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  • The China Quarterly, Volume 200
  • December 2009, pp. 973-994

The Political Economy of Earmarked Transfers in a State-Designated Poor County in Western China: Central Policies and Local Responses*


In order to improve the effectiveness of redistributive policies, in 2002 the Chinese government increased fiscal transfers and imposed more stringent regulations on the use of earmarked funds. This article evaluates the impact this had on K county in a north-western province. The case study finds that the misappropriation of earmarked transfers did decrease but this did not necessarily indicate an improvement in the local government's compliance in the usage of transfers. Instead, the county governments found ways to sabotage central policies by exporting fiscal burdens to the subordinate bureaus that received the earmarked subsidies. In some bureaus this was done by reducing the amount of funds allocated for operating expenses. In others it involved increasing staff numbers. These findings provide a basis for evaluating the effectiveness of using earmarked funds and internal supervisory mechanisms to achieve policy objectives in an authoritarian regime.

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Christine Wong and Richard Bird , “China's fiscal system: a work in progress,” in Loren Brandt and Thomas Rawski (eds.), China's Great Transformation: Origins, Mechanism, and Consequences of the Post-Reform Economic Boom (New York: Cambridge University Press, 2008)

Era Dabla-Norris , “Issues in intergovernmental fiscal relations in China,” IMF Working Paper, WP/05/30 (2005)

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Kellee S. Tsai , “Off balance: the unintended consequences of fiscal federalism in China,” Journal of Chinese Political Science, Vol. 9, No. 2 (2004), pp. 726

Dali L. Yang , “State capacity on the rebound,” Journal of Democracy, Vol. 14, No. 1 (2003)

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Ehtisham Ahmad , Li Keping , Thomas J. Richardson and Raju Singh , “Recentralization in China?IMF Working Paper 02/168 (2002)

Jonathan Rodden , “Reviving Leviathan: fiscal federalism and the growth of government,” International Organization, Vol. 57, No. 4 (2003), pp. 695729

Melanie Manion , “Politics and policy in post-Mao cadre retirement,” The China Quarterly, No. 129 (1992), pp. 125

Maria Edin , “State capacity and local agent control China: CCP cadre management from a township perspective,” The China Quarterly, No. 173 (2003), pp. 3552

Kevin O'Brien and Lianjiang Li , “Selective policy implementation in rural China,” Comparative Politics, Vol. 31, No. 2 (1999), pp. 167–86

Thomas Bernstein and Xiaobo , Taxation without Representation in Contemporary Rural China (Cambridge: Cambridge University Press, 2003)

Bruce Bueno de Mesquita , James D. Morrow , Randolph M. Siverson and Alastair Smith , “Political institutions, policy choice and the survival of leaders,” British Journal of Political Science. Vol. 32, No. 4 (2002), pp. 559–90

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The China Quarterly
  • ISSN: 0305-7410
  • EISSN: 1468-2648
  • URL: /core/journals/china-quarterly
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