Readjusting the Relationships between Central and Local Governments in a China in Transition

Abstract

In the process of China's promoting its economic growth and social development, the adjustment of the relationships between the central and local governments have played the key role. The decentralization policy implemented in China has resulted in great economic achievement but, at the same time, has created many difficult problems. Fiscal and investment decentralization, and other important decentralizations, have been the main levers for the central government to gear the relationships between central and local governments. However, these levers require a through examination. Decreases in the central government's revenue, enlarging regional disparties and the upheaval of the local-interest-centered activities are the unintended by-products of China's decentralization policy. To eliminate decentralization's negative impacts and overcome the shortcoings, relationships between the central and local governments need to be readjusted. While offering further discussion and making key suggestions in conclusion, the author thinks that some immediate measures should be taken. Enormous effort is dedicated to theoretical discussion and empirical studies on the cause and result of decentralization of China in transition.