Beijing has already started to establish a solid tax base for local governments. A trial program that replaces the business tax (an important revenue source for local governments) with the VAT is expanding nationwide. The central government is also considering giving a larger share of VAT receipts to local governments, which now get only 25 percent.

Beijing also means to develop the property tax, consumption tax and resource tax into major revenue sources for local governments.

Lou has noted that the reform of the consumption tax is in sight, the property tax trial is due to expand and the resource tax on coal and metals, which had been levied on by volume, will be calculated on a price basis.

Beijing is also expected to open the door gradually for local governments to issue debt directly. That would be a major break from the current provisions of the budget law that bans local governments from borrowing directly from banks.

Reform won't be confined to central-local finance relationships. The November meeting is expected to herald a reform of the Budget Law and giving more discipline to the budget process.

"The motif of the reform is more discipline, more accountability and more transparency," Ma said.

Even with regard to the general budget, there's much room for improvement: The current disclosures are confined to functions, meaning that lawmakers only know how much is spent on "pensions" or "agriculture", without knowing which department spent how much on what.

Transparency-oriented reform demands more than that.