We examine whether China’s 2014 local government debt-swap program, intended to centralize fiscal control and eliminate off-budget borrowing, paradoxically reinforced subnational fiscal autonomy through implicit fiscal decentralization. Exploiting cross-sectional variation in debt levels identified by the 2013 national audit and employing a difference-in-differences design, we examine how the programme affected infrastructure-related land supply and local financing behaviour. We find that the debt-swap programme significantly increased the supply area of infrastructure land while exerting little effect on land prices, consistent with a supply-side expansion rather than demand shocks. Mechanism analyses show that the programme alleviated repayment pressure and facilitated renewed borrowing through local government financing vehicles, thereby expanding local indebtedness despite the central government’s objective of curbing it. In contrast, we find only limited improvements in expenditure efficiency, fiscal revenue, and GDP. Overall, these findings suggest that the debt-swap programme primarily reshaped intertemporal fiscal constraints rather than imposing durable fiscal discipline. More broadly, the results highlight an institutional paradox of recentralization: policies aimed at constraining subnational borrowing may unintentionally expand local fiscal capacity through alternative channels, thereby reinforcing implicit fiscal decentralization.
This comparative study investigates China’s policy reform waves alongside global education trends, analyzing 334 central-level policy documents published by the National People’s Congress, State Council, and Ministry of Education between 1979 and 2023. The study identifies three waves: enhancing access (1979–1990), improving quality and accountability (1991–2010), and enforcing equity (2011–2023). Even though the decentralization of finance and administration of education led, a few years later, to equity and quality concerns, several key differences to global reform trends remained: decentralization did not lead to deregulation; outcomes-based regulation complemented but did not replace input-based regulation; equity remained central, especially in the final reform wave.
This paper investigates the profound influence of Tang Dynasty legacies on the subsequent Song Dynasty's distinct financial-military transformation. While the Tang era was characterized by an expansive cosmopolitanism, a decentralized military, and a complex interplay of central and regional powers, its eventual decline underscored critical vulnerabilities in state governance and defense. The Song founders, keenly aware of these historical precedents, embarked on a deliberate path of institutional re-engineering. This study argues that the Tang's "cosmopolitan crucible"—its blend of cultural openness, economic dynamism, and ultimately, military decentralization—served as a crucial historical backdrop, compelling the Song to forge a highly centralized, civilian-controlled financial-military complex. We explore how Tang's sophisticated, yet often unstable, fiscal mechanisms and its frontier-focused military organization contrasting with the rise of autonomous regional commanders, directly informed Song's innovations in state monopolies, paper currency, and a robust professional army under strict imperial command. By examining both continuity and rupture, this research illuminates the adaptive strategies employed by the Song to consolidate power, ensure stability, and sustain an unprecedented level of economic and military capability, fundamentally reshaping the trajectory of imperial Chinese statecraft.
In Qing Dynasty China, the inter-government fiscal arrangement was characterized by a “dual-track fiscal system” in which a formal system with a central budget of revenues and spending coexisted with a decentralized and fragmented informal local fiscal system financed by miscellaneous extra-legal taxes. Why did the dual-track fiscal system endure despite its obvious flaws? Why was the Qing state unable to establish a stable and rationalized fiscal federalism? This chapter investigates the causes and consequences of the dual-track fiscal system. Through historical institutional analysis and several empirical studies, we propose a novel explanation based on the opportunistic behavior and credible commitment by the central government. Due to the central government’s inability to credibly commit to not encroaching on the formal fiscal powers of lower-level governments, the decentralized, off-budget, and informal local finances represent an “institutional equilibrium”.
This study analyzes the two-tier local government models in France, Japan, Germany, and the United States to draw lessons for reforming the organization of state apparatus in Vietnam. Based on the theoretical foundations of local government organization, it clarifies the principles of decentralization, autonomy, accountability, and effective public governance. International experience highlights the importance oftransparent institutions, financial autonomy, competent personnel, and the application of technology in governance. In Vietnam, the two-tier model has been implemented since July 1, 2025, under Law No.72/2025/QH15, replacing the traditional three-tier structure. The article examines the challenges during the transition and proposes solutions to improve the legal framework, ensure substantive decentralization, enhance implementation capacity, reform public finance, strengthen oversight, and promote accountability - thereby contributing to building an effective, modern, and democratic local government.
Given the Chinese government’s aim of high-quality development and under the double constraints of incremental land and limited local revenue, Chinese local governments' path-dependence on land finance is confronting significant challenges. Guangdong Province has implemented a series of urban renewal programs called Three Olds Redevelopment (TOR) projects, providing a potential alternative for financially sustainable development. Using panel data covering 21 prefecture-level cities in Guangdong during 2009–2018, this study constructed a quantitative analysis of the fiscal revenue effect of TOR. The results illustrate that TOR reduces fiscal revenues, including tax revenue and land-transfer fees, in the short term but increases them in the long term. Higher fiscal decentralization tends to amplify the fiscal effects, while market power and dependence on land finance may weaken the impact. As for the mechanism, TOR projects can increase long-term fiscal revenue because of social capital involvement and functional upgrading effects. We suggest urban renewal and policy innovation to transcend land finance path-dependence and realize sustainable local finance.
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.
Despite extensive comparative research on the relationship between government and courts, the independence and administration of local judiciaries remain understudied. Is a decentralized system—where local governments appoint judges and finance court budgets—more conducive to court autonomy than a centralized system that allows higher-level governments to control local judiciaries? We examine a reform in China that gradually recentralizes control over local courts. Using a difference-in-differences design with a unique dataset of lawsuits from listed firms (2012–2018), we find that recentralization diminishes local officials’ ability to interfere with court decision-making and reduces advantages for local litigants. These results suggest that recentralization can help insulate courts from government influence and enhance judicial independence under certain conditions.
Organizational coordination has been regarded as a vital factor to determine the environmental governance efficiency of local authority, while existing empirical studies mainly discuss the vertical decentralization but largely ignore the horizontal cross-departmental interaction within single government. Based on the data of 31 Chinese provinces from 2003 to 2017, this paper uses a panel vector autoregression (PVAR) approach, two-way fixed-effect models and dynamic panel regression with system generalized method of moments estimation (SYS-GMM) to investigate the environmental strategic interaction between two representative departments (finance department and environmental protection department) within local governments. The results indicate, on the whole, their environmental governance strategies show a significantly co-directional coordination. However, the cross-departmental interaction obviously varied in different periods and regions (even showed as conflict sometimes), and was synchronized with the dynamic trade-off between economic and environmental targets of China. This research helps understand the inner logic of environmental governance of Chinese government, and can be valuable guidance for other countries to accomplish multi-departmental sustainable development goal.
The People’s Republic of China’s (PRC) fiscal system is characterized by very high expenditure decentralization and heavy reliance on transfers to finance public services. The government’s embrace of inclusiveness and equalization as national goals has raised questions about whether transfers can deliver equalization. This paper seeks to answer this question by analyzing newly available fiscal data compiled from government websites. We find the allocation of central transfers remains strongly region based, resulting in high intra-regional inequality among provinces. Poorer provinces also tend to retain more central transfers at their own (provincial) level. Those provinces with greater pretransfer inequality tend to exert greater equalization efforts, but these are not necessarily proportional to their pretransfer inequality. As a result, some localities are left out of the PRC’s countrywide equalization program. These equalization patterns remained highly persistent during the coronavirus disease shock in 2020. Collectively, the findings highlight that the PRC’s complex intergovernmental fiscal system still poses challenges for equalization.
Blockchain originated from the aspiration for decentralization, and in Western countries, its association with freedom from governmental and corporate dominance remains unwavering. However, in China–where blockchain has taken an intriguing foothold–the socio-technical imaginaries of blockchain diverge significantly. As China rises in blockchain development, critical literature examining its ventures is notably lacking. This article analyses state-led initiatives and corporate endeavours related to blockchain deployment in rural China. While blockchain's roots lie in libertarian ideals, within China, it serves as a ‘state techno-solutionist’ tool, empowering authoritarian capitalism for enhanced state control and corporate profit through data exploitation. Although the application of blockchain in agricultural tracing and finance is heralded as a blessing to elevate smallholder farmers from poverty and enhance agricultural practices, the reality contrasts sharply. Instead of empowering farmers, the technology exacerbates power imbalances, embedding them in a system marked by extensive data harvesting and surveillance. Such integration entangles these farmers subsisting on China's economic fringes within broader national and global capitalist financial frameworks, rendering them more susceptible to exploitation and manipulation. Moreover, blockchain in rural China epitomizes authoritarian capitalism, where capitalists aligning closely with state agendas. Blockchain's transparency, traceability, and tamper-resistant features, instead of diminishing government interference, are harnessed by capitalists to amplify the social credit system, strengthening the data dominance of platform companies and supporting state surveillance. Therefore, blockchain emerges as a threat to rural China's ways of life–all driven by the pursuit of corporate profit and the government's quest to reclaim national greatness.
Central bank digital currency (CBDC) is generally defined as the digital form of a country's fiat currency.Based on the distributed ledger technology and other financial technology, CBDC could improve the efficiency of domestic and cross-border payments, increase payment safety and soundness, and promote financial inclusion.However, it is argued that the introduction of CBDC would threaten data security and invade personal privacy.Currently, this issue has received growing concern, and some recommendations are proposed by countries or international organizations, like privacy design, restrictions on public authorities and payment intermediaries, and establishing independent supervisory authority.Other suggestions include getting countries involved in international coordination and promoting the formation of unified standards.Among major economies, China is the first to launch CBDC, which is known as e-CNY.Based on an overview of the privacy protection legislation in China, this article attempts to describe the rules that should be followed when dealing with personal data generated in e-CNY circulation.
Special Session Introduction China's Rise in Asia:China-Host Country Interactions and Transformations Alvin Camba (bio), Guanie Lim (bio), and Victoria Chonn Ching (bio) Chinese capital exports are at the front and center of China's globalization (Hung 2015), actualizing US$3.8 trillion of foreign direct investment (FDI) stock in 2018 (UNCTAD 2019) and around US$843 billion in Chinese concessionary and non-concessionary financing between 2000 and 2019 (Bluhm et al. 2018). Against this backdrop, China has emerged as an alternative capital exporter as Western firms and international institutions have increasingly shifted their development finance from hard to soft infrastructure, in addition to concentrating their FDI in key sectors not easily participated by countries in the Global South (Camba 2022). For those in the Global South, China has also become a provider of military aid, an ally in the international arena, and a model to emulate. These changes are expected to exert enormous consequences on executive power competition among political elites, socio-ethnic fissures within countries, and geopolitical strategies of individual countries and/or regions. These domestic transformations better inform the ongoing debates on China's rise both within and across the Global South. The current literature on China's globalization can be divided into three different dimensions. First, there is a question of how China's interests, state-business relations, and state-society structures figure into China's mode of exporting capital. This literature has debated the question of China's global economic position, the issue of centralization or decentralization, and the recent emergence of party-state capitalism (Pearson et al. 2021, 2022). A parallel group of scholarship analyzes how China's Communist Party (CCP) and its institutions prefigure into the country's capital export strategy and China's geopolitical ambitions and gains (Benabdallah 2020; Doshi 2021; Repnikova 2022). Second, another group of works has examined China's impact on host regions and countries. From an economic lens, this scholarship examines how Chinese development finance or direct investments have catalyzed gross [End Page 543] domestic production, industrial policy, supply chain linkages, or capital restructuring (Camba et al. 2022; Lin 2012; Wise and Chonn Ching 2018). Politically, some debate how much China has inspired or exported models of autocracy (see, for example, Bader 2015; Camba 2022). These works also discuss China's role as a global environmental actor (Gallagher and Qi 2021; Kong and Gallagher 2019; Saha 2020). Finally, more recent literature has examined how the host country has responded to China's overtures. This body of work varies from analyzing national government institutions, elite politics, bureaucracies, and civil society. Some have examined host country positioning amidst geopolitical tensions, while others analyze hedging strategies (Liao and Katada 2021; Stallings 2020). Others have looked at how elites have taken advantage of China to increase their political power (Liu and Lim 2019). Despite all these advancements, what is relatively less scrutinized is the kind of host country politics that has emerged in response to—or alongside—Chinese capital exports and the degree to which these changing dynamics address underlying socio-economic or historical cleavages (Camba 2021a; Liu and Lim 2023). Our special session further interrogates how China's rise has spurred innovative bureaucratic strategies, social cleavages, and ethnic tensions in South, Southeast, and Central Asia. These sub-regions are rich for empirical investigation and theory building because democratization and development processes have differed not only from the Global North or Western countries but also among themselves. Adopting a macroscale perspective, Southeast Asian countries have generally pursued labor-intensive industrialization and illustrated distinct development patterns (Higgott and Robinson 2013), South Asian countries are fraught with nationalist movements and inter-state rivalries (Bhattacharyya 2020), and Central Asian countries are transitioning from their communist past into newly emerging democracies (Cummings 2012). However, these regions have—in varying ways—managed disillusionment with the West, increasing income inequalities, and intensified geopolitical tensions. Special Session Overview The first article focuses on Singapore. Xianbai Ji (2023) discusses how this quintessential city-state sought to engage the Belt and Road Initiative (BRI), China's signature global infrastructure strategy, since 2013. Compared to other economies, the Singaporean approach to the BRI shifted away from engaging with China...
Decentralized court finance and personnel management practices have been criticized for breeding extra-judicial interventions and corruption in China. Determined to advance law-based governance and to constrain recalcitrant local leaders, the Chinese leadership under Xi Jinping in 2014 rolled out reforms to centralize local court finance to the provincial level with the aim to sever local courts from local influence. Despite high expectations, implementation is at best partial. Close to half of all provinces have not accomplished the required changes, and more than half of all court expenditure continues, to date, to remain reliant upon local governments. The direct reason is that provincial governments lack sufficient and sustainable fiscal capacity to finance the operation of local courts without central assistance. Different interests between major stakeholders, namely the courts and the fiscal bureaus, also add to coordination problems and difficulties in reform implementation, in particular the tension between fiscal adequacy pursued by the judiciary and fiscal management efficiency stressed by finance bureaus.
Using panel data from 275 prefecture-level cities in China spanning from 2003 to 2019, this paper employs the multiperiod difference-in-differences method to empirically analyze the policy effect of land negotiation policy on local governments’ hidden debt. The paper also investigates the influence mechanisms of land finance, budget soft constraints, fiscal decentralization and government competition. The empirical results reveal that: (1) Land negotiations promote the expansion of local governments’ hidden debt, which is counterproductive to the sustainable development of government finances. (2) The impact of land negotiation policy on local government’s hidden debt is transmitted via its effects on land finance. (3) The greater the degree of soft budget constraint and the degree of government competition, the less the expansion effect of land negotiations on the hidden debt of the government. The greater the degree of fiscal decentralization, the greater the expansion effect of land negotiations on the government’s hidden debt. (4) Land negotiation promotes the expansion of hidden debt in eastern China and inhibits it in central China, with no significant effect observed in western China. (5) Cities with larger urban scale and higher economic development levels experience stronger effects from land negotiation policies. Therefore, it is imperative to deepen the land negotiation system further, develop policy indicators and feedback mechanisms tailored to local conditions, and introduce a multiparty supervision system to enhance implementation of the land negotiation system.
Abstract There are large variations in the choice of a decentralized or centralized education finance system across countries. We examine the financing of public primary education in China as a unique case study. China has successfully established modern universal basic education in the century from 1912 with very different education finance systems in different historical periods, ranging from a completely decentralized education finance system to a completely centralized system. This chapter presents a brief summary of China’s public primary education finance reforms and then provides a credible causal evaluation of its most recent centralized reform in 2006 using confidential school finance data as well as survey and census data. Similar to the recent literature on the centralization education finance reforms in the United States, we find that the 2006 reform in China leads to an increase in educational spending that translates to increases in student school enrollment and academic achievement. We also document unintended reform consequences that call for further research and policy design improvements.