Frozen In Time: The Much Needed Reform Of Expenditures Assignments In China

China has been carrying out significant fiscal reforms on intergovernmental fiscal relations for over three decades. However, these reforms have largely concentrated on the revenue side of the budget, and generally have not been coordinated with an explicit strategy for the reform of functional expenditure assignments. Currently, there is large consensus that the weaknesses with the current assignment of expenditure responsibilities have become one of the most serious obstructions---if not the most serious---to the further improvement of China fiscal system. In this paper, we provide a comprehensive review of the actual practice with expenditure assignment among different levels of government in China over the past decades. We highlight the most important issues surrounding the current system qualitatively and quantitatively, and provide a road map and practical recommendations for its future reform

Falling Short: Intergovernmental Transfers in China

The main objective of the paper is to propose a framework in which fiscal health conditions can be assessed and the main determinants affecting fiscal health can be identified, inspite of severe data constraints. The paper draws on big urban agglomerations in India as well as smaller cities as a sample and attempts to identify the difference, if any, in the main determinants for variations in fiscal health conditions across different size classes of cities. To compensate for the lack of statistical rigor in the estimations of expenditure needs and revenue capacities, we propose a framework which analyses the ratio of expenditure needs to revenue capacity by fitting an econometric model. It is a two-step method, in the first stage we estimate the expenditure need and revenue capacity separately by simple methods discussed above. In the second stage we take the ratio of expenditure need and revenue capacity as an indicator of financial performance of a ULB and fit an econometric model to explain the performance of ULBs on the basis of factors which are likely to affect the performance of the ULBs. We find that the role of the higher tiers of the government is important in bigger and smaller size class of cities in their financial management. However, for bigger cities we find that the own source revenues can also play an important role in bringing down the fiscal ratio. In the smaller ULBs the role of the demand indicators is not that prominent but the cost indicators play a relatively prominent role. In case of bigger agglomerations, the demand indicators are more prominent than the cost indicators

Pocketing and Deceiving: The Behavior of Agency in a Donor - Delivery Agency - Recipient Organization

This paper presents a simple model to analyze the corrupt behavior of the delivery agency in a donor-delivery agency-recipient organization. Corrupt behavior of the delivery agency can take two forms: (i) “pocketing” or where the delivery agency distributes only a portion of the relief fund to the recipient and keeps the remaining fund to itself, and (ii) “deceiving”, where the delivery agency provides false information to the donor regarding the need of the recipient. We show that both forms of behavior can emerge as equilibrium outcomes in this type of organization. We identify factors that influence such corrupt behaviors and draw some policy implications.funds transfers,corrupt behaviors, donor organization, recipient organization, deliver organization

The tradeoff between growth and equity in decentralization policy: China's experience

This paper investigates the potential tradeoff between economic growth and regional equity in the design of fiscal decentralization policy in the context of China's experience. We develop a theoretical model of fiscal decentralization, where overall national economic growth and equity in the regional distribution of fiscal resources are the two objectives pursued by the central government. The model is tested using panel data for 1985-98. We find that fiscal decentralization in China has led to economic growth as well as to significant increases in regional inequality.

The Role of Provincial Policies in Fiscal Equalization Outcomes in China

In this paper, we use pooled data for central-provincial and provincial-local governments in 2000-01, overall involving over 4000 sub-provincial governments, to assess China 's sub-national fiscal equalization practices and outcomes. Our goal is to explain horizontal fiscal disparities between and within provinces, with a special focus on the role played by intermediate-level governments, particularly the provincial governments, on overall equalization outcomes in China . The significant policy implication of our findings is that if the goal of the central government is to improve equity in the distribution of fiscal resources throughout the entire national territory, it will not be enough to improve the design and size of central-provincial transfers. There will be a need to re-structure and control the structure and practices of provincial-local government transfers.Fiscal Equalization, central-Provincial, China, sub-national fiscal equalization

Growth and Equity Tradeoff in Decentralization Policy: China's Experience

The paper uses China's recent experience to investigate the potential tradeoff between economic growth and regional equity in the design of fiscal decentralization policy. Although present in other countries, this policy tradeoff has been particularly relevant to China over the last two decades. We build a theoretical model of fiscal decentralization, where overall national economic growth and equity in the regional distribution of fiscal resources are the two objectives pursued by a benevolent policy maker. Solutions that emphasize regional equity tend to have larger central government expenditures and higher contribution to the central budget by the richer jurisdictions. The reverse is true for solutions emphasizing growth. The model is tested using panel data for 1985-98. We find that fiscal decentralization in China led to economic growth, but this relationship was non-linear. Decentralization also led to significant increases in regional inequality. Overall, the historical record shows that pushing for a more equitable distribution of fiscal resources across provinces in China is likely to lead to lower national economic growth. The tradeoff between economic growth and regional equity is the most important and difficult decision in intergovernmental fiscal reform currently facing the Chinese authorities.decentralization, china

Temporal Variations of Sediment Provenance in a Karst Watershed, China

The environmental quality of the sediments in karst areas is a common concern, and it is of great significance to analyze the sources of the sediments. This study investigates the sources and its temporal variations of catchment sediments in a typical small karst watershed area. Toxic metal concentrations in the catchment area were monitored via three geochemical baseline projects in China. The sediment identification fingerprint tool (SIFT) was used to establish a geochemical model for tracing the main source contributions and its temporal variations of catchment sediments over the past 28 years (1992–2019). The catchment sediments in the small karst catchment area were mainly sourced from the background lithologies, among which limestone contributed the most, followed by dolomite, sand-shale, and mudstone; however, the anthropogenic lead–zinc tailings contributed the least. The contributions and temporal variations of each source were closely related to the lithology, topography, and landform, as well as the change in land-use and vegetation cover and the degree of rocky desertification. Moreover, the implementation of vegetation restoration and control of rocky desertification decreased the contributions of the upstream geological bodies, and the toxic metal content of the catchment sediment decreased accordingly. This study is of great significance for environmental governance in karst areas