Features, Problems and Reform of County and Township Fiscal Administration System in China

That China’s counties and townships are in fiscal predicament is an acknowledged fact. This problem is largely attributed to the current multi-tier fiscal system, the county and township fiscal administration system in particular. So far, we still lack overall analytic research on the county and township fiscal administration system and the relationship between functions and powers and fiscal powers at county and township levels in the context of multi-tier fiscal system and its structure despite a sound normative framework for county and township fiscal system depends on such research. By analyzing the multi-tier fiscal system and its structure, this paper discusses the status, features, problems and causes of the county and township fiscal administration system, sorts out distribution and operation of functions and powers, expenditure responsibilities and fiscal powers across levels of government, and, from the angle of standard, puts forward some thoughts for resolving these problems. The research finds that the fiscal administration system of “supervising the lower level” and the functions and powers “mandated by higher levels” not only conflict with the internationally accepted principle of fiscal federalism, but are free from the restriction of local democratic fiscal rules and procedures, both unfavorable to the efficient operation of county and township fiscal administration system. This is why further reforms are necessary.

Keywords: People’s Republic of China, Local Government, Public Policy, Public Finance, County and Township Fiscal Administration System, Tax Sharing Fiscal Administration System, Multi-Tier Fiscal System, Fiscal Federalism