Structural Change in Local Finance during China’s Reform Era: A Case Study

Abstract

By looking at one particular case, this study determines what resources were available to local governments in order to finance local economic development in the reform era. It finds that although local finance expanded tremendously in this era, and extra-budgetary revenue also increased, those two things did not produce much financial surplus for capital construction and fixed investment. The only source at the local government’s disposal was cheap land expropriated from local peasants. Land thus becomes the key to understanding local finance during the reform era.

Keywords

local government / tax distribution system / extra-budgetary finance / land finance

RIGHTS & PERMISSIONS

2014 Higher Education Press and Brill