Interjurisdictional Competition, Land Finance Revenue, and Redistributive Expenditure of Local Governments in China

Abstract

This study investigates redistributive spending in China’s governance system, focusing on fiscal decentralization, interjurisdictional competition, and land finance revenue. Using multilevel modeling of data from 283 prefectural cities and 2,862 county-level jurisdictions, it finds that interjurisdictional competition prioritizes developmental spending over redistributive services. No significant relationship is observed between fiscal capacity—measured by tax revenues or intergovernmental transfers—and redistributive expenditures. However, higher land finance revenues are positively linked to increased redistributive spending. The study attributes this development-oriented strategy to the cadre promotion system, where local officials advance their careers by achieving policy goals through competition for economic investments. By integrating land finance into the analysis of redistributive spending, this research highlights its implications for equity and sustainability. It underscores the urgent need for fiscal and social policy reforms to balance developmental priorities with equitable social welfare provision.