Intergovernmental Relations and Economic Management in China by Jun Ma

By Jun Ma

This publication examines how China's decentralization strategy has affected and may have an effect on the country's macroeconomic functionality and the functioning of the marketplace. With an cutting edge program of online game concept, the writer develops an analytical framework which can clarify the behaviour of the primary and native governments below substitute institutional environments. The learn additionally indicates tips on how to identify fascinating principles of video games in China's political and fiscal associations via acceptable reforms.

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In other words, the Ministry of Autonomy is a representative of the localities when it negotiates with other ministries; at the same time it is backed by the local governments when facing threat from the Prime Minister. A stable equilibrium of power division can therefore be achieved. 2 Central Government Credibility and Local Tax Efforts: a Game Theoretic Model INTRODUCTION As discussed in Chapter 1, China introduced a decentralized revenue-sharing system (that is, the fiscal contract system) in 1980.

A circular issued by the center required each province to 'cleanse' these unapproved zones and all promises made by the localities regarding tax concessions could only be fulfilled by using the localities' own budgetary funds. 18 In addition to 'zones', many regions offered tax concessions under other names. These tax concessions included legal offers made according to state regulations and others which violated state regulations. 20 Many localities, if attempting to offer a tax concession, could always find some regulations that were 'applicable'.

If revenue was mobilized through tapping local extra-budgetary funds, it was totally immune from the central government's influence. When regions shifted budgetary funds to extra-budgetary funds, the center's ability to control revenues and expenditures was seriously undermined. In other words, the extra-budgetary funds were fiscal resources circulating 'outside the body' - that is, beyond the control of the central government. Local extra-budgetary funds include the following two categories. The first is a set of taxes and charges that are controlled by local finance bureaus (not a part of the state budget), the most important of which is the public utility surcharge - a 10 per cent tax on the utility bills of consumers.

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