The Centenary of the CPC: Exploration and Improvement of Central-Local Economic Relationship

Zhou Wen (周文)* and Liu Shaoyang (刘少阳)

School of Marxism, Fudan University, Shanghai, China

Abstract: Decentralization is a global phenomenon, but growth is not. The economic relationship between central and local governments is an important yet unresolved question in China’s economic development. As a large country with unbalanced political and economic development, China is faced with unbalanced and inadequate development as the primary constraint to meeting people’s ever-growing needs for a better life. The Communist Party of China (CPC) has been exploring to mobilize the initiatives of both central and local governments. During the planned economy era, China experienced a few rounds of centralization of economic powers but failed to strike a balance in maximizing the initiatives of both central and local governments. After the reform and opening up policy enacted in 1978, China’s central and local governments have succeeded in combining economic decentralization with administrative decentralization. China’s central government, local governments and enterprises have become resource allocation entities. China’s economic growth miracle has been driven by promoting the initiatives of central and local governments. Entering the new era, the central-local economic relationship represents an institutional strength of concentrating resources to accomplish great undertakings and leveraging the initiatives of both central and local governments. With the principal contradiction facing China’s development shifted into one between people’s growing needs for a better life and unbalanced and inadequate development, the management of central and local government relationship has taken on greater theoretical significance and salient implications in the new era.

Keywords: economic relationship, coordinated regional development, fiscal and taxation system, national governance system

JEL Classification Code: H1

DOI: 10.19602/j.chinaeconomist.2021.11.04