China is a large unitary country, but local governments play important roles. Especially in the process of China’s transition to a market economy, local government entrepreneurialism and competition have been key contributors to the ‘economic miracle’. At the same time, local governments have played starring roles in the country’s inability to curb its addiction to debt-fuelled, investment-led growth, environmental degradation and financial risks.
This presentation will examine the challenge of managing a modernizing China through the lens of central-local fiscal relations, how recent reforms are addressing the accumulated problems of four decades of gradualist, incremental reform, and how these reforms are reshaping economic governance in China.