Chapter 6 analyzes the size and structure of China’s government expenditure. It estimates the size of China’s government expenditure which includes general fiscal expenditure, the expenditure financed by government funds, social insurance expenditure, the expenditure financed by the operating income from state-owned capital, the off-budget expenditure financed by local government debt, and extra-budgetary expenditure. It reveals phenomenon like the Chinese government spending a large proportion of its revenue on economic construction while spending an insufficient amount on education, health and social welfare; and local governments undertaking most of the total government expenditure. The problems with the current expenditure system are discussed, and prospective reforms of the government expenditure system are also discussed in this chapter.