A Study On The Efficiency Of Intra-governmental Financial Competition In China

The issue of intra-governmental financial competition is common to the majority of market economies in the whole world. In the developed countries, especially the federated ones, the issue of intra-governmental financial competition efficiency has received a high level of attention from the academia, for which there have emerged many in-depth and detailed studies. Nevertheless, in China, the issue of intra-governmental financial competition efficiency is still a new issue, awaiting further explorations. Since the 1980s, the financial regime of the Chinese government was structurally shifted from the planned institutions, based on a high level of centralisation and'unified taxation and unified expenditure', to a stratified management model that is based on differential taxations by various levels of governments. By this new model, both the central government and its local counterparts have secured their respective revenues and expenditures. It is based on this stratification that the intra-governmental financial competition came into being. With the development of the socialist market reform and the progress in financial reform, this competition has become increasingly intense. Due to the variety of means available to the intra-governmental financial competition, its impact on the Chinese society and economy is also multifaceted. Henceforth, this study has great theoretical significance for a better understanding of the intra-governmental financial competition and its efficiency in China. At the same time, it can offer realistic guidance of great importance to all the reform projects in China.On the basis of current researches both within China and without, the methodologies in this article are mainly normative analysis, empirical analysis and comparative analysis. From the theoretical perspectives of intra-governmental financial competition and its efficiency, this article compares and contrasts the different vantage points on the intra-governmental financial competition and its efficiency, from which to derive a new, reasonable definition on the efficiency of intra-governmental financial competition efficiency, as well as to shed light on the impact factors and evaluation benchmarks on such efficiency. Employing such theoretical perspectives as of economics, finance and game theory, this article offers a detailed analysis of the status quo of the Chinese intra-governmental financial competition and its efficiency. It has placed focus on the efficiency of the Chinese intra-governmental financial competition. Targeting the weaknesses inherent in current researches on this issue in China, this article reinforces empirical study, so as to deepen our understanding on the Chinese intra-governmental financial competition efficiency. The conclusion thus drawn is: by and large, the Chinese intra-governmental financial competition has augmented the social productive power, boosted economic growth, increased social welfare, thus in accordance with the evaluation benchmarks on efficiency. Nonetheless, the Chinese intra-governmental financial competition is still far away from an equalisation of basic public services across regions. On the contrary, the divide between regions has been widened, thus in direct contrast to the evaluation benchmarks of fairness. Therefore, the Chinese intra-governmental financial competition is efficient, albeit at a low level. To find solutions to the abovementioned problems, this article draws on the American and German experiences of intra-governmental financial competition, the combination of which with China's national situations paves the way for us to propose certain practicable advice for policy-making in such areas as deepening of separate taxation, improvement of local taxation and strengthening of transfer payment in China.