We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.
To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to .
To save content items to your Kindle, first ensure coreplatform@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.
Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.
Find out more about the Kindle Personal Document Service.
Public finance matters. It matters for sustained economic growth. It matters for economic stability. It matters for the distribution of income and wealth. It matters for the delivery of such basic services as education and health. It matters for political stability. These statements are as true in China as in any country. What differentiates China from other countries is not that its development is magically unrelated to what its public sector does and how it is financed but rather that the key to its public finance system lies in intergovernmental fiscal relations.
Unless China begins to tackle more systematically the serious problems that have emerged in the finances of its various levels of subnational government, the problems to which the present unsatisfactory system give rise will over time increasingly distort resource allocation, increase distributional tensions, and in all likelihood slow down the impressive recent growth of the Chinese economy. These statements may seem strong but as we show in this chapter, the evidence on hand – although far from fully satisfactory, given the lack of solid and reliable information on the size and nature of China's real fiscal system – is consistent with this pessimistic reading. China's fiscal and – in time – economic future rests, to a greater extent than generally seems to be understood, on the success achieved in strengthening and extending recent ad hoc reforms to key aspects of its fiscal system within a more consistent and purposive framework.
Finding the proper balance between central control and local autonomy is a perennial problem in the Chinese economy, and the Chinese fiscal system has undergone numerous changes in central-provincial revenue-sharing arrangements since the 1950s. In the post-Mao period, fiscal decentralization began in 1980 under the slogan of “cooking in separate kitchens” (fenzao chifan), and a series of reforms was implemented to put local governments increasingly on a self-financing basis. However, this attempt to revamp the financial interaction between the central and provincial governments has been made immensely more complicated by rapid changes in the fiscal system and the shifting composition of revenues and expenditures brought by economic reform.
Email your librarian or administrator to recommend adding this to your organisation's collection.