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County‐level fiscal strait and resolutions in China

Author

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  • Dan Luo
  • Ronghua Ju

Abstract

Purpose - The purpose of the paper is to examine China's county‐level fiscal difficulties. A large portion of China's counties (county‐level cities) have to run with the shortage of financial resources and huge government debt. To make a suitable policy to solve this problem is a top priority. Design/methodology/approach - Using the first‐hand survey data, the paper compares nine sample counties whose economic development level is different, sums up the difficulties county‐level governments are facing and explores countermeasures from qualitative and quantitative approaches. Findings - By studying the survey data of nine sample counties (cities), it is found that county‐level finance is facing the following problems: low‐level fiscal revenue, high debt risk and large gap of fiscal revenue between different counties (cities). Based on these findings, the paper provides suggestions such as ensuring that the county‐level government has sufficient fiscal resources and improving the transfer payment system. Originality/value - Data from three well‐developed counties (county‐level cities), three middle‐income counties (county‐level cities) and three backward counties made the paper's findings more comprehensive and realistic and suggestions more practical.

Suggested Citation

  • Dan Luo & Ronghua Ju, 2011. "County‐level fiscal strait and resolutions in China," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 3(2), pages 210-223, May.
    • Handle: RePEc:eme:caerpp:v:3:y:2011:i:2:p:210-223
    DOI: 10.1108/17561371111131326
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    References listed on IDEAS

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    1. Lewis, Blane D., 2003. "Local Government Borrowing and Repayment in Indonesia: Does Fiscal Capacity Matter?," World Development, Elsevier, vol. 31(6), pages 1047-1063, June.
    2. Adam, Christopher S. & Bevan, David L., 2005. "Fiscal deficits and growth in developing countries," Journal of Public Economics, Elsevier, vol. 89(4), pages 571-597, April.
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