Fiscal Reform and Rural Public Finance in China

27 Pages Posted: 4 Nov 2009

See all articles by Richard M. Bird

Richard M. Bird

affiliation not provided to SSRN

Loren Brandt

University of Toronto - Department of Economics; IZA Institute of Labor Economics

Scott Rozelle

University of California, Davis - Department of Agricultural and Resource Economics

Linxiu Zhang

Chinese Academy of Sciences - Center for Chinese Agricultural Policy

Date Written: November 2, 2009

Abstract

We present a summary analysis of the important changes in township and village finance in China between 2000 and 2004, based on a survey of 100 villages in 50 townships in 25 counties in five provinces. The reforms included the elimination of regular fee assessments imposed on rural households and the removal of the long-standing agricultural tax as well as increased investment efforts by upper-level governments in the rural sector. This "Tax-and-Fee reduction" was popular in rural China but it is too soon to say what the long-term effects of this policy might be. However, the analysis reported here shows clearly that by most measures and for most areas the initial effects on the fiscal health of townships and villages are mixed. One clearly beneficial effect of the increased centralization reflected in this package of reforms was that relatively more resources have been directed to poor rural areas. However, the evidence we present suggests that such investment would have had a bigger payoff had there been larger direct village input into infrastructure projects.

Keywords: China, rural sector, villages, townships, local taxes, fees, intergovernmental

JEL Classification: R51, R28, H71, H77

Suggested Citation

Bird, Richard Miller and Brandt, Loren and Rozelle, Scott and Zhang, Linxiu, Fiscal Reform and Rural Public Finance in China (November 2, 2009). Rotman School of Management Working Paper No. 1498776, Available at SSRN: https://ssrn.com/abstract=1498776 or http://dx.doi.org/10.2139/ssrn.1498776

Richard Miller Bird (Contact Author)

affiliation not provided to SSRN

No Address Available

Loren Brandt

University of Toronto - Department of Economics ( email )

150 St. George Street
Toronto, Ontario M5S 3G7
Canada
416-978-4442 (Phone)
416-978-6713 (Fax)

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Scott Rozelle

University of California, Davis - Department of Agricultural and Resource Economics ( email )

One Shields Avenue
Davis, CA 95616
United States
530-752-9897 (Phone)

Linxiu Zhang

Chinese Academy of Sciences - Center for Chinese Agricultural Policy ( email )

Anwai, Beijing, 100101
China

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