Central–local relations in the People's Republic of China

This paper examines China's central–local relations and their impact on China's economic development in a dynamic historical perspective. It provides a description of the organizational and fiscal structure of China's central and local relations; traces the locus of China's central–local relation reforms, and makes an effort to draw lessons from China's own administrative history. The author argues that while China has a wealth of lessons and experiences from its past, its long history has also left it an institutional legacy that could prevent China from effectively benefiting from its own lessons. The 1994 tax reform has significantly improved China's fiscal system. It has paved the way for more profound administrative changes. However, the readiness for more changes does not necessarily guarantee a successful homerun. Major efforts are still needed if China wants to measure its success by contemporary international, rather than China's own historical standards.