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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.

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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.

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