengthening of China as a powerful player in the international arena have contributed to the worldwide recognition and adoption of an alternative to market-based economic model - socialism with Chinese characteristics. Economically, it is based on the retained state ownership on the means of production in the strategic sectors. According to Kroeber, China’s reliance on state-owned enterprises is due to the lack of experience in using legislative and regulatory systems by the officials at the beginning of reforms. Obviously, they found it more convenient to regulate the transitive economy through state-controlled enterprises rather than through state agencies and institutes established for this purpose (Kroeber, 2016, p. 13).Such an approach does not mean complete denial of market relations between economic agents, but their functional sphere is clearly delineated and put under informal non-economic control. Private businesses and foreign companies are strongly encouraged to contribute to national growth and create as many jobs as possible. However, the ability of a competitive mechanism to filter and select the best entrepreneurial decisions and projects is seen as creating chaos and instability. Therefore it is deliberately weakened for the benefit of “national champions” who are always under state control when needed. From the neoclassical economic theory point of view, the practice of active intervention in the market operations leads to the violation of general equilibrium mechanisms, distortion of price information signals for economic agents, the emergence of social welfare losses and increased inefficiency of economic activity. Unlike in the developed countries of the Western Hemisphere, where economic relations dominate and politics is driven by economic interests, China demonstrates a clear political primacy over economic ones.By implementing the components of the socialist system with Chinese characteristics into the national economy, the government hopes, first, to maintain high rates of economic growth, secondly, to enhance the quality of public services and to strengthen the social protection programs of the population, and thirdly, to preserve the long-term political stability and control over society, fourth, to strengthen China’s position and influence in the international arena.At the initial stages of model building, there were some difficulties with the coordination of private and public sector activities. State-owned enterprises, which provided a significant portion of tax revenues to the budget, had to be transferred from the care of various line ministries to the tax administration. Family-owned businesses in rural areas and small towns, as well as joint ventures with foreign manufacturing companies in free economic zones, began to emerge. The benefits they produced first became subject to different types of product taxes, which were later replaced (in the 1990s) by a single value-added tax.In 1994, the tax administration was reformed, which was separated from the Ministry of Finance and subordinated directly to the State Council of the People’s Republic of China. It is tasked with collecting national taxes at the treasury, monitoring the tax activity of local authorities. For this purpose, it relies on a system of tiered state tax missions.The financial base of China’s powerful government sector was shaped by changing approaches to tax-sharing between central and local governments: instead of distributing the final fiscal levies, the money collected for each type of tax was allocated separately. Thus, a system of classification of all contributions to the state into national, local and mixed appeared. It made it possible to strengthen the solvency of the central government, reduce the motivation of local authorities to conceal volumes and reduce the tax base, and accumulate funds to reduce regional imbalances. All this testifies to the high adaptability of the Chinese model to the new environment while maintaining internal stability.During the period from 2003 to 2008 fiscal policy can be considered as relatively stable. Steps have been taken to harmonize the legislation and to eliminate some minor outdated fees and charges. Further transformations in this area were triggered by the global economic crisis and aimed at maintaining the high economic growth rates that the country has shown for a long time.In particular, VAT has been reduced since 2009 for small businesses engaged in the renewal of fixed capital and abolished for imported production assets; two-year tax holidays have been declared for the newly established foreign enterprises in the space of the free economic zones, and for the national ones the income tax reimbursement has been introduced for investment in innovative development or environmental technologies.The analysis of changes in the structure of public finances shows the importance of fiscal policy in the Chinese model of economic development. Starting in 2018, a new cycle of tax adjustments has begun in the PRC, focused on supporting the economy in times of trade and economic confrontation with the US. In particular, the VAT rate for manufacturers is reduced from the current 16 to 13%, for the transport and construction sectors - from 10 to 9%. The purchase of new electric vehicles is generally tax exempt. The structure of the personal income tax system is being reorganized in the direction of extending tax exemptions and reimbursements, adjusting the limits of tax categories, facilitating the rules of payment at the place of residence, which means shifting their burdens from poor and middle-income citizens to wealthy citizens. In general, at present, China’s tax system seeks to increase transparency, align business with residents and non-residents, reduce the tax burden by expanding tax base, and bring taxation mechanisms and practices to international standards.Regional fiscal policies aimed at equalizing the spatial level of the population well-being as well as the economic growth rates of the various country’s territories are an important complements to the tax system in China, as in any other country. Given the uneven development observed between the different provinces, as well as the large population in the PRC, the regulation of transfer flows between regions is of particular importance.From the beginning of reforms to the final formation of its own model of inter-regional transfers in the early 2000s, the country has undergone several important stages. Until 1994, a quota subsidy system was in place, under which each province received a fixed share of the total treasury revenues. As this approach constantly suffered from corruption problems and did not solve the main task - equalization of financial capacities of the regions - it was gradually replaced by intergovernmental targeted payments. Since 1995, a system of tax benefits and social transfers has been in operation, assistance for depressed sub-national units has been systematically issued in 2000, and in 2001-2005 the government has actively supported the administrations of agricultural territories, which have lost much of their income after the abolition of a number of agricultural taxes. The coincidence of these transformations in time with the major changes in China’s tax policy testify to the complementary nature of tax reforms and transfer policy, their important role in the country’s financial system. In the 2010s, the main focus of state transfer policy shifted to supporting infrastructure projects.Another important component of China’s public sector is State-Owned Enterprises (SOEs). Most often they are not natural monopolies, which are justified in Western economic literature, but are hybrids, combining the characteristics of private firms and state-owned companies. The state supports them in the form of preferential working conditions, cheaper loans and hidden subsidies (for example, through low raw material prices). From private business practices, SOEs borrow operating techniques and managerial autonomy.The high profitability of SOEs is ensured not by the form of their ownership or competitive success, but by artificially created non-economic advantages. 90% of them are now corporatized and have the technical ability to raise capital from various sources, including foreign ones.Within the national SOEs’ investments are concentrated around capital construction and infrastructure projects, reflecting their role in the implementation of party politics. Most of them were invested in the management of public buildings, the development of road transport, the production and supply of electricity and heating, rail transport. It is not uncommon for state-owned companies to invest domestically through joint ventures with foreign firms, with foreigners often coming from Hong Kong, China or Macau, an offshore area heavily used by Chinese businesses. Even state-owned businesses are actively practicing legal tax relief schemes that provide for preferential treatment for foreign-owned companies, which enhances their operational freedom and allows them to expand their financial capacity and fulfill the state’s industrial development goals.SOEs continue to be an important place of employment for the workforce: around 45% of urban residents are employed. Among the sectors of the national economy with high employment, where the SOEs are actively operating, the agro-industrial complex, generation of electricity, gas and water, research and educational activity, provision of public services to the population are distinguished. The level of remuneration in state organizations and institutions is higher than the industry average, especially when there is a basis for commercialization of the results of their activity.The level of employment at SOEs, relative to the share of invested capital, remains high (throughout the economy), indicating the party’s additional social burden (along with its infrastructure policy) put on the mission of SOEs in the economy.Thus, in the manufacturing sector alone, the share of the public sector, which can be identified by official statistics, ranges from 25 to 30%. In the service sectors, the state controls an even larger share - about 50% of value added -largely due to the ownership of megabanks and insurance companies. But this is only the tip of the iceberg, because many SOEs have dozens of subsidiaries controlled under different names, in addition to local SOEs, operating in the regions of the country. In some provinces, especially with low regional output per capita, SOEs generally make more than half of the investment, provide jobs to the majority of residents and, through taxes paid, have a decisive impact on local budget revenues. Therefore, the regional authorities take good care of the SOEs operating on its territory, giving them additional administrative preferences and preferential lending.By controlling the initial (and partially intermediate) links in the value chains by the means of SOEs, the Chinese government has the ability to systematically implement industrial policies in the country, as well as to remove monopoly rents from the private sector and use them to finance accelerated economic growth.As a result, more than 55% of the Chinese economy is concentrated in the public sector (broadly) under party control. Relying on it, the country’s leadership implements a policy of accelerated growth and industrial breakthrough. It concentrates funds in cutting-edge industries, limiting their unproductive use and fleeing of capital abroad. Successful modernization policies ensure high growth rates that affect the well-being of the whole population and are reflected in civic loyalty and political stability. Public SOEs align private players’ access to raw materials and energy resources, their exclusive status in the markets does not guarantee monopoly rents, and in some regions SOEs fulfill a social mission and compensate for the lack of public goods.The negative side in the high growth rates and expanded role of the government sector is also present. It takes the form of low efficiency of resource use, especially capital, indebtedness, a decline in the stability of the banking system, an insufficient level of private consumption against, excess production capacity and ambiguous infrastructure projects.The Chinese model of socialism has in recent years been the subject of increased criticism from governments, academia and business in the developed world. Support for Chinese SOEs at foreign markets, provided by public sector mechanisms, raises accusations of unfair competition, abuse of trade terms and rules designed for free liberal economies. Leadership gained by Chinese companies in some global markets has been perceived as a challenge in the West and has raised new questions about scientific and technological backwardness and technological security. At the same time, however, it has led to talks about the resumption of pending reforms of the institutions and rules of international trade, cross-border movement of capital, technology transfer, to attention for the deteriorated transport infrastructure and low connectivity between regions of the world. Through its international initiatives and national model of economic relations modeling, China offers for the humankind a new, separate way to solve global problems. Each country in the world will form its own assessment and response. But one thing is for sure - having more than one initiative, governance model, development strategy, and the competition between them - is a win-win situation for all of humanity.