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The evolving contours of central–provincial fiscal interactions

S. Philip Hsu

Chapter 8 in Handbook of Public Finance in China, 2026, pp 164-190 from Edward Elgar Publishing

Abstract: This chapter explores the evolving contours of central–provincial interactions in the fiscal realm since 1980, mapping out three distinct phases according to variations in issues, policy goals, and institutional frameworks. The empirical investigation yields four key findings. First, the central government has maintained a firm grip on setting the institutional rules governing both revenue and expenditure interactions, based on its policy objectives and priorities. Second, while the central government has consistently retained a strong capacity to steer rule-setting, the provinces have continued to exert influence over policy formulation and the outcomes of policy implementation, supporting a non-zero-sum perspective. Third, aside from the economic logic of fiscal issues, interactions between the centre and the provinces have been significantly influenced by various types of political logic. Fourth, momentous economic changes, unprecedented during China's reform era, are impacting both revenues and expenditures, creating substantial uncertainties in future fiscal outcomes.

Keywords: Central–provincial interactions; Fiscal revenues; Fiscal expenditures; Fiscal decentralisation; Tax-assignment system (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035311705
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