Political Incentive And Fiscal Transparency Of The Chinese Government

An increasing amount of literatures have concerned on the impact of political incentives on Chinese economic development. They found that political incentives significantly contributed to Chinese economy growth as market system is not sound enough at present in China. This paper shows that the logic behind political incentives can not only explain China’s high growth rate, but can also explain other aspects of local officials’behaviors. For instance, to promote the government information disclosure, especially the disclosure of fiscal information, is such a case. The central government has paid a lot of attention to improve local government’s fiscal transparency in recent years. However, many academic institutions have observed that fiscal transparency differs significantly in different local governments. In this paper, through empirical test, we find that local government officials had different motivations to disclose government fiscal information when they faced different political incentives. The greater the incentives they had, the more information they would like to offer, leading to a more transparent government. In this article, we have found that the fiscal transparency in the provinces where Alternate Member and Full Member of CPC Central Committee serves as provincial secretary is significantly higher than that in those provinces where Politburo Member serves as provincial secretary. Similar results have been found in provincial governor’s sample.Besides, we found that other personal background of local officials could affect the fiscal transparency as well. Compared to the outside provincial officials, those who had working experience in the province then had relations with the local elites were inclined not to disclose the information. Aged officials have the tendency not to disclose public budget information while officials who had a longer term in office would be more likely to disclose budget information. Education background had no significant impact on the fiscal transparency. At the same time, in this paper, the empirical results show that the local economic situation and fiscal expenditure structure had no significant impact on fiscal transparency.