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Is China one of the world’s most decentralized countries, or one of the most centralized? In fact, it is both. On one hand, 70 percent of all government expenditures pass through the subnational government budgets. On the other hand, subnational governments have no in dependent (formal) taxing powers. The question that might be raised is whether the longer-term intention is to develop a system of local public finance that would give subprovincial governments more fiscal discretion, or whether some other structure is envisaged. Either way, the issue to consider is what specific reform packages would move China toward its goal.


(c) 2011 Lincoln Institute of Land Policy. From Hong, Yu-hung, and Joyce Y. Man. China’s Local Public Finance in Transition. Cambridge, Mass: Lincoln Institute of Land Policy, 2011.

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