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Strategic Change and the Limits of Central Authority in China

PFM, Vol. 8 No. 4, (2008)

The Chinese Government faces major challenges in shaping the nation’s development strategy. In this paper we suggest that the initiatives to be taken include establishing new priorities for governments, and for government expenditure, in China; revising the incentives facing local governments, and in particular removing the revenue incentives to pursue regional economic growth as an overwhelming priority; building new institutions to facilitate the effective delivery of services in local areas, in ways that are not entirely dependent on market forces, and making greater use of methods for providing funds to local governments (such as specific purpose payments) so as to ensure that central priorities are achieved.

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