Decentralization reforms and regionalism in China: A review

Abstract

Since 1978, the decentralization reforms, in general, and the reforms in planning and fiscal systems, in particular, have brought about dramatic changes in the context of central-regional/local relationships, which have in turn generated a tremendous impact on and problems for China's regional development. This article aims to examine the impacts and consequences of China's decentralization reform on regional development over the past seventeen years. With a brief review of prereform experiences, this article focuses on the decentralization reforms of planning and fiscal systems in the 1980s and 1990s: the contract-responsibility reforms and the ongoing tax-sharing reforms, and their regional implications and consequences. Special attention is paid to regionalism that is emerging as a result of these reforms. The authors argue that regionalism, in forms of territorial segmentation and confrontation, was planted in the traditional administrative economic system, but grew and was exacerbated by the current flawed or uncompleted decentralization reforms. The current tax-sharing system reform, which centered the functional division between the center and localities, seems to be on the right track, but its fate is hard to predict and far from claiming success.