افزایش نابرابری درآمدی منطقه ای چین : نقش تمرکز زدایی مالی

This article examines the quantitative effects of the Chinese fiscal system on the increasing regional income inequality in China, from 1978 to 2007. Fiscal decentralization is a multifaceted concept not likely to be captured by a single measure. This paper investigates the evolution of three aspects of fiscal decentralization including spending decentralization, revenue decentralization, and autonomy power, and tests the effects of each aspect on the regional income inequality in China in the past thirty years. Several critical findings were obtained through econometric analysis. The fiscal decentralization on spending side in China has contributed to rising income inequality over the last three decades. On the revenue side, the fiscal system became more decentralized from mid-1980s to 1994, and re-centralized after the 1994 tax sharing reform. The econometric analysis shows that the increase in revenue share of local governments from mid-1980s to 1994 indeed increased regional inequality, while the revenue re-centralization in 1994 only had a modest effect on reducing regional inequality. In terms of autonomy power measured by how public spending at local level of government is maintained by its own revenue, the degree of fiscal decentralization decreased since mid-1980s, and experienced a sharp reduction in 1994 due to the tax sharing reform. The autonomy power has mixed effects on regional inequality in the two periods, before and after the 1994 reform, depending on the targeting of fiscal transfers and the incentives of local governments. As it turns out, fiscal decentralization may not be automatically equalizing or anti-equalizing, whereas how fiscal decentralization is promoted is important for how it impacts regional inequality.

China has experienced unprecedented economic growth during the past three decades of market-oriented reforms. Per capita real income has more than quadrupled since 1978. This growth has fueled a remarkable decline in the poverty rate, from 64% at the beginning of the reform, to 10% in 2004 (Dollar, 2007). However, the economic well-being of the people in a country is not only determined by the poverty rate and income per capita, it is also influenced by income inequality. The relationship between these factors has been established in the following abbreviated social welfare function (Lambert, 1993):

This paper examines the effect of fiscal decentralization on the regional income inequality in China from 1978 to 2007 by using several data sources. As many authors have pointed out, fiscal decentralization is a multifaceted concept not likely to be captured by a single measure. Therefore, there is no clear-cut judgment about whether the Chinese fiscal system has become more centralized or decentralized over the past three decades. This paper investigated the evolution of three aspects of fiscal decentralization–spending decentralization, revenue decentralization, and autonomy power–and tested the effect of each aspect on the regional income inequality in China in the past thirty years. On the spending side, the fiscal system in China has become more decentralized since economic reform was initiated in 1978. The regression results suggest that this spending decentralization unambiguously increased the regional income inequality in China, which is consistent with the results of Kanbur and Zhang (2005). On the revenue side, the fiscal system became more decentralized from the mid-1980s to 1994, and re-centralized after the 1994 tax reform. The econometric analysis showed that the increase in the revenue share of local governments from the mid-1980s to 1994 indeed increased the regional inequality, while the revenue re-centralization in 1994 only had a modest effect on reducing the regional inequality. In terms of autonomy power, measured by how public spending at the local level of government is maintained by its own revenue, the degree of fiscal decentralization decreased since mid-1980s, and experienced a sharp reduction in 1994 due to the tax sharing reform, which means that the local governments became more dependent on inter-governmental transfers since mid-1980s. Compared to previous research, a new and crucial finding of this study is that the growing dependency of local governments on fiscal transfers increased the regional inequality before 1994, and decreased it after the tax reform in 1994. As it turns out, more fiscal transfers may not automatically be equalizing. A further investigation on the dispersion of fiscal dependency indicated that only if the transfers targeted the poor regions very well could the regional inequality decrease.