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Perspective on Local Governance Reform in China

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  • Mingxing Liu
  • Binwen Song
  • Ran Tao

Abstract

This paper is an attempt to present an analysis of China's decentralization and local governance practices, the dilemmas rooted in the current institution. We argue that the misbehavior of local government officials is endogenous to China's central‐local structure and that competition among localities has become distorted and constrained by various policy burdens and development mandates imposed from above. The information asymmetry for the enforcement cost of mandates that exists between central and local governments not only leads to difficulties and distortions in local performance evaluations, but also creates opportunities for local bureaucracy expansion and rent‐seeking. Enhancing fiscal transfers, or strengthening political restraint, although necessary, would be far from enough to solve the local governance problems. The ultimate solution entails an in‐depth deregulation reform on factor mobility and a furthest eradication of policy mandates for the local government. Edited by Xinyu Fan

Suggested Citation

  • Mingxing Liu & Binwen Song & Ran Tao, 2006. "Perspective on Local Governance Reform in China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 14(2), pages 16-31, March.
    • Handle: RePEc:bla:chinae:v:14:y:2006:i:2:p:16-31
    DOI: 10.1111/j.1749-124X.2006.00012.x
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    References listed on IDEAS

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    Cited by:

    1. Brehm, Stefan, 2013. "Fiscal Incentives, Public Spending, and Productivity – County-Level Evidence from a Chinese Province," World Development, Elsevier, vol. 46(C), pages 92-103.
    2. Jakob Arnoldi & Yulia Muratova, 2019. "Unrelated acquisitions in China: The role of political ownership and political connections," Asia Pacific Journal of Management, Springer, vol. 36(1), pages 113-134, March.
    3. Leung, Charles Ka Yui & Chow, Kenneth & Yiu, Matthew & Tam, Dickson, 2010. "House Market in Chinese Cities: Dynamic Modeling, In-Sampling Fitting and Out-of-Sample Forecasting," MPRA Paper 27367, University Library of Munich, Germany.

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