The Evolution of Central–Provincial Fiscal Relations in China, 1971–1984 The Formal System

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Abstract
Central–provincial budgetary relations are among the most significant, intricate and obscure facets of Chinese governmental procedures. Audrey Donnithorne and Nicholas Lardy illuminated central–provincial budgetary relations to 1959, and more recent writings by Donnithorne, Barry Naughton and Dorothy Solinger have brought aspects of the story forward. Based on recently-published Chinese materials, this article traces the evolution of the formal system in central-provincial relations from 1971 to 1984. A new fiscal regime was supposed to begin in 1985 but was never fully implemented because lack of progress in the reform to replace enterprise profits with taxes. The regime since 1984 has been largely a continuation of the 1980–84 fiscal management system, with some new incentives for provinces to collect more revenue. The post-1984 arrangements are well described to collect more revenue. The post-1984 arrangements are well described in a recent World Bank study. This argicle, therefore, fills a gap in the current literature and untagles the complicated and rather obscure story for the 1971 to 1984 era.

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