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Intergovernmental Fiscal Relations in China

Government and Institutions

The authors provide an overview of the current system of intergovernmental fiscal relations in China, highlighting the current imbalance between revenue sources and expenditure mandates, which adversely affects all local governments, especially the poorest. They discuss other weaknesses of the system, including the lack of significant own revenue sources for local governments, their inadequate budget formulation and implementation procedures, and the emergence of indirect forms of indebtedness and fiscal risks. The authors go on to present policy options that address such weaknesses as redefining spending responsibilities, creating enhanced own-revenue sources for local governments, redesigning transfer systems, improving public financial management, and enforcing prudent borrowing limits.

305wp.pdf (219.06 KB)
Annalisa Fedelino
Teresa Ter-Minassian
Publication Date
December, 2006