between separate stoves and a single menu fiscal decentralization in china

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1、BetweenSeparateStovesandaSingleMenu:FiscalDecentralizationinChina*Kai-yuenTsuiandYouqiangWangABSTRACTArecentbodyofliteraturewiththeparadigmofmarketpreservingfederalismatitscorecontendsthatChinaisadefactofederaliststate.Withtheautonomyandtaxrightsoflocalgovernmentsentrenchedinthe

2、reformera,localgovernmentshaveallegedlybecomedecentralizedenginesofgrowth.Scrutinizingtheunderlyingpremisesoftheaboveparadigm,thisarticlearrivesatapictureofChinaslocalgovernmentsaslessautonomousandthesystemofverticalbureaucraticcontrolasmorepotentthanthatpaintedbytheaboveparadig

3、m.EmergingfromourfindingsisanalternativeinterpretationofChinascentrallocalfiscalrelationsthatmayhelpusunderstandsuchrecentphenomenaastheproliferationofarbitrarycharges.IftheRussiangreatleaptomarketanddemocracyhassofarturnedouttobealitanyofunfulfilledaspirationsandgrossmiscalculatio

4、ns,Chinassomewhattimidexcursionintotheunchartedwatersofreformhasbeenamplyrewardedwithunprecedentedgrowth.Tryingtomakesenseofsuchagreatdivergenceisabodyofliteraturethataccentuatestheroleoffiscaldecentralizationthedevolutionofdecision-makingpowerstolocalgovernmentsasthehandmaidenof

5、Chinasrapideconomic1growthinthereformera.Throughoutthisarticle,suchfiscaldecentral-izationisreferredtoasthehelping-handparadigm.Formingthebackbonetothisnewliteratureisthemodelofmarketpreservingfederalism,weavingtogetheratapestryofChineseinstitutionalinnova-tionsthatlimitcentral-s

6、tatepredationandunleashlocal-stateen-trepreneurship.Specifically,thefiscalcontractingsystemintroducedinthe1980s,thehallmarkofChinasfenzaochifan,ormealspreparedbyseparatestoves,allegedlycommitsthecentreandtheprovincestolong-termandstableschemesofsharingthefiscalpie,clarifyingtheirta

7、xrightsandtherebyrestrainingcentral-statepredation.Beingresidual*TheworkdescribedinthispaperwasfullysupportedbyagrantfromtheResearchGrantCounciloftheHongKongSpecialAdministrativeRegion(ProjectNo.CUHK4119/99H).WethankChristineWongandThomasRawskifortheirvaluableandincisivecomments

8、.1.SeeGabriellaMontinola,YingyiQianandBarryR.We