World Bank2013-08-282013-08-282002-04-09https://hdl.handle.net/10986/15423In China, the highly decentralized fiscal system undermines improvements in policy outcomes and contributes to increasing disparities among its regions. However, rather than re-centralizing, China would benefit from pursuing reforms to: improve expenditure and revenue assignments for the various levels of government; distribute fiscal resources more equally; and improve the use of these resources through better budget management at all levels of government. This report recommends a comprehensive reform effort that covers all the components of the inter-governmental fiscal system, arguing that selective interventions to address specific local financial problems such as defaults on pension and unemployment stipends, and payment arrears on teachers' salaries, have created some pervasive incentives. A piecemeal approach to inter-governmental fiscal reform is unlikely to succeed because it will not take into account the interdependence of transfers on revenue assignments or the role played by expenditure assignments on the adequacy of revenue assignments and transfers.en-USCC BY 3.0 IGOACCOUNTABILITYACCOUNTINGADMINISTRATION REFORMADMINISTRATIVE CAPACITIESADMINISTRATIVE CAPACITYAGGREGATE FISCAL DISCIPLINEAUDITINGAUTHORITYBASIC EDUCATIONBORROWINGBUDGET EXECUTIONBUDGET MANAGEMENTBUDGET PROCESSBUDGET REFORMBUDGETARY AUTONOMYBUDGETARY EXPENDITURESBUDGETARY FUNDSBUDGETARY INSTITUTIONSBUDGETARY RESOURCESBUDGETARY SUPPORTCENTRAL GOVERNMENTCENTRAL GOVERNMENTSCENTRAL TRANSFERSCIVIL SERVICECONSOLIDATIONDEVELOPMENT BANKSDISTORTED INCENTIVESEBFECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIES OF SCALEEQUALIZATIONEXECUTIONEXPENDITUREEXPENDITURE ASSIGNMENTEXPENDITURE ASSIGNMENTSEXPENDITURE RESPONSIBILITIESFINANCIAL CONTRIBUTIONFINANCIAL INSTITUTIONSFINANCIAL MANAGEMENTFINANCIAL TRANSACTIONSFISCALFISCAL DECENTRALIZATIONFISCAL REFORMFISCAL REFORMSFISCAL RESOURCESFISCAL REVENUESFISCAL YEARFOREST MANAGEMENTGNPGOVERNMENT AGENCIESGOVERNMENT EXPENDITURESGOVERNMENT LEVELSGOVERNMENT SUBSIDYGOVERNMENTAL REFORMGRANT DESIGNGROSS DOMESTIC PRODUCTGROSS NATIONAL PRODUCTHEALTH EXPENDITURESHEALTH SERVICESINCOMEINFLATIONINSURANCELACK OF AUTONOMYLAWSLEGAL REQUIREMENTSLEVELS OF GOVERNMENTLOCAL AUTONOMYLOCAL GOVERNMENTLOCAL GOVERNMENT EXPENDITURESLOCAL GOVERNMENTSLOCAL REVENUELOCAL TAXLOCAL TAXESMANDATESMARGINAL BENEFITSMARKET DISCIPLINEMATCHING GRANTSMINISTRY OF FINANCEMUNICIPAL FINANCEMUNICIPALITIESNATIONAL EXPENDITURESNATIONAL GOVERNMENTSPAYMENT ARREARSPERVERSE INCENTIVESPOLLUTIONPOLLUTION CONTROLPREFECTURESPREVENTIVE HEALTH CAREPRIVATE GOODSPROVINCIAL GOVERNMENTSPUBLIC EMPLOYMENTPUBLIC EXPENDITUREPUBLIC EXPENDITURE MANAGEMENTPUBLIC EXPENDITURE REVIEWPUBLIC EXPENDITURESPUBLIC FINANCEPUBLIC GOODSPUBLIC INVESTMENTPUBLIC SECTORPUBLIC SECTOR EMPLOYMENTPUBLIC SECTOR PERFORMANCEPUBLIC SERVICEPUBLIC SERVICESPUBLIC SPENDINGRATIONALIZATIONRECURRENT EXPENDITURESREPRESENTATIVESRESOURCE USEREVENUE MOBILIZATIONREVENUE SHARINGSAVINGSSOCIAL PROTECTIONSOCIAL SECURITYSOCIAL SERVICESSOCIAL WELFARESTATE-OWNED ENTERPRISESSTRUCTURE OF GOVERNMENTTAX ADMINISTRATIONTAX COLLECTIONTAX POLICYTAX REFORMTAX REFORMSTAX REVENUESTAX SHARINGTAX SYSTEMTOTAL EXPENDITURESTRANSITION ECONOMIESTREASURYUNEMPLOYMENTWAGE DIFFERENTIALSWATERSHED INTERGOVERNMENTAL FISCAL RELATIONSINTERGOVERNMENTAL TAX RELATIONSINTERGOVERNMENTAL TRANSFER OF FUNDSPENSION SYSTEMSUNEMPLOYMENT INSURANCETEACHER SALARIESPAYMENT OF CHARGESPAYMENTS ARREARSPUBLIC EXPENDITURESGOVERNMENT SPENDING POLICYBUDGET MANAGEMENTVALUE ADDED TAXESCORPORATE TAXATIONEQUALIZATIONLOCAL GOVERNMENT EXPENDITURESLOCAL GOVERNMENT TAXATIONINCENTIVESFINANCIAL INCENTIVESLEGAL REFORMUNFUNDED MANDATESREVENUE SHARINGTAX COLLECTIONTAX ENFORCEMENTEFFICIENCYFISCAL EFFICIENCYDECENTRALIZATIONGOVERNMENT ROLECIVIL SERVICE REFORMSADMINISTRATIVE STRUCTUREWorld Bank10.1596/15423