عوامل تمرکز زدایی هزینه ها و مخارج: مدارک و شواهد از چین

This study is the first attempt to examine the determinants of expenditure decentralization at sub-provincial levels in China. The Chinese central government gives detailed guidelines to local governments on public finance, but, ironically, their expenditure assignment is far from being well-regulated. Differences in fiscal decentralization on the expenditure side are enormous among local governments. Employing a panel dataset of 1995–2006, we provide empirical evidence that transfer dependency negatively affects expenditure decentralization in Chinese local governments. It suggests that intermediate governments, i.e., provincial governments, may have “grabbed” central grants for self-interests.

This paper aims to explore the determinants of expenditure decentralization in China, the world’s third largest country by total land area, and to examine their broad policy implications. Though China is a constitutionally unitary country, fiscal decentralization at sub-provincial levels varies tremendously across provinces, especially on the expenditure side. While there is a growing literature on the factors that explain the extent of fiscal decentralization, we still know little about what drives fiscal decentralization in different places (Bodman & Hodge, 2010). Taking advantage of the substantial variation in sub-provincial expenditure decentralization in China, this study contributes to this body of literature by testing hypotheses concerning some potential determinants of fiscal decentralization reported in the literature. Investigating the drivers of fiscal decentralization should be meaningful as most studies evaluate the effects of fiscal decentralization without looking into its complexities. Without an in-depth understanding of fiscal decentralization per se, it often runs the risk of overshooting when making conclusions about the benefits or perils of decentralization. Decentralization is “often viewed as a shift of authority toward local governments and away from central governments, with total government authority over society and economy imagined as fixed” (Rodden, 2004, p. 482). Fiscal decentralization, more often than not, referring to the shift of fiscal responsibilities to lower levels of government, is fundamental to public governance in reality. Studies on fiscal decentralization have been burgeoning in the international community; however, the drivers of fiscal decentralization have remained little known thus far. Early literature on fiscal decentralization focuses on power assignment in the public sector (Tiebout, 1956 and Oates, 2005). The bulk of the literature in recent decades has investigated the impact of fiscal decentralization on public governance (Prud’homme, 1995, Rodden and Wibbels, 2002 and Uchimura and Jütting, 2009). The drivers of decentralization have been largely overlooked, except for some recent efforts such as Bodman and Hodge, 2010 and Panizza, 1999. Compared with studies on the impacts of fiscal decentralization, untangling factors underpinning fiscal decentralization will be instrumental in generating a better understanding of the complexity and dynamics of decentralization in different politico-economic backgrounds. In many cases, fiscal decentralization per se is not the problem, but decentralization may have been implemented in an incompatible environment. When the drivers of decentralization/centralization are discovered, the evaluation of decentralization/centralization will be more pointed and the nuanced side of central–local relationship will be more revealing.

The paper examines the determinants of fiscal decentralization and provides a snapshot of the dynamics of central transfers in China. The study complements Freinkman and Plekhanov’s (2009) findings on fiscal decentralization that regions relying more on central transfers tend to have a more centralized fiscal system within the region. Instead of only reporting the findings, we offer a tentative explanation for the negative relationship between transfer dependency and expenditure decentralization in China. That is, some intermediate governments might use central transfers to enhance the growth of public employment for their own interests. This study also contributes to our understanding of subnational fiscal decentralization in developing economies. Drawing on data at the provincial, prefectural, and county levels in China, it has generated empirical results that help to identify the determinants of China’s expenditure decentralization, and probably for other developing countries as well. The study suggests that an appropriate fiscal incentive structure for regional governments is needed. More importantly, an effective monitoring of intermediate governments is imperative especially in developing countries such as China. In the Western democracies, the strengthening of party leadership and the partisan link between the central and local governors may effectively prevent regional governments from preying on grassroots governments, despite some exceptions (Enikolopov and Zhuravskaya, 2007 and Riker, 1964). Alternatively, appropriate administrative organizations (independent commissions) for regulating the intergovernmental system prove to be instrumental in holding local governments accountable to the principal in many countries (Sato, 2007 and Shah, 2007). In contrast to practices in the Western context, the Chinese government actually attempts to use its unique nomenclature system to make regional governors comply with central mandates (Huang, 1996). The personnel control system nonetheless is not always effective as local governments often find ways to circumvent central control in reality. Based on this study, we propose some preliminary measures to curb the predatory role of intermediate governments and improve the intergovernmental fiscal system in China.