The Fiscal Study On China's Local Government Level Reform

China is a unitary and centralized country, and it is a unified multi-ethnic country. According to the principle that unified leadship with each level assuming its own management, there is a pyramid-shaped structure of local government in general under the central government. At present, besides the central level government , local government were variously installed in various places, some introduce two-tier system, some introduce three-tier and four-tier coexist system, even five-tier system, but mostly four-tier system, namely the province -- City -- County -- the township (town). This framework not only the most administration level since from Qin Dynasty, but also the most level of world's major countries. Multiple levels of management will be many intermediate links and more relationship needs to harmonize. The government not only has a high operating cost, but also low administrative efficiency because of game and seriously information asymmetries. From the financial perspective, the most level of the administration on the one hand makes more financial dependents, administration costs expansion, authority defined unclear and its downward movement at the grass-roots government improper expenditures and misuse of other expenditures; On the other hand it makes no full division of the tax between government, the grass-roots sources inadequate, low local-meeting-rate, continuously seek extra budgetary income, and invoke debt problem. The lack of income and huge expenditures make counties financial increasingly difficult, lack effective and local government functions can't be fully play, this further affecting the economic and social development. Therefore, reduce government levels, deepen the reform of the administrative system has become imperative."Decision of the CPC Central Committee on the Formulation of the 11 five-year plan" clear that reduce administrative levels, increase administrative efficiency and reduce administrative costs is an important part of the administrative reform during "Shiyiwu", but public opinion is not uniform how to reform.The focus from the financial perspective to research problems associated with our current variety government-level and proposes that financial structure reform as the pilot to further promote the reform of local administrative levels. As to the township-level government, with the improvement of overall level development in rural areas, the development of modern transport and information technology, it has no need for as a level of government. Therefore, the focus proposes to implement"township budgets managed by country level governments"first and abolish the township-level regime subsequent, restore its dispatch to the county-level governments. To the municipal government, as the market economy develops, the"counties subordinate to the cities"system has contrary from its original mind that the city to bring its townships, rural and urban merger management, and has become institutional factors that tied county's economic development. Therefore, the "counties subordinate to the cities " system must be replaced by the " counties directly managed by provincial level governments " ,and integrate county and city resources, introduce city and county lateral separate governance that can help the urban and rural partition, reduce administrative costs and enhance the administrative efficiency.