Intergovernmental Relations from the Fiscal Aspect in China

ABSTRACT

Amid the progress of diversification of the economy and society, review of the role of the government has become an important challenge, and how each country rebuilds the form of state is also a very important issue. To solve this problem is a common task between China and Japan. Under these circumstances, the administrative and financial reform is being promoted in Japan. From the aspect of efficiency and decentralization, this movement is considerable, and also really suggestive for the reform in China. Above all, establishment of a “common local tax system” and “local administration and finance council” (where the central government and local governments hold joint deliberations on an equal footing) are notable. On the other hand, to increase transparency of public finance (especially in a local level) is indicated as an essential issue in China. To summarize this issue, 1. promotion of the enhancement of a financial base, 2. creation of a revenue source allocation system to ensure consistency in policies between central and local governments, and 3. early clarification of the division of roles are indispensable for both China and Japan. In other words, how the so-called “autonomous and self-responsibility” system should be created is the key and urgent need. How the form of state should be established under development and diversification of the economy/society is a major task, and amid the widening of disparities as a more serious problem for both countries, it is important to realize the independence and autonomy of local governments while ensuring the national minimum.