China's gradual transition to a pure VAT

In the framework of the transition of China's VAT system from the production to a consumption type, recovery of input tax relating to certain fixed assets was introduced on an experimental basis in three north-eastern provinces on 1 July 2004. On the basis of data available on the eve of the first anniversary of the experiment, the author evaluates its preliminary results from various perspectives and recommends several changes to be made to the accompanying measures.