Path To Transform Local Government Function: Intergovernmental Coordination

Building Harmony Society presses for rational station of government function . and qualitative supply of public service. This paper focuses on the restrictions on local government function transformation, and suggests some possible resolution paths.Chinese economic reform starts from the fiscal management system reform, centering on fiscal decentralization. However, the past reform did not bring the local government functions back in rationality, with embodiments as follows: the "Contracted Financial Responsibility System" in 1980s strengthens the local governmental intervention to market; the taxation distribution reform in 1994, on one hand, plays active role in coordinating local governments and enterprises, on the other hand, functions with local government distortions.The fiscal management system reflects sharply the inter-engagement of central and local governments, while Chinese fiscal management system reform is characterized with the unilateral power-centralization and decentralization. Effective fiscal decentralization calls for multi- dimensionality equilibrium, with special emphasis on public participation.The main points in this paper go as below. When dealing with intergovernmental relationship, the local governments should be responsible to both central government and local public, but in Chinese fiscal reform, the lack of balance system chokes the local government function transformation. The intergovernmental coordination is the effective path to drive forward the function transformation. To direct the...