Neo Public Finance comes into being as a new fiscal theory framework and a new analysis and research paradigm for fiscal science. Classified according to the research objects of fiscal science, the contemporary mainstream study is a “narrow-sensed” fiscal science which studies the fiscal activities of the governments under the market economy. Therefore, it is a “market-based fiscal science”. When the market failure theory – the theoretical basis of market-based fiscal science, fails, and the understanding of the relations among the public sector, private sector and the market is biased, we come back to discuss the aforementioned relations in the economics and that’s how “Neo Public Finance” was born. The study is new because it redefines the relations between the public sector, the private sector and the market and it explores the new analysis and research paradigm through the critique and deconstruction of the market failure theory as well as drawing upon the rational kernel of the fiscal theory from the continental school. On the precondition that the “market failure theory” is abandoned, the Neo Public Finance has created a brand-new research dimension for the fundamental fiscal theory; on the other hand, proceeding from the needs for national governance, the neo public finance offers more explanatory methodologies and tools to study fiscal issues.  

“Public finance is the foundation and key pillar of national governance”. This is an important conclusion made in the “Decision of the CPC Central Committee on Some Major Issues Concerning Comprehensively Deepening the Reform”, which has elevated the position and role of public finance in the national economy. However, the academic community in China has been failing to attach enough importance to the fundamental theory of public finance, and lags behind in the development and innovation of the fundamental fiscal theory; hence the fiscal policies and practices are not built on the up-to-date theory. Public finance is a comprehensive discipline which studies the fiscal distribution of countries. In today’s academic world, the fiscal theory in the Anglo-Saxon School is the mainstream. Proceeding from the market failure theory, this School derives the existential necessity of governments and public finance through logic analysis. However, from either the historical or logical perspectives, the view that “the market failure is the starting point of government finance” itself might be a fallacy. In this logic system, government finance is the means to make up for the market defects, and the relations between the market and the government is confrontational. In reality, it is hard to apply this theory to guide China’s fiscal practice. 

Since China’s academic community overlooks the research on fundamental fiscal theory, our fiscal theory system is completely westernized. The fundamental differences between China and the western countries in the economic theory basis, political systems and ideologies determine that China cannot simply copy the western fiscal theory. In this context, the current fiscal theory fails to provide the right intelligence support based on the specific process and needs of China’s economic and social development.  On the other hand, a platform to exchange ideas on the fundamental fiscal theory is not available in China’s academic community; therefore, the fiscal theories cannot go through the contention of a hundred schools of thought. 

It is hoped that the “Neo Public Finance” could be a catalyst to provoke academic discussions on the fundamental theories, and serve as a platform for scholars to discuss the fundamental fiscal theory so that high-quality research findings can be produced. Ultimately, fiscal policies and practices can be based on sound theories and fiscal study can have rules to follow.