Intergovernmental fiscal and finance relations have a deep impact on characteristics of China's economy and the behavior of local government at all levels. This paper wants to figure out the basic logic for the allocation of financial resources among regions under the implicit financial decentralization. Based on local government financing vehicles' (LGFV) debt data and by exploiting “Province Managing County” (PMC) reform as a policy shock to construct a DID framework, this study find that city governments with better economic and fiscal status can gain more funds through bank loans and municipal bonds when facing PMC reform, whereas the less developed ones are less capable to utilize the new opportunity, thus widening the regional gap of local government financing. Mechanism analysis implicates that city's economic and fiscal status are the deciding force of the above procedure. However, the catching-up pressures and developing incentives of less developed regions can't be realized in reality. This study argue that this might be an explanation for the expansion of regional disparity along with the reform of China's central-local relationship.
Web3, the new iteration of the internet, is vying to put power back in the hands of users around the world. Web3 technologies like blockchain hold tremendous promise in enabling this vision with a broad range of applications, from modernizing existing financial systems to changing the way individuals interact with one another in the digital world. While the ethos of Web3 is decentralization, the People's Republic of China (PRC) is shaping its own vision of Web3 according to its principles of authoritarian rule—outlawing uncontrollable technologies like cryptocurrencies while simultaneously developing Web3-inspired projects like the Blockchain-based Service Network to influence global technology standards. Despite the promise of Web3 to decentralize the internet, the PRC is using Web3 as a tool for further control.
Shows how China improved the adequacy and equity of government educational expenditure and how the changes improved education outcomes by (1) describing the education finance system and its changes over time, focusing on pretertiary education and on the decentralization of education funding and provision; (2) discussing how the evolution of the education finance system has affected the adequacy and equity of education spending and development; and (3) recognizing the challenges to the current system, particularly with regard to equity, and offering some potential policy solutions. Subnational governments, particularly counties, remain primarily responsible financing and administration of pretertiary education. However, there exists a large and growing cascading system of financial transfers from the central government to local governments aiming to help equalize educational funding across regions. Nevertheless, inequality remains one of China’s biggest challenges and will require the central and provincial governments to considerredistribution across regions and improve incentives to support schools in poor regions.
China’s achievement of miraculous economic growth is a theoretical proposition that calls for an explanation. The key to understanding the logic of China’s economic reform is a rational explanation of the logical paradox between irregular local finance and the incentive compatibility of central and local governments. Based on the fact that autonomous local financial resources have long been dependent on irregular fiscal revenue, this paper constructs an inclusive public financial system analysis framework from the dual perspectives of the central and local government. This analytical framework offers an explanation of the long-standing implicit fiscal decentralization contract in which irregular fiscal revenue is the carrier in the reform process, together with a description of the central-local interaction process and institutional space underlying the behavioral motivations of central finance tolerance and local financial autonomy. It demonstrates the logical consistency of irregular fiscal revenue, central and local incentive compatibility, economic growth and market-oriented reform. The inclusive public finance system, which takes into account both local dynamism and central control, provides the important institutional logic that has enabled China to reach the dual goals of economic growth and market-oriented reform.
Rural industry provides an important basis for rural revitalization, and its development can promote urban-rural integration. Rural China has long had complex and diverse rural industries whose existence and development is founded on rural society. Complex and varied rural industries have long existed in rural China, where local society provides the social foundation for their existence and development. One example is the processing of supplied materials or putting-out system (lailiao jiagong 来 料 加 工 ) in remote rural areas under the jurisdiction of City L, Zhejiang. In recent years, industries in the developed areas of Zhejiang have expanded to remote villages through processing to order, driving the growth of rural industries in remote areas. The processing of supplied materials is a link in the global production chain. Flexible decentralized processing links surplus rural labor in remote areas to the vast global market. The industry’s production process is deeply embedded in local society; interpersonal relationships and social ethics facilitate production management, forming a social foundation for the development of rural industry. Social ethics in these areas takes the particular operational form of sensitive cultivation of personal relationships or “human feelings.” The processing of supplied materials has shaped the distinctive character of rural development and provides a route for social transformation. To implement the strategy of rural revitalization, besides provision of land, finance and industrial policy, China needs to handle the social foundation of rural areas rationally, make full use of rural social resources and stimulate endogenous motivation in rural society.
Long before the creation of blockchain platforms, the rise of personal computing and Internet connectivity brought with it a digital, online dimension of the material world, leading to the socio-technical construct known as ‘digital identity’. After the online discussion boards and emailing lists of the early 90s, individuals started socializing via the Internet more predominantly using social networks. One specific type of platform links this online socializing and transacting to blockchain-based spaces: dark web marketplaces. Identified as second-generation cryptocommunities, dark web marketplaces deployed cryptography for the use of pseudonymous identity, for communication, but also currency. This paper explores two questions in this fascinating space: what was the role of identity on the Silk Road, and what governance lessons can be drawn from this illustration for the purpose of applying them to more recent cybercommunities such as Ethereum? The paper is structured as follows. The first part describes the Silk Road and sketches its essential characteristics. The second part looks at how individuals could become platform users on the Silk Road, by analyzing the contractual relationship between the Silk Road and an individual user based on the rights and obligations enshrined in the Silk Road Terms of Service (ToS). The third part critically reflects on arbitrariness as the main pitfall arising out of the private regulatory framework created by the Silk Road, and contributes to existing narratives surrounding the regulatory nature of code by proposing a code-as-procedure perspective for analyzing this regulatory framework. Part four concludes.
The Chinese developmental model has seven distinctive characteristics: First is an essentially capitalist development under decisive authoritarian leadership and purposive governance. Second is a vertical production structure where basic capital goods are produced in monopoly state-owned enterprises and the much-larger rest of the economy is under private ownership often connected with local party officials dispensing local monopoly rights. Third, at least in the post-Mao decades China is politically stable in relative terms. Fourth, the model is characterized by state-guided nationalist industrial policy and finance, subsidized access to land and credit for business, repression of labor rights and of yield on household financial savings. Fifth, there are massive investments in infrastructure funded by a very high national savings rate (particularly because of large undistributed profits of companies). Notably, per capita stock of government investment in fixed assets in 2017 was larger than that in Germany or UK, and five times that in India. Sixth, one notes rural industrialization in a decentralized framework with acute competition over jurisdiction, particularly in the early decades after reform. Seventh, there is openness to foreign trade and acquisitions and learning from foreign technology.
This chapter analyzes the “third” hand of a local government in China: the caring hand, which is largely ignored in the literature on the behavior of local governments in a decentralized fiscal system. The incentive for a local government to lend its caring hand is quite different from the motivation to help township and village enterprises and provide other public goods. While technically a unitary state, China is a highly decentralized country with a high degree of autonomy enjoyed by local governments. The collusive relationship between local governments and local enterprises works as a mechanism to keep the information of local businesses hidden from higher-level governments. China’s rural health care system, established under a centrally planned economy, was widely regarded as a success. Responsibility for the financing and management of township and village health facilities was devolved to township governments.
A multiplicity of spatial plans in a planning system can have different ways of co-existing under different institutional organizations. Having a highly centralized government like China, the phenomenon of a multitude of national-level plans dominating at the same time has its own unique characteristics. Much literature emphasizes only the lacking of coordination between governmental institutes. However, this research finds that the current constitution of the Chinese planning system profoundly reflects the relations between central and local governments. This paper first examines the characteristics of the Chinese political system, briefly reviewing the iterative process of "centralization-decentralization-selective centralization", showing the rise and fall of spatial planning as an administrative tool of local governments. Especially since the 1990s, the central government has raised revenue from the local level, which leads to local governments depending more on selling land for quick money. But as the urban expansion accelerates, the state asserts its control on local development by the National Mainfunction Plan and National Land-use Plan, which seriously impedes the coordination of spatial plans at different levels. Therefore, this study argues that spatial planning reform in China requires not only generating integrated information platforms and technical standards, but more importantly, establishing new relations between central and local government. In the end, some suggestions are made on central authorities reducing the constraints of a planning censorship system and rebalancing the responsibility and the public finance of local government on planning matters.
Many observers of international politics detect a growing Chinese challenge to the rules-based, liberal international order. In particular, some saw Beijing's recent creation of the Asian Infrastructure Investment Bank (AIIB) as a threat to existing organizations governing international development financing. This article broadly concurs with more sanguine accounts emphasizing the AIIB's similarity to existing multilateral development banks. However, we go further by arguing that the full extent of China's challenge to global governance cannot be understood without reference to the ongoing transformation of the Chinese party-state: the contested fragmentation, decentralization and internationalization of state apparatuses. These processes mean that the AIIB is just one institution among many in China's messy international development financing field—alongside policy and commercial banks, functional ministries, provincial governments and state-owned enterprises. Contestation among these agencies will shape China's real challenge to global economic governance, which will often be significant, yet unintended and non-strategic, in nature.
Abstract The present paper describes the trajectory of China's fiscal and tax reform in the past 40 years, which can be summarized in five phases. The reform commenced with “decentralizing power and transferring benefits.” Then, under great fiscal pressure, institutional reform was instigated, which aimed to establish a new fiscal and tax system. To regulate the government revenue and expenditure beyond the fiscal and tax system, reforms were put in place to build an institutional framework for public finance. As the fiscal and tax reform had gradually entered the more sophisticated phases, China took a series of measures to further improve the public finance system. Since 2012, based on the overall plan of comprehensively deepening reform, China has embarked on establishing a modern public finance system. The present paper characterizes China's fiscal and tax reform as gradually moving toward a system that aligns with the overall reform and complements the goal of marketization and modernization of state governance.
Social policy scholars often take the view that welfare states can be classified into different types based on distinct political philosophies and stable institutional features. However, it is a challenge to fit China squarely into any existing taxonomy. Using the volatile growth of educational expenditure in recent years as an example, this paper contends that China’s social policy in general, educational policy, in particular, has not evolved into a stable model. Much of the irregularity stems from the tension between centralized mandates and decentralized financing, often leading to underfunded social programs. In response, the central government relies on top-down mobilization to achieve unfunded or underfunded policy mandates. Mobilization, however, cannot last long as it stresses and strains local governments. The alternation between mobilization and post-mobilization accounts for the great irregularity in educational financing and poses a serious challenge for China’s welfare state building. There is a need to replace mobilization with a more regularized, sustainable and equitable financing mechanism for education and other social programs.
This thesis extends the literature by adding new empirical evidence associated with firm’s decisions in fixed investment and capital structure, under the assumption of capital market imperfection. In Chapter 2, we combine a panel of over 95,000 Chinese manufacturing firms of different ownership types over the period 2000-2007 with the Marketization Index for China’s provinces during the same period and investigate whether or not, and how, the cross-regional differences in institutions and financial development can affect the firm level financing constraints. Our main results indicate that institutional and financial development in China can reduce financing constraints significantly for the investments of private firms and partly for foreign firms, while increasing the financing constraints for the investments of state and collective firms. Different from previous studies at aggregate level, we identify a positive relation between finance and growth in the Chinese economy from a micro-perspective. In Chapter 3, we estimate the respective effect of state ownership and share concentration on firms’ leverage adjustment speed towards optimal level by using the Chinese listed firms dataset (1998-2010). We find that the firms with state ownership present lower leverage adjustment speed towards optimal leverage ratio than their privately owned counterparts. A positive relation from share concentration to leverage adjustment speed is also detected. These results suggest that ownership structure can significantly determine a firm’s costs of adjustment as well as incentives to adjust. Our works offer a new channel for people to understand the heterogeneous leverage adjustment behaviours among firms. In Chapter 4, using the Chinese listed firms dataset (1998-2016), we test the casual relation from short debt maturity to firms’ fixed capital expenditure. After controlling the level of leverage, we obtain a significant negative coefficient on short debt maturity in the investment regression model, especially for the sample of firms with worse financial condition. This indicates that rollover risk plays an important role in determining firms’ investment decisions and it is more likely to be triggered at bad time. Overall, our research suggest several policy implications. First, deeper economic decentralization and further financial liberalization are important for reducing the resource misallocation between state and non-state sectors in the Chinese economy. Second, more applicable provisions for minority investor protection are required to be formulated, which are expected to provide more options for ownership reform in publicly listed SOEs. Lastly, alternatives for long-term debt financing, other than bank loans, have to be developed, thereby reducing the systematic rollover risk in the economy.
China's Socioeconomic Reforms and Governance
Corporate Finance and Governance
Geochemistry and Geochronology of Asian Mineral Deposits
Labor force is very important to drive urban development. Labor contributes skills and generate positive knowledge spillovers to urban economy, especially high-skilled labor. Labor also constitutes the tax base that determines the fiscal wellness of the city. Moreover, the major source of urban and regional population change is through internal migration. Given the importance of labor in urban economy, there has been long-lasting research interests in factors that drive inter-city migration. Jobs, amenities and living costs are regarded as the main determinants of labor migration. Recent research also points to the importance of local informal institution, such as culture and attitude to migration, in urban development. However, labor mobility within the national border can face formal policy barriers as well. In China, due to the household registration system, many migrants cannot access local social services in host cities due to the lack of local Hukou, especially social insurances and housing provident funds. Due to the decentralized financing and governance of these social services, cities vary greatly in their coverages of social services among urban migrants. Using this cross-city variations, I define local inclusiveness as the extent to which a city government allows migrants to access local social insurances and housing provident funds and construct an urban inclusiveness index to measure it. I examine how local inclusiveness affects urban development via the quantity and quality of labor supply. Specifically, I study three inter-related questions. First, at the individual level, how does local inclusiveness affect migrantsâ choices of destination cities? Second, at the city level, how does local inclusiveness impact urban development through aggregate urban labor supply? Third, what factors may explain a cityâs inclusion for migrants? Using a conditional discrete choice model to examine the role of local inclusiveness in migrantsâ choices of destinations, I find inclusive cities attract more migrants, controlling for expected wage, housing costs, and a host of urban characteristics that affect quality of life. I then construct a two-sector structural model to estimate how urban inclusiveness affects urban productivity through the quantity and the composition of labor supply. I use historical cultural openness to instrument for urban inclusiveness. I find more inclusive cities perform better economically through higher labor supply, especially high-skilled migrants. Using spatial statistics to correct for spatial error dependence, I find a cityâs inclusiveness towards migrants largely depends on its fiscal capacity and labor demand, instead of cultural factors. This research reveals the connection among local inclusion, internal migration, and urban development in China. Evidence suggests the importance of attracting and retaining migrant labor through an inclusive local policy agenda.
This chapter discusses the decentralization of China’s securities markets and the regulatory roles and ambitions of local governments. Multi-level financial market regulation is an intrinsic part of the Chinese regulatory system, and the chapter looks at the effects and implications of decentralization of financial markets regulation. The powers of local governments to regulate credit companies, financing guarantor companies, private capital management companies, and regional markets are reviewed, as are the economic and political tensions between local and central government objectives, and the possible distorting effects of local government competition for financial services business and private local investment.
Research on Chinese civil society has tended to focus on the relationship between non-governmental organizations (NGOs) and the state. Such work has underestimated the complexity of the emerging institutional environment where Chinese NGOs are often caught between the state, the market, and a constrained civil society. How do civil society organizations and their respective nonprofit sectors emerge, what forms do they take? More specifically, how do organizational forms and strategies reflect political and market structures at the time? Chinese nonprofit sectors re-emerged in the late 1990s, and their relationships with the state have been contentious. The rapid transformation of the nonprofit sectors provides a unique opportunity to look at the emergence of a new organizational field. Using strategic action fields (SAFs) theory, I examine how organizations within the field of nonprofit organizations attempted to establish and defend their positions vis-à-vis the state and market. I conducted comparative case studies of two leading China's NGOs –Civil Society Center (CSC) in the city of Guangzhou and Excellence Promoter (EP) in the city of Shanghai. I traced the histories and current development of CSC and EP and their connected organizations and used ethnographic, interview, and survey data to triangulate the emerging urban nonprofit sectors in the context of an authoritarian state. I argue that, in different periods, the nonprofit organizational fields of Guangzhou and Shanghai reflected political and market structures at the time. In the early 2000s, Guangzhou’s nonprofit organizations were grassroots-driven, and a State Avoidance Autonomous field arose as large organizations decentralized into smaller organizations to decrease state scrutiny and intervention. In contrast, in Shanghai, where the state promoted nonprofit organizations as an extension of governmental programs, a State Alliance Social Market Field developed. This State Alliance Social Market Field prioritized business values and practices to guide organizational strategies rather than the ethical commitments that had been the center of the State Avoidance Autonomous field. By partnering with government, EP was able to rapidly expand while its Guangzhou counterpart, CSC, remained small and marginal. Powerful e-commerce companies such as Tencent, however, have been changing the rules and norms that used to govern the field. They entered the nonprofit field through the creation of a new fundraising platform that opened up alternative resources for Chinese NGOs. The involvement of the market through corporate foundations and new technologies has provided alternative funding for grassroots NGOs under the attack from the state. My study contributes to nonprofit studies and China studies by providing insight into how NGOs interact with different state and market players and the consequences of such interactions on organizational strategies.
The tension between mobilizing resources to meet education-related growth targets and regularizing educational funding for a more stable and sustainable growth is structurally rooted in China’s educational system, which features growth-oriented, centralized mandates and county-based, decentralized financing. It was manifested in 2012, when China experienced a ‘great leap’ in educational expenditure. Based on interviews and school-level data from a province in western China, this article suggests that the ‘great leap’ was real rather than fabricated. Local governments have demonstrated remarkable capacity in resource mobilization involving both formal and informal strategies. It also shows the scarring effects of too much mobilization. The ‘great leap’ has clearly stressed and strained local governments to the extent that there is clear evidence of policy non-compliance and greater irregularity in government funding for education in the aftermath.
This chapter explains the interactive relationship between blockchain technology and the corresponding policy responses of governments it has provoked. It reviews existing global governance and global political economy literatures on the implications of technology change. The chapter explores the origins of Bitcoin and the challenges it has brought for governance. Nearly a decade since its inception, the global popularity of Bitcoin reveals the increasingly established nature of the emergent technology. The extant literature largely ignores the regulation of Bitcoin in China. China has grown to be the largest Bitcoin market globally. Despite the existing problems and uncertainties in the future, China provides both the Global South and the Global North an alternative between two other polarized extremes of either liberalization or prohibition. Bitcoin is exposed to market risks and volatile speculation. Investors have flooded into the market and pumped up Bitcoin prices. The two common illegal uses of Bitcoin across jurisdictions are in digital black markets and for money laundering.
Purpose The rise of cultural governance has made cultural democracy important in East Asia. South Korea and China have chosen to develop cultural democracy by means of developing community-based cultural houses. Cultural houses in Korea were first managed from the center but have now been decentralized, and those in China have been developed based on local financing and administration. Since central-local intergovernmental relations, as they relate to public culture, have gone untouched in East Asia, the purpose of this paper is to study how central-local intergovernmental relations have impacted the development of cultural democracy in this area, in order to better understand how public culture should be developed. Design/methodology/approach A comparative study of the cases of South Korea and China has been used. The materials and information collected for the study were gathered by a review and an analysis of extant literature, policy documents, data and other materials from the relevant departments of both countries. It was also based on semi-structured interviews conducted with the national cultural departments, regulatory institutions, and with officials and scholars. Findings This study shows that central-local intergovernmental relations can have an impact on the management of community-based cultural houses and the effectiveness of cultural democracy’s development. Only complete decentralization that directly invites democratization will provide positive local conditions for cultural democracy’s growth. In short, meaningful governmental responses to local demands and a strong civil society are critical for the advancement of cultural democracy. Practical implications This study seeks to provide insights into the relationship between central-local intergovernmental relations and cultural democracy. At the micro project level, cultural project management should be improved; at the medium local level, the public must be made part of any decentralization effort; and at the macro national level, the multiple impacts caused by decentralization need to be considered. Originality/value This study is unique in terms of both its research questions and its research area. Central-local intergovernmental relations, as they relate to public culture, have gone comparatively untouched, especially in the context of East Asia. It is in this context that studying how central-local intergovernmental relations impact the development of cultural democracy is worthwhile, in order to better understand how public culture has developed and will be developed in future. A comparative study of the cases of South Korea and China has been used to discover the impacts of different dimensions of central-local decentralization on cultural development.