Skip to main content

Shifting Fiscal Control to Limit Cadre Power in China's Townships and Villages*

  • Jean C. Oi (a1), Kim Singer Babiarz (a2), Linxiu Zhang (a3), Renfu Luo (a4) and Scott Rozelle (a5)...

In contrast to its decentralized political economy model of the 1980s, China took a surprising turn towards recentralization in the mid-1990s. Its fiscal centralization, starting with the 1994 tax reforms, is well known, but political recentralization also has been under way to control cadres directly at township and village levels. Little-noticed measures designed to tighten administrative and fiscal regulation began to be implemented during approximately the same period in the mid-1990s. Over time these measures have succeeded in hollowing out the power of village and township cadres. The increasing reach of the central state is the direct result of explicit state policies that have taken power over economic resources that were once under the control of village and township cadres. This article examines the broad shift towards recentralization by examining the fiscal and political consequences of these policies at the village and township levels. Evidence for this shift comes from new survey data on village-level investments, administrative regulation and fiscal oversight, as well as township-level fiscal revenues, expenditures, transfers (between counties and townships) and public-goods investments.

Corresponding author
Email: (Corresponding author).
Hide All

The authors acknowledge the National Natural Science Foundation of China (71033003), the Chinese Academy of Sciences (KZZD-EW-06) and the Institute of Geographic Sciences and Natural Resources Research, Chinese Academy of Sciences (2011RC102) for financial support for data collection.

Hide All
Barnett, Steven, and Brooks, Ray. 2010. “China: does government health and education spending boost consumption?” Tokyo: International Monetary Fund working paper WP/10/16.
Bernstein, Thomas P., and , Xiaobo. 2000. “Taxation without representation: peasants, the central and the local states in reform China.” The China Quarterly 163, 742–63.
Cai, Yongshun. 2008. “Local governments and the suppression of popular resistance in China.” The China Quarterly 193, 2442.
Chang, Hongxiao. 2004. “Can a new education law save China's compulsory education system?Caijing 118, 2123.
Chen, An. 2007. “The failure of organizational control: changing Party power in the Chinese countryside.” Politics & Society 35 (1), 145–79.
Chung, Jae Ho. 1995. “Beijing confronting the provinces: the 1994 tax-sharing reform and its implications for central–provincial relations in China.” China Information 9, (2-3), 123.
Chyi, Hau, and Zhou, Bo. 2010. “The effect of tuition reforms on school enrollment in rural China.” Xiamen: Wang Yanan Institute for Studies in Economics, Xiamen University.
Duckett, Jane. 2007. “Local governance, health financing, and changing patterns of inequality in access to health care.” In Shue, Vivienne and Wong, Christine (eds.), Paying for Progress in China: Public Finance, Human Welfare and Changing Patterns of Inequality. London: Routledge, 4668.
Edin, Maria. 2003. “State capacity and local agent control in China: CCP cadre management from a township perspective.” The China Quarterly 173, 3552.
Han, Linghui, Liu, Chengfang, Luo, Renfu, Rozelle, Scott, Wong, Christine and Zhang, Linxiu. 2009. “Fiscal reform, incentives and fiscal health in China's rural towns.” Beijing: Institute for Geographical Sciences and Natural Resource Research, Chinese Academy of Sciences.
Hu, Shanlian, Shenglan Tang, Liu, Yuanli, Zhao, Yuxin, Escobar, Maria–Luisa and de Ferranti, David. 2008. “Reform of how health care is paid for in China: challenges and opportunities.” The Lancet 372 (9652), 1846–53.
Huang, Jikun, Wang, Xiaobing, Zhi, Huayong and Rozelle, Scott. 2011. “Subsidies and distortions in China's agriculture: evidence from producer-level data.” Australian Journal of Agricultural and Resource Economics 55 (1), 5371.
Jing, Fang. 2004. “Health sector reform and reproductive health services in poor rural China.” Health Policy and Planning 19 (supplement), 140–49.
Kennedy, John J. 2007. “From the tax-for-fee reform to the abolition of agricultural taxes: the impact on township governments in north-west China.” The China Quarterly 189, 4359.
Li, Lianjiang, and O'Brien, Kevin J.. 1996. “Villagers and popular resistance in contemporary China.” Modern China 22 (1), 2861.
Li, Lianjiang, and O'Brien, Kevin J.. 2008. “Protest leadership in rural China.” The China Quarterly 193, 123.
Li, Linda Chelan. 2007. “Working for the peasants? Strategic interactions and unintended consequences in the Chinese rural tax reform.” China Journal 57, 89106.
Liu, Mingxing, Murphy, Rachel, Tao, Ran and An, Xuehui. 2009. “Education management and performance after rural education finance reform: evidence from western China.” International Journal of Educational Development 29 (5), 463–73.
Liu, Mingxing, and Tao, Ran. 2007. “Local governance, policy mandates and fiscal reform in China.” In Shue, Vivienne and Wong, Christine (eds.), Paying for Progress in China: Public Finance, Human Welfare and Changing Patterns of Inequality. London: Routledge, 166–89.
Liu, Mingxing, Wang, Juan, Tao, Ran and Murphy, Rachel. 2009. “The political economy of earmarked transfers in a state-designated poor county in western China: central policies and local responses.” The China Quarterly 200, 973–94.
Luo, Renfu, Zhang, Linxiu, Huang, Jikun and Rozelle, Scott. 2007. “Elections, fiscal reform and public goods provision in rural China.” Journal of Comparative Economics 35 (3), 583611.
Montinola, Gabriella, Qian, Yingyi and Weingast, Barry R.. 1995. “Federalism, Chinese style: the political basis for economic success in China.” World Politics 48 (1), 5081.
O'Brien, Kevin J. 1994. “Implementing political reform in China villages.” Australian Journal of Chinese Affairs 32, 3359.
O'Brien, Kevin J. 1996. “Rightful resistance.” World Politics 49 (1), 3155.
O'Brien, Kevin J., and Li, Lianjiang. 2004. “Suing the local state: administrative litigation in rural China.” China Journal 51, 7596.
O'Brien, Kevin J., and Li, Lianjiang. 2006. Rightful Resistance in Rural China. Cambridge: Cambridge University Press.
Oi, Jean Chun. 1989. State and Peasant in Contemporary China: The Political Economy of Village Government. Berkeley: University of California Press.
Oi, Jean C. 1992. “Fiscal reform and the economic foundations of local state corporatism in China.” World Politics 45 (1), 99126.
Oi, Jean C. 1996. “Economic development, stability, and democratic village self-governance.” In Brosseau, Maurice, Pepper, Suzanne and Tsang, Shu-ki (eds.), China Review. Hong Kong: Chinese University Press, 125–44.
Oi, Jean C. 1999. Rural China Takes Off: Institutional Foundations of Economic Reform. Berkeley: University of California Press.
Oi, Jean C. 2004. “Old problems for new leaders: institutional disjunctions in rural China.” In Chu, Yun-han, Luo, Chih-cheng and Myers, Ramon H. (eds.), The New Chinese Leadership: Challenges and Opportunities after the 16th Party Congress. Cambridge: Cambridge University Press, 141–55.
Oi, Jean C., and Rozelle, Scott. 2000. “Elections and power: the locus of decision-making in Chinese villages.” The China Quarterly 162, 513–39.
Oi, Jean C., and Shimizu, Kay. 2010. “The uncertain outcomes of rural industrialization: a reassessment.” In Leng, Tse-Kang and Zhu, Yunhan (eds.), Dynamics of Local Governance in China During the Reform Era: Challenges Facing Chinese Political Development. Lanham, MD: Lexington Books, 1131.
Oi, Jean C., and Shukai, Zhao. 2007. “Fiscal crisis in China's townships: causes and consequences.” In Perry, Elizabeth J. and Goldman, Merle (eds.), Grassroots Political Reform in Contemporary China. Cambridge, MA: Harvard University Press, 7596.
Park, Albert, Rozelle, Scott, Wong, Christine and Ren, Changqing. 1996. “Distributional consequences of reforming local public finance in China.” The China Quarterly 147, 751–78.
Qian, Yingyi. 2007. “Fiscal and governance challenges for government and corporations: China in 2007.” Paper presented at the Stanford Center for International Development Workshop, Stanford University, February 2007.
Remick, Elizabeth J. 2004. Building Local States: China During the Republican and Post-Mao Eras. Cambridge, MA: Harvard University Asia Center.
Ren, Xiemei. 2006. “A study of the impacts of rural reforms on rural education management in X county China.” Central Michigan University.
Rozelle, Scott. 1991. “The economic behavior of village leaders in China's reform economy.” PhD diss., Cornell University.
Rozelle, Scott. 1996. “Stagnation without equity: patterns of growth and inequality in China's rural economy.” The China Journal 35, 6392.
Shue, Vivienne. 1988. The Reach of the State: Sketches of the Chinese Body Politic. Stanford, CA: Stanford University Press.
Shue, Vivienne, and Wong, Christine (eds.). 2007. Paying for Progress in China: Public Finance, Human Welfare and Changing Patterns of Inequality. London: Routledge.
Sicular, Terry. 1995. “Redefining state, plan and market: China's reforms in agricultural commerce.” The China Quarterly 144, 1020–46.
Strauss, Julia C. 1998. Strong Institutions in Weak Polities: State Building in Republican China, 1927–1940. Oxford: Clarendon Press.
Tang, Shenglan, Meng, Qingyue, Chen, Lincoln, Bekedam, Henk, Evans, Tim and Whitehead, Margaret. 2008. “Tackling the challenges to health equity in China.” The Lancet 372 (9648), 1493–501.
Tsai, Lily L. 2010. “Governing one million rural communities after two decades: are China's village elections improving?” In Oi, Jean C., Rozelle, Scott and Zhou, Xueguang (eds.), Growing Pains: Tensions and Opportunity in China's Transformation. Stanford, CA: Asia-Pacific Research Center, 143–66.
Wang, Hufeng. 2009. “A dilemma of Chinese healthcare reform: how to re-define government roles?China Economic Review 20 (4), 598604.
Wang, Shaoguang. 1995. “The rise of the regions: fiscal reform and the decline of central state capacity in China.” In Walder, Andrew G. (ed.), The Waning of the Communist State: Economic Origins of Political Decline in China and Hungary. Berkeley: University of California Press, 87113.
Wang, Shaoguang. 1997. “China's 1994 fiscal reform: an initial assessment.” Asian Survey 37, 801–17.
Wang, Shaoguang, and Hu, Angang. 1999. The Political Economy of Uneven Development: The Case of China, Asia and the Pacific. Armonk, NY: M.E. Sharpe.
Whiting, Susan. 2004. “The cadre evaluation system at the grass roots: the paradox of party rule.” In Naughton, Barry J. and Yang, Dali L. (eds.), Holding China Together: Diversity and National Integration in the Post-Deng Era. New York: Cambridge University Press, 101–19.
Wong, Christine. 1997. Financing Local Government in the People's Republic of China. Hong Kong: Oxford University Press for the Asian Development Bank.
Wong, Christine P. W., Heady, Christopher and Woo, Wing Thye. 1995. Fiscal Management and Economic Reform in the People's Republic of China. Hong Kong: Oxford University Press for the Asian Development Bank.
Yep, Ray. 2004. “Can ‘tax-for-fee’ reform reduce rural tension in China? The process, progress and limitations.” The China Quarterly 177, 4270.
Yip, Winnie, and Hsiao, William C.. 2008. “The Chinese health system at a crossroads.” Health Affairs 27 (2), 460–68.
Zhang, Linxiu, Luo, Renfu, Liu, Chengfang and Rozelle, Scott. 2006. “Investing in rural China: tracking China's commitment to modernization.” The Chinese Economy 39(4), 5784.
Zhao, Litao. 2009. “Between local community and central state: financing basic education in China.” International Journal of Educational Development 29 (4), 366–73.
Zhao, Litao. 2010. “Reforming China's funding of compulsory education: changes and their outcomes.” Social Science in China 31 (1), 5573.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

The China Quarterly
  • ISSN: 0305-7410
  • EISSN: 1468-2648
  • URL: /core/journals/china-quarterly
Please enter your name
Please enter a valid email address
Who would you like to send this to? *



Altmetric attention score

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed