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Volumn 23, Issue 3-4, 1990, Pages 227-258

"Playing to the Provinces:" Deng Xiaoping's political strategy of economic reform

(1)  Shirk, Susan L a  

a NONE

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EID: 0003243558     PISSN: 00393592     EISSN: None     Source Type: Journal    
DOI: 10.1016/0039-3592(90)90010-J     Document Type: Article
Times cited : (40)

References (186)
  • 2
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    • The Brookings Institution, Washington, D.C, Deng Xiaoping's choice was also constrained by his own conservatism and the conservatism of the other members of his generation of communist party leaders. Deng's cohort of leaders are first generation founders of the communist revolution in China, whereas Gorbachev belongs to the fourth generation of communist leaders in the Soviet Union.
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    • Lee argues that the political nature of the People's Republic of China was shaped by the particular nature of this founder generation that remained in power for over 40 years. [Hong Yung Lee, From Revolutionary Cadres to Party Technocrats in Socialist China (Berkeley: University of California Press, forthcoming)].
  • 4
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    • Columbia University Press, New York, In my view, central Party officials hold all formal authority and delegate some of it to lower levels of government for three reasons: to improve incentive compatibility: to divest themselves of sole responsibility; and to win the political support of lower level officials. Granick's observation that legacies of past investments in enterprises give different levels of government a normative claim to a share of enterprise products and profits is correct and important. However, his evidence for continuity in the relationships of levels of government and enterprises to demonstrate the validity of the property rights hypothesis is not completely persuasive. Moreover, the strongest evidence for hierarchy is one he ignores, namely the power of the central Party authorities to appoint and dismiss regional officials. Bahry's research on the Soviet Union shows that even in the more-highly centralized [[Truncated]]
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    • 84918159228 scopus 로고    scopus 로고
    • Christine Wong (personal communication) has suggested to me that because the central government shifted many of its spending responsibilities to local governments and collected substantial amounts of funds through state corporations and loans from local governments, the net effect of fiscal decentralization was less favorable to local governments than many Chinese and foreign experts believe.
  • 14
    • 0003833468 scopus 로고
    • University of Chicago Press, Chicago, argues that local governments had greater control over the material products of local factories than over financial profits., My view of the Chinese system as a hierarchy contradicts Granick's that local governments were principals with their own property rights.
    • (1990) Chinese State Enterprises, A Regional Property Rights Analysis
    • Granick1
  • 15
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    • Australian National University, Canberra, As Donmthorne points out, the Chinese national government was able to draw on the taxable capacity of light industry only by taxing local governments, which was politically much harder than taxing firms.
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    • Donald W. Treadgold, University of Washington Press, Seattle, Chinese provincial authority was also closely tied to the military especially during the 1970s after the Cultural Revolution. Many provincial CCP secretaries served simultaneously as People's Liberation Army political commissars.
    • (1967) Soviet and Chinese Communism
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    • Columbia University Press, New York, The support of provincial allies in the Central Committee saved Khrushchev when the Presidium (Politburo) tried to get rid of him in 1957, Even in the Soviet Union, with a more centralized institutional set-up, leaders with ambitious retorm agendas have sought to play provincial leaders against the conservative central bureaucracy. Khrushchev tried to play to the provinces to weaken his rivals and disarm the powerful central ministries.
    • (1987) Outside Moscow; Power, Politics and Budgetary Policy in the Soviet Republics , pp. 27
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    • David S.G. Goodman, University College Cardiff Press, Cardiff, Goodman challenges Chang's assertion that the provincial leaders promised to support Mao's policies in exchange for greater provincial autonomy by presenting evidence that the provincial leaders were not in complete agreement: While some of them advocated greater financial autonomy, others demanded more central aid to provinces for projects like water conservancy. To argue that provincial officials have political influence in the policy process and that Mao Zedong tried to win their support does not require that they always agree on policy; in fact, given the very different situations faced by their regions, it would be surprising if they had unanimous policy preferences. Moreover, provincial leaders probably find no inconsistency in their calls for greater financial autonomy and more state aid for particular projects like water conservancy; they wish to have both.
    • (1984) Groups and Politics in the People's Republic of China , pp. 68-82
    • Goodman1
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    • How to Improve Control of Extra-Budgetary Funds
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    • Yun1
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    • Columbia University Press, New York, Chinese planning was also much more decentralized than Soviet planning. The volume of interprovincial trade in China was depressed because provincial planners sought independent balances. This argument is presented in
    • (1987) Economic Integration and Planning in Maoist China
    • Lyons1
  • 44
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    • Author's interview.
  • 46
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    • How to Improve Control of Extra-Budgetary Funds
    • The extra-budgetary funds were equal to three times the 1965 amount.
    • (1982) Caimao jingji , Issue.7
    • Yun1
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    • Author's interview.
  • 60
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    • Zhao was not appointed as Premier until 1980, subsequent to the key 1979 meetings deliberating fiscal arrangements, but he may have played a leadership role at the meetings nonetheless.
  • 61
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    • Some Tentaive Ideas on Carrying Out the Reform of the Economic Management Structure
    • Some provincial advocates pressed for an approach to reform called “local planned economy” that would shift all economic authority from center to provinces. They held up American federalism as the model to emulate.
    • (1979) Renmin ribao , pp. 3
    • Fang1
  • 62
    • 84918115732 scopus 로고
    • Lun zhongguo caizheng tizhi gaige yu hongguan tiaokong
    • China Finance and Economics Publishers, Beijing
    • (1988)
    • Yinong1    Huaicheng2    Fulin3
  • 65
    • 84918159213 scopus 로고    scopus 로고
    • One interviewee said the number was five hundred.
  • 66
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    • Author's interview.
  • 67
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    • Lun zhongguo caizheng tizhi gaige yu hongguan tiaokong
    • China Finance and Economics Publishers, Beijing
    • (1988) , pp. 76
    • Yinong1    Huaicheng2    Fulin3
  • 70
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    • Author's interviews.
  • 71
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    • Different Viewpoints in a Discussion on the Reform of the Economic Management Structure
    • (1979) Renmin ribao , pp. 3
    • Guo1    Yang2
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    • Some provincial advocates pressed for an approach to reform called “local planned economy” that would shift all economic authority from center to provinces. They held up American federalism as the model to emulate.
    • (1979) Renmin ribao , pp. 3
    • Fang1
  • 73
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    • Author's interviews.
  • 74
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    • Lun zhongguo caizheng tizhi gaige yu hongguan tiaokong
    • China Finance and Economics Publishers, Beijing, says that despite the original intention in 1979 to reform other aspects of the economic structure before tackling financial reform, the clamor from all quarters for more financial power was so deafening that financial reform was undertaken first.
    • (1988) , pp. 75
    • Yinong1    Huaicheng2    Fulin3
  • 76
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    • State Council Notice on Carrying Out the Financial Management System of ‘Linking Revenues and Expenditures, Sharing Total Revenues, Contracting the Percentages, and Fixed for Three Years (1979)’
    • Finance and Economic Publishers, Beijing, (Collection of Documents on the State Economic System Reform), The ministries must have been reluctant to give up their control over local enterprise expenditures. In a 1979 document on fiscal decentralization, the State Council emphasized that while the central ministries would no longer have authority to hand down local expenditure targets, they still were to “guide the direction, approve the work program, carry out supervision and urging, sum up experiences, and help local enterprises in their sector”
    • (1984) Jingji tizhi gaige wenjian huibian 1977–83 , pp. 803-804
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    • The system was described in, Finance and Economic Publishers, Beijing, (Collection of Documents on the State Economic System Reform)
    • (1984) Jingji tizhi gaige wenjian huibian 1977–83 , pp. 803-804
  • 80
    • 84918159205 scopus 로고    scopus 로고
    • In July, 1979, the State Council had made a preliminary decision to implement a version of fiscal decentralization called “linking revenues and expenditures, sharing total revenues, contracting for percentages, fixed for three years” (shouzhi guagou, chuane fencheng, bili baogan, sannian bubian) which was essentially the Jiangsu “sharing total revenues” system; the “apportioning revenues and expenditures while contracting responsibility according to levels” (huafen shouzhi, fenji baogan) or “sharing fixed revenues” system was introduced on an experimental basis only in Sichuan because it was said to require reforms in other aspects of the economy.
  • 81
    • 84918159207 scopus 로고
    • State Council Notice on Carrying Out the Financial Management System of ‘Linking Revenues and Expenditures, Sharing Total Revenues, Contracting the Percentages, and Fixed for Three Years (1979)’
    • Finance and Economic Publishers, Beijing, (Collection of Documents on the State Economic System Reform), After the October meeting of provincial Party secretaries and the December National Planning Conference, the State Council announced a change to the “sharing fixed revenues” system.
    • (1984) Jingji tizhi gaige wenjian huibian 1977–83 , pp. 803-804
  • 82
    • 84918159207 scopus 로고
    • State Council Notice on Carrying Out the Financial Management System of ‘Linking Revenues and Expenditures, Sharing Total Revenues, Contracting the Percentages, and Fixed for Three Years (1979)’
    • Finance and Economic Publishers, Beijing, (Collection of Documents on the State Economic System Reform)
    • (1984) Jingji tizhi gaige wenjian huibian 1977–83 , pp. 803-804
  • 83
    • 84918159204 scopus 로고    scopus 로고
    • Author's interviews.
  • 84
    • 84918159203 scopus 로고    scopus 로고
    • In July, 1979, the State Council had made a preliminary decision to implement a version of fiscal decentralization called “linking revenues and expenditures, sharing total revenues, contracting for percentages, fixed for three years” (shouzhi guagou, chuane fencheng, bili baogan, sannian bubian) which was essentially the Jiangsu “sharing total revenues” system; the “apportioning revenues and expenditures while contracting responsibility according to levels” (huafen shouzhi, fenji baogan) or “sharing fixed revenues” system was introduced on an experimental basis only in Sichuan because it was said to require reforms in other aspects of the economy.
  • 85
    • 84918115732 scopus 로고
    • Lun zhongguo caizheng tizhi gaige yu hongguan tiaokong
    • China Finance and Economics Publishers, Beijing
    • (1988)
    • Yinong1    Huaicheng2    Fulin3
  • 88
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    • Caishui gaige shinian
    • China Finance and Economics Publishers, Beijing, The failure to achieve a complete set of reforms has affected the implementation of fiscal reforms.
    • (1989) Caizheng bu caishui tizhi zhu
  • 89
    • 84918159201 scopus 로고    scopus 로고
    • Author's interviews.
  • 90
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    • In an earlier document the State Council had stressed that in the fiscal contract negotiations, stability of central revenues and national financial balance had to take priority. Author's interviews.
  • 91
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    • Caizheng bu caishui tizhi gaige zhu
    • (1988) Jingji guanli , Issue.10 , pp. 35-37
  • 92
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    • Caizheng bu caishui tizhi gaige zhu
    • (1988) Jingji guanli , Issue.10 , pp. 39
  • 93
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    • Lun zhongguo caizheng tizhi gaige yu hongguan tiaokong
    • China Finance and Economics Publishers, Beijing
    • (1988) , pp. 84
    • Yinong1    Huaicheng2    Fulin3
  • 94
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    • Caizheng bu caishui tizhi gaige zhu
    • (1988) Jingji guanli , Issue.10 , pp. 39
  • 95
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    • Author's interviews.
  • 96
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    • Fiscal Reform Elite Turnover and Central-Provincial Relations in Post-Mao China
    • Author's interviews; Shanghai's share was increased from 12.1 percent in 1984 to 24 percent in 1985. Tianjin's share was raised from 46 per cent in 1984 to 58 per cent in 1985
    • (1989) The Australian Journal of Chinese Affairs , Issue.22 , pp. 1-28
    • Tong1
  • 97
    • 84918159196 scopus 로고    scopus 로고
    • The center extended a loan to Liaoning in the meantime. Author's interviews.
  • 98
    • 84918159195 scopus 로고    scopus 로고
    • That is not to say that fiscal reform did not aggravate regional tensions. For one thing, many provinces were jealous of Guangdong's special financial privileges (author's interviews).
  • 100
    • 84918159193 scopus 로고    scopus 로고
    • Author's interviews.
  • 104
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    • Report on the Implementation of the State Budget for 1986 and on the Draft State Budget for 1987
    • FBIS
    • (1987) Xinhua, April 13, 1987 , pp. K11-21
    • Bingqian1
  • 105
    • 84928851170 scopus 로고
    • Fiscal Reform Elite Turnover and Central-Provincial Relations in Post-Mao China
    • In one exception to the universal application of these extractions, the center hit up Guangdong and Fujian for loans in 1981 (1.6 billion yuan from Guangdong, 154 million yuan from Fujian) and again in 1982 (the loans were written off in 1983 and never repaid), Officials in Guangdong and Fujian probably calculated that it was worth their while to pay off the center to keep their special privileges (which included capital construction and foreign investment approval authority, planning authority, a separate labor market, and foreign exchange retention as well as fiscal autonomy). From their point of view, the loans were protection money to the organization boss to preserve their profitable franchise.
    • (1989) The Australian Journal of Chinese Affairs , Issue.22 , pp. 1-28
    • Tong1
  • 106
    • 84918159192 scopus 로고
    • State Council Notice on Improving the Financial Management System of ‘Apportioning Revenues and Expenditures While Contracting Responsibility According to Levels’
    • (1982), Beijing Finance and Economics Publishers, Beijing, (Collection of Documents on the State Economic System Reform)
    • (1984) Jingji tizhi gaige wenjian huibian 1977–83 , pp. 841
  • 107
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    • State Council Notice on Improving the Financial Management System of ‘Apportioning Revenues and Expenditures While Contracting Responsibility According to Levels’
    • (1982), Beijing Finance and Economics Publishers, Beijing, (Collection of Documents on the State Economic System Reform)
    • (1984) Jingji tizhi gaige wenjian huibian 1977–83 , pp. 841
  • 111
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    • Lun zhongguo caizheng tizhi gaige yu hongguan tiaokong
    • China Finance and Economics Publishers, Beijing
    • (1988) , pp. 83
    • Yinong1    Huaicheng2    Fulin3
  • 112
    • 84918159190 scopus 로고
    • Guangming ribao, August 23, 1982
    • Econ 271, 81938
    • (1982) JPRS
  • 113
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    • State Council Notice on Improving the Financial Management System of ‘Apportioning Revenues and Expenditures While Contracting Responsibility According to Levels’
    • (1982), Beijing Finance and Economics Publishers, Beijing, (Collection of Documents on the State Economic System Reform)
    • (1984) Jingji tizhi gaige wenjian huibian 1977–83 , pp. 841
  • 118
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    • University of California Press, Berkeley, The theory of political rent-seeking, i.e., politicians who intervene in markets to generate political resources for themselves, has been most elegantly developed by
    • (1983) Essays on the Political Economy of Rural Africa
    • Bates1
  • 120
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    • Ten Years of Chinese Reform: Review, Reflection, and Prospects
    • One group of Chinese reform economists argued that the emergence of problems like local administrative interference and market blockades could not be blamed entirely on the decentralized fiscal system. They were the result of introducing fiscal decentralization into a system characterized by “unified local Party and government leadership and the role played by local Party and government authorities in functioning as the acting owners of enterprise assets under the system of public ownership”
    • (1988) Jingji yanjiu , Issue.9 , pp. 13-37
    • Sheng1    Xuejun2    Xiaoping3
  • 121
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    • Author's interviews.
  • 122
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    • Author's interviews
  • 125
    • 84918159229 scopus 로고
    • Caishui gaige shinian
    • China Finance and Economics Publishers, Beipng, Although formally all provinces were on a system of “sharing specific revenues,” “because conditions were not ripe” the “sharing total revenues” system was “temporarily implemented”
    • (1989)
    • Caizheng bu caishui tizhi gaige zhu1
  • 126
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    • Author's interview.
  • 128
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    • Caishui gaige shinian
    • China Finance and Economics Publishers, Beipng, During the period from 1979 to 1987, the center accumulated deficits totaling more than 64 billion yuan, while local governments ran surpluses totaling more than 7 billion yuan
    • (1989) , pp. 232
    • Caizheng bu caishui tizhi zhu1
  • 129
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    • Lun zhongguo caizheng tizhi gaige yu hongguan tiaokong
    • China Finance and Economics Publishers, Beijing
    • (1988)
    • Yinong1    Huaicheng2    Fulin3
  • 130
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    • Minister of Finance Addresses Financial Meeting
    • (1988) Xinhua
  • 131
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    • See Susan L. Shirk, The Political Failure of Economic Reform in China, Chapter Seven for a detailed analysis of the Ii gai shui case (forthcoming).
  • 132
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    • Author's interview.
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    • Author's interview.
  • 138
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    • Further Perfect Reform of Separately Listing Cities in the State Plan
    • For an argument on behalf of giving full provincial-level legal status to central cities see
    • (1987) Shijie jingji daobao , pp. 10
    • Jia1    Limin2    Siyun3
  • 139
    • 84918159180 scopus 로고
    • State Council Decision to Improve the Method of Local Financial Contracts
    • (1988) Caizheng , Issue.10 , pp. 1
  • 140
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    • By 1984, one account listed 52 experimental cities in China
    • (1984) Renmin ribao
  • 141
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    • Author's interview.
  • 142
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    • Author's interview.
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    • Author's interview.
  • 144
    • 84918159176 scopus 로고    scopus 로고
    • Author's interview.
  • 145
    • 84918159175 scopus 로고
    • Xinhua, June 2, 1987
    • Most extra-budgetary funds were in the hands of enterprise managers, but a sizable share was controlled by local government officials.
    • (1987) FBIS , pp. K13
  • 146
    • 84918159174 scopus 로고    scopus 로고
    • Author's interview.
  • 147
    • 84918159173 scopus 로고
    • State Council National Forum on Industry and Communications Closed September 1st
    • FBIS
    • (1981) Xinhua, Septembers, 1981 , pp. 12-13
  • 148
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    • Everyone Must Support Key Construction
    • (1983) Hongqi , Issue.8 , pp. 16-18
    • Ping1
  • 149
    • 84918159171 scopus 로고
    • The Components Will Be Stimulated When the Whole is Handled Well
    • FBIS, As one article acknowledged, “If we properly curtail the construction of ordinary processing industry projects in our locality or department and concentrate our financial and material resources on supporting the state in the construction of key projects and the development of energy sources and transport in our country, we eventually will benefit, although our immediate earnings will be smaller”.
    • (1983) Xinhua, April 17, 1983 , pp. K10-11
    • Xing1
  • 151
    • 84918117995 scopus 로고
    • A Brief Introduction to the System of ‘Apportioning Revenues and Expenses between the Central and Local Authorities, While Holding the Latter Responsible for their own Profit and Loss in Financial Management’
    • JPRS, No. 82018
    • (1982) Caizheng , pp. 16-19
    • Gouchun1
  • 154
    • 84918159169 scopus 로고
    • Conscientiously Control the Scale of Investments in Fixed Assets
    • FBIS, February 21, 1983
    • (1983) Renmin ribao , pp. K15-K18
    • Lixin1    Chunsheng2
  • 155
    • 84918159168 scopus 로고
    • Xinhua, April 20, 1982
    • In April 1982, the State Council issued a regulation prohibiting regional blockades in purchasing and marketing industrial products
    • (1982) FBIS , pp. K10-K11
  • 156
    • 84918159167 scopus 로고
    • Why is it Necssary to Oppose Regional Economic Blockades?
    • also
    • (1982) Hongqi , Issue.9
    • Xiangwu1    Yunchun2
  • 157
    • 84918159166 scopus 로고
    • On the Socialist Unified Market
    • Continuing press complaints about protectionist practices indicate that the problem persisted after 1982
    • (1983) Renmin ribao
    • Guang1
  • 159
    • 84918159164 scopus 로고
    • Minister Calls for an End to Local Protectionism
    • FBIS, The pervasiveness of local protectionism is indicated by the fact that when Beijing Mayor Chen Xitong declared that Beijing would stop practicing local protectionism, it was front page news. According to the press report, local governments' strategies for protecting local products included stipulation that a portion of the earnings derived from the price disparity of colored televisions purchased from outside be turned over to local coffers; orders to commercial enterprises specifying the amount of local products that must be sold each month; earmarking loans for the purchase of local goods; and lists of products forbidden to be “imported” from other regions.
    • (1990) Xinhua, April 10, 1990 , pp. 43
    • Yun1    Guimin2
  • 161
    • 84918159162 scopus 로고    scopus 로고
    • Author's interview.
  • 163
    • 84918159161 scopus 로고
    • Immediately Stop Additional Levies of Local Energy and Transportation Constructional Funds
    • For example, the press criticized local officials for giving or reducing taxes for particular enterprises on the one hand, and for imposing extra taxes (such as the so-called local energy and transportation construction tax) on all enterprises on the other hand
    • (1984) Renmin ribao
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    • Harvard University Press, Cambridge, On local political machines in other communist countries see
    • (1969) The Soviet Prefects
    • Hough1
  • 166
  • 169
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    • Author's interview.
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    • Author's interview.
  • 173
    • 84918159180 scopus 로고
    • State Council Decision to Improve the Method of Local Financial Contracts
    • The contracting methods were specified as revenue progressive increase contract (shouru dizeng baogan), dividing total revenues (zonge fencheng), dividing the total plus dividing the increase (zonge fencheng jia zengzhang fencheng), remittance progressive increase contract (shangjie e dizeng bao gan), fixed amount remittance (dinge shangjie), and fixed amount subsidy (dinge buzhu)
    • (1988) Caizheng , Issue.10 , pp. 1
  • 174
    • 84918159155 scopus 로고    scopus 로고
    • Author's interview.
  • 175
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    • Li Peng Chairs State Council Executive Meeting
    • (1988) Xinhua
  • 176
    • 84918159180 scopus 로고
    • State Council Decision to Improve the Method of Local Financial Contracts
    • The State Council meeting announcing the contracts for these thirteen high-revenue areas also announced that from then on the terms of all provincial contracts would be made public
    • (1988) Caizheng , Issue.10 , pp. 1
  • 177
    • 84918159153 scopus 로고    scopus 로고
    • This measure probably was designed to satisfy the high-revenue provinces that still turned over to the center a high proportion of their revenues. These provinces wanted everyone to recognize their own contributions to the public good and wanted to show up the free ride of other provinces.
  • 179
    • 84918159180 scopus 로고
    • State Council Decision to Improve the Method of Local Financial Contracts
    • (1988) Caizheng , Issue.10 , pp. 1
  • 180
    • 84918116251 scopus 로고
    • My Opinion on Several Questions Regarding Financial Reform
    • FBIS, One financial specialist predicted optimistically that “if we fixed an appropriate base figure for the contracted budget and a contracted growth rate, at least the financial revenues on the part of the central financial authorities would not decrease, according to normal predictions. Even if the increase in the local financial revenues is higher than the increase in the financial revenues of the central financial authorities, there will not be a serious imbalance between the revenue and expenditure of the central authorities since both the revenue and expenditure budgets are contracted”.
    • (1988) Renmin ribao, March 18, 1988 , pp. 25-26
    • Zhenbin1
  • 181
    • 84918116251 scopus 로고
    • My Opinion on Several Questions Regarding Financial Reform
    • FBIS, One financial specialist predicted optimistically that “if we fixed an appropriate base figure for the contracted budget and a contracted growth rate, at least the financial revenues on the part of the central financial authorities would not decrease, according to normal predictions. Even if the increase in the local financial revenues is higher than the increase in the financial revenues of the central financial authorities, there will not be a serious imbalance between the revenue and expenditure of the central authorities since both the revenue and expenditure budgets are contracted”.
    • (1988) Renmin ribao, March 18, 1988 , pp. 25
    • Zhenbin1
  • 182
    • 84918116251 scopus 로고
    • My Opinion on Several Questions Regarding Financial Reform
    • FBIS, One financial specialist predicted optimistically that “if we fixed an appropriate base figure for the contracted budget and a contracted growth rate, at least the financial revenues on the part of the central financial authorities would not decrease, according to normal predictions. Even if the increase in the local financial revenues is higher than the increase in the financial revenues of the central financial authorities, there will not be a serious imbalance between the revenue and expenditure of the central authorities since both the revenue and expenditure budgets are contracted”.
    • (1988) Renmin ribao, March 18, 1988 , pp. 25
    • Zhenbin1
  • 184
  • 185
    • 84918172420 scopus 로고
    • Report on the Implementation of the State Budget for 1989 and on the Draft Budget for 1990
    • FBIS
    • (1990) Xinhua, April 7, 1990 , pp. 16-24
    • Bingqian1
  • 186
    • 84918159151 scopus 로고
    • Report on the Implementation of the 1989 Plan for National Economic and Social Development, and the Draft 1990 Plan
    • FBIS
    • (1990) Xinhua, April 7, 1990 , pp. 13-21
    • Jiahua1


* 이 정보는 Elsevier사의 SCOPUS DB에서 KISTI가 분석하여 추출한 것입니다.