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The Evolution of Central–Provincial Fiscal Relations in China, 1971–1984 The Formal System

Published online by Cambridge University Press:  12 February 2009

Michel Oksenberg  and
James Tong
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Central–provincial budgetary relations are among the most significant, intricate and obscure facets of Chinese governmental procedures. Audrey Donnithorne and Nicholas Lardy illuminated central–provincial budgetary relations to 1959, and more recent writings by Donnithorne, Barry Naughton and Dorothy Solinger have brought aspects of the story forward. Based on recently-published Chinese materials, this article traces the evolution of the formal system in central-provincial relations from 1971 to 1984. A new fiscal regime was supposed to begin in 1985 but was never fully implemented because lack of progress in the reform to replace enterprise profits with taxes. The regime since 1984 has been largely a continuation of the 1980–84 fiscal management system, with some new incentives for provinces to collect more revenue. The post-1984 arrangements are well described to collect more revenue. The post-1984 arrangements are well described in a recent World Bank study. This argicle, therefore, fills a gap in the current literature and untagles the complicated and rather obscure story for the 1971 to 1984 era.

Type
Research Article
Information
The China Quarterly , Volume 125 , March 1991 , pp. 1 - 32
Copyright
Copyright © The China Quarterly 1991

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References

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2. Our article draws extensively on the following recent texts on the fiscal administrative system: Guojia yusuan (The State Budget) (Beijing: Zhongguo Caizheng Jingji Chubanshe, 1980, 1982)Google Scholar; Guojia caizheng gailun (A General Account of the State Fiscal Administration) (Beijing: Zhongguo Caizheng Jingji Chubanshe, 1983)Google Scholar; Yi, Xu and Baosen, Chen, Caizheng xue (A Study of Fiscal Administration) (Beijing: Zhongguo Caizheng Jingji Chubanshe, 1984)Google Scholar. For chronology of the evolution of the system, we have relied mainly on Weizhong, Fang (ed.), Zhonghua renmin gongheguo jingji dashiji (1949–1980) (A Chronology of Major Economic Events in the People's Republic of China, 1949–1980) (Beijing: Zhongguo Shehui Kexue Chubanshe, 1984)Google Scholar; Zhonghua renmin gongheguo jingji dashiji (1949–1984) (A Chronology of Major Economic Events in the People's Republic of China, 1949–1984) (Beijing: Beijing Chubanshe, 1985)Google Scholar; Shanquan, Gao et al. , Dangdai zhongguo de jingji tizhi gaige (Current Reforms in the Economic Structure in China) (Beijing: Zhongguo Shehui Kexue Chubanshe, 1984)Google Scholar; Yinong, Tian, Fulin, Zhu and Huaicheng, Xiang, Lun zhongguo caizheng guanli tizhi de gaige (On Reforms of the Fiscal Management Structure in China) (Beijing: Jingji Kexue Chubanshe, 1985)Google Scholar, and Hua's, Xing series on the history of fiscal administration in Caizheng, 1982–1984Google Scholar. For official laws and regulations, we have consulted the Zhonghua renmin gongheguo jingji fagui xuanbian (Selections of Economic Laws and Regulations in the People's Republic of China) (Beijing: Zhongguo Caizheng Jingji Chubanshe, 1980)Google Scholar, Caizheng guizhang zhidu xuanbian (Selections of Official Stipulations of Fiscal Administration) (Beijing: Zhongguo Caizheng Jingji Chubanshe, 1979, 1980, 1981, 1982, 1983)Google Scholar; and Zhonghua renmin gongheguo caizheng shiliao (Documents on the History of Fiscal Administration in the People's Republic of China), Vol. 1 (Beijing: Zhongguo Caizheng Jingji Chubanshe, 1982)Google Scholar, hereafter Caizheng shiliao.

3. The main novel feature in the new fiscal regime was the reclassification of various types of taxes as central and local government income. The reclassification effort was not completed in 1985 and 1986 due to delays in the reform to change enterprise ownership, which affected the recipient status of some taxes.

4. For the new fiscal regime, see Jingquan, Xiang and Daimo, Guo, “Yijiu bawu nian caizheng guanli tizhi gaige” (“Reforms in the fiscal management structure in 1985”), Yijiu baliu zhongguo jingji nianjian (Economic Almanac of China, 1986) (Beijing: Jingji Guanli Chubanshe, 1986), IV–11–13Google Scholar; State Council of the People's Republic of China, “Guanyu shixing ‘huafen shuizhong, heding shouzhi, fenji baogan’ caizheng guanli tizhi de guiding” (”Regulations on implementing the fiscal management structure of 'dividing tax categories, determining revenues and expenditures, and contracting to each level'”) Caizheng, No. 5 (05 1985), pp. 10–12Google Scholar. For changes in how revenues are divided between the central and local governments in 1984, 1985 and 1986, see Yongfa, Xu, “Yijiu bawu nian zhongyang yu difang yusuan shouru jiji huafen wenti” (“Questions on classifying revenues in the central and local government budgets in 1985”) Caizheng, No. 4 (04 1985), pp. 23–25Google Scholar; Si, Qian, “Yijiu baliu nian zhongyang yu difang yusuan shouru jiji huafen wenti” (“Questions on classifying revenues in the central and local government budgets in 1986”) Caizheng, No. 4 (04 1986), pp. 10–11Google Scholar; Shaofa, Shi and Yongfa, Xu, “Tantan yijiu baliu nian guojia yusuan shouji kemu” (“On categories of revenues and expenditures in the 1986 state budget”) Caizheng, No. 1 (01 1986), pp. 15–16Google Scholar; Hesi, Zong, “‘Liuwu’shiqi de caizheng tizhi gaige” (“Reforms in the fiscal management structure during the Sixth Five-Year Plan”) Caizheng, No. 11 (11 1986), pp. 19–21Google Scholar. Yijiu baliu zhongguo jingji nianjian (Economic Almanac of China, 1989) (Beijing: Jingji Guanli Chubanshe, 1989), III–1–2Google Scholar; and Rulong, Chen (ed.) Dangdai Zhongguo Caizheng (Contemporary Chinese Finance) (Beijing: Zhongguo Shehuikexue Chubanshe, 1988), Vol. I, pp. 373–381Google Scholar.

5. See China: Revenue Mobilization and Tax Policy, A World Bank Study (Washington: The World Bank, 1990), esp. Ch. Ill, pp. 72–108Google Scholar.

6. See Bachman, David, “The Ministry of Finance and Chinese politics,” Pacific Affairs, Vol. 62, No. 2 (Summer 1989), pp. 167–187CrossRefGoogle Scholar. For brief summaries of recent national finance conferences, see Caizheng, No. 3 (1987), p. 6Google Scholar; No. 1 (1988) pp 10–11; No. 8 (1989), pp. 16–17.

7. Glimpses of the complicated bargaining and the final deal that was struck between central and provincial authorities in the post-Mao period can be seen in the document on the Jiangsu experiment, “Guanyu gaige Jiangsusheng caizheng, wuzhi guanli tizhi wenti de taolun jiyao” (“Summary of the discussion on the question of reforming the structure of fiscal and material management in Jiangsu”) (n.d.) issued by the State Planning Commission, and the “Guangdong, Fujian liangsheng huiyi jiyao” (“Summary of the conference on Guangdong and Fujian province”) (30 March 1980) and “Guangdong, Fujian liangsheng he jingji techu gongzuo huiyi jiyao” (“Summary of the work conference on Guangdong and Fujian and Special Economic Zones”) (12 July 1981) in Caizheng shiliao, pp. 221–24, 232–33, 235–36.

8. The State Budget (1980), pp. 30–35.

9. For a description of the relationship between the planning and the budgetary processes, see Donnithorne, The Budget and the Plan in China, and James Tong's unpublished paper, “Central-provincial fiscal relations: basic issues and mechanisms.”

10. In 1968 provinces could retain savings on expenditure. See below for this and other actual operations of the arrangement during the Cultural Revolution.

11. In 1985–86, the fiscal regime was supposed to return to this arrangement, but this was put on hold due to related economic reforms; see Xiang Jingquan and Guo Daimo, Reforms in the Fiscal Management Structure in 1985; State Council of the People's Republic of China, “Regulations on implementing the fiscal management structure.”

12. Shanquan, Gao et al. , Current Reforms in the Economic Structure, p. 131Google Scholar.

13. Ibid.

14. Hua, Xing, “Shinian dongluan shiqi caizheng tizhi biandong pinfan (1)” (“frequent changes in the fiscal management structure during the ten-year turmoil”) Caizheng, No. 8 (1983), pp. 22–23Google Scholar. Each of these co-operative regions would have its own integrated industrial base, communication network and defence industries. The plan was based on the rationale that should war occur in any region, economic production could still continue in other regions with minimum disruption. In peace, localities could plan higher growth rates unrestricted by central mandatory targets; see Weizhong, Fang (ed.), Chronology, pp. 460–61Google Scholar. See also Rulong, Chen (ed.), Zhonghua renmin kongheguo caizheng dashiji (People's Republic of China Financial Chronology) (Beijing: Caizheng Jingji Chubanshe, 1989), p. 314Google Scholar.

15. Hua, Xing, “Frequent changes in the fiscal management structure (1),” p. 23Google Scholar.

16. These were the circulating fund and the rustification fund for resettling urban youth in the rural areas, see Caizheng shiliao, p. 168.

17. Caizheng shiliao, p. 267. See also Rulong, Chen (ed.), Financial Chronology, p. 315Google Scholar.

18. Caizheng shiliao, p. 267.

19. Hua, Xing, “Frequent changes in the fiscal management structure (1),” p. 23Google Scholar.

20. Caizheng shiliao, pp. 170–71.

21. It was further reduced to 13.8% in 1978; Hua, Xing, “Frequent changes in the fiscal management structure (1),” p. 23Google Scholar.

22. Caizheng shiliao, pp. 170–71.

23. The planned increase in employment was only 3.06 million in 1970 and 1971, but the actual increase was 9.83 million. As a result, total employment reached 53.18 million, total wage bill 30.2 billion yuan, and total grain sales 42.75 million tons, thus crashing the three ceilings of 50 million employed, 30 billion yuan wage bill, and 40 million tons of grain sales long guarded by the central planners. See Weizhong, Fang (ed.), Chronology, pp. 490–91Google Scholar.

24. Weizhong, Fang (ed.), Chronology, pp. 488, 508, 509Google Scholar.

25. Two exceptions were made to exclude basic construction and expenses to settle urban youths in the countryside; see Weizhong, Fang (ed.), Chronology, p. 499Google Scholar.

26. Weizhong, Fang (ed.), Chronology, p. 498Google Scholar; Caizheng shiliao, p. 179; Hua, Xing, “Shinian dongluan shiqi caizheng tizhi biandong pinfan (2)” (“Frequent changes in the fiscal management structure during the ten-year turmoil”) Caizheng, No. 9 (1983), pp. 8–9Google Scholar.

27. In 1973, when the experiment was extended to the rest of the nation, the: percentage of local revenue retained by the provinces as the contingency funds was set at 1.1% for Shanghai; 1.6% for Liaoning; 2% for Jiangsu, Shandong, Beijing, Tianjin and Heilongjiang; 2.5% for Guangdong; 3% for Sichuan, Zhejiang, Anhui, Hebei, and Jilin; 3.5% for Shaanxi, Gansu, Hunan and Shanxi; 4% for Yunnan, Guangxi, Fujian and Jiangxi; 6% for Guizhou, Xinjiang, and Nei Monggu; and 10% for Qinghai and: Ningxia; see Caizheng shiliao, pp. 180–81.

28. Caizheng shiliao, p. 176.

29. The State Budget (1980), pp. 49–50; Hua, Xing, “Frequent changes in the fiscal, management structure (2),” p. 8Google Scholar; Weizhong, Fang (ed.), Chronology, p. 498Google Scholar.

30. Weizhong, Fang (ed.), Chronology, p. 540Google Scholar.

31. Yinong, Tian et al. , On Reforms of the Fiscal Management Structure, p. 56Google Scholar.

32. Ibid., pp. 55–58.

33. Ibid., pp. 55–57.

34. Weizhong, Fang (ed.), Chronology, p. 562Google Scholar, and Rulong, Chen (ed.), Financial Chronology, p. 353Google Scholar.

35. Hua, Xing, “Frequent changes in the fiscal management structure (2),” p. 9Google Scholar.

36. For the justification of the experiment, see the article by the Jiangsu CCP Provincial Committee, on “The road that must be taken in accelerating the pace of socialist development,” Red Flag, No. 2 (1977), pp. 26–32Google Scholar.

37. The meeting was convened on 11 November 1976 and chaired by Yu Qiuli and Gu Mu, the heads of Jiangsu's Planning Bureau and those of the central government's First Ministry of Machinery, the Ministry of Finance, and the National Bureau of Material Supply, see Weizhong, Fang (ed.), Chronology, pp. 571–72Google Scholar. In economic planning, Jiangsu was to acquire greater authority to set production targets and formulate its production plans. In material supply, the former system of central allocation through ministerial channels was changed. The province could shift material across functional agencies within an overall target, see Hua, Xing, “Yijiu qiqi-yijiu qiba nian gaijin caizheng tizhi de xin tansuo” (“New explorations of improving the financial structure of 1977–78”), Caizheng (11 1983), p. 23Google Scholar. For specific agreements over the type, amount and mode of allocation of coal, cement, industrial chemicals, crude oil, chemical fertilizers, steel products, nonferrous metals, timber, rubber, tyres, electrical and mechanical products, see Caizheng shiliao, p. 223.

38. Caizheng shiliao, p. 225; Hua, Xing, “New explorations,” pp. 23–24Google Scholar; Yinong, Tian, “Guanyu caizheng tizhi wenti” (”Concerning the question of fiscal administrative structure’) in Caizheng jiben lilun cankao duwu (Reference Text on Basic Theory of Fiscal Administration) (Beijing: Zhongguo Caizheng Jingji Chubanshe, 1982)Google Scholar. Tian was the vice-minister of finance in 1982.

39. The sharing rate was computed on the basis of the actual revenue and expenditure figures of 1973 and 1975, and was set at 58% for the central government and 42% for Jiangsu province in December 1976. In 1977 and 1978 the sharing rate was first set at 57% for the central government and 43% for the province, but was later revised in early 1978 to 61% and 39% respectively, due to a change in the revenue base. See Yi, Xu and Baosen, Chen, Zhongguo de caizheng, 1977–1980 (China's Fiscal Administration, 1977–1980) (Beijing: Renmin Chubanshe, 1982), p. 43Google Scholar; Hua, Xing, “New explorations,” pp. 23–24Google Scholar; Yinong, Tian, “Concerning the question of fiscal administrative structure,” p. 322Google Scholar.

40. Hua, Xing, “New explorations,” p. 24Google Scholar.

41. Ibid.

42. Yinong, Tian, “Concerning the question of fiscal administrative structure,” pp. 328–29Google Scholar.

43. Hua, Xing, “New explorations,” p. 24Google Scholar.

44. Weizhong, Fang (ed.), Chronology, p. 593Google Scholar.

45. See Caizheng shiliao, p. 189; Hua, Xing, “New explorations,” p. 23Google Scholar.

46. Weizhong, Fang (ed.), Chronology, pp. 539–540Google Scholar; Hua, Xing, “New explorations,” p. 9Google Scholar.

47. Apart from revenue increase, the local contingency fund also includes a share of profits from five types of small county enterprises; Hua, Xing, “New explorations,” p. 24Google Scholar.

48. Caizheng shiliao (1982), p. 191; Hua, Xing, “New explorations,” p. 25Google Scholar.

49. Caizheng shiliao (1982), p. 193.

50. Ibid.

51. To finance an ambitious capital construction programme, the central government raised the revenue target from 93 billion to 100 billion yuan, then to 111 billion at the fourth quarter. The final revenue account was 112.1 billion, or more than 20 billion over that of 1977. To encourage local authorities to meet the revenue target, the base figure for computing the overall sharing rate remained unchanged at the original 93 billion level. Hua, Xing, “New explorations,” p. 25Google Scholar.

52. Ibid. p. 26.

53. A temporary concession was given to the provinces, which obtained a higher share over the previous rate. Provinces which had a sharing rate of lower than 50% got a flat rate of 50% across the board. Provinces with a sharing rate of higher than 50% increased their share by an additional 10%; Hua, Xing, “New explorations,” p. 26Google Scholar.

54. An account of this policy review is contained in Weizhong, Fang (ed.), Chronology, pp. 621–22Google Scholar; and the 1980 Zhongguo baike nianjian (1980 Almanac of China) (Beijing: Zhongguo Da Baike Chuanshu Chubanshe, 1981), p. 292Google Scholar. See also Hamrin, Carol, China and the Challenge of the Future (Boulder: Westview Press, 1990), pp. 34–38Google Scholar.

55. Weizhong, Fang (ed.), Chronology, p. 630Google Scholar.

56. Hua, Xing, “Yijiu baling nian kaiqi de caizheng tizhi zhongda gaige” (“The important reforms on the fiscal management structure that began in 1980”), Caizheng (12 1983), p. 8Google Scholar.

57. The text of the document is published in 1981 Zhongguo jingli nianjian (1981 China Economic Almanac) (Beijing: Beijing Jingji Guanli Zazhishe, 1982), 11–130, 131Google Scholar.

58. The State Budget (1982), p. 55. There are few reports of fiscal arrangements between the province and subordinating levels. For the case in Hubei and Beijing, see Yijiu baer caimou jingying guanli jingyan xuanbian (Collection of Experiences in Economic Management in 1982) (Beijing: Renmin Chubanshe, 1982), pp. 219–224Google Scholar; and Fuzhen, Zhang, “Duiyu dachengshi ruhe jianli chu yiji caizheng de tantu” (”On how to establish the district level of fiscal administration in a metropolitan city”), Caizheng, No. 11 (11 1981), pp. 19–20Google Scholar.

59. Economic Almanac 1981, 11–130, 131.

60. It is officially called the system of “dividing revenues and expenditure, contracting to different levels (huafen shouzhi, fenji baogari). For a classic study of the system in the 1950s, see Lardy, Economic Growth and Distribution in China.

61. For a detailed description and sub-classification of these revenue and expenditure items, see The State Budget (1980), pp. 107–166, The State Budget (1982), pp. 46–47.

62. “Guanyu shixing xin de caizheng tizhi jinku shouru huafen, baojie, jiaoku ruogan wenti de guiding” (“Regulations on apportioning revenue, accounting, and submitting to the Treasury”) in Bangongshi, Caizheng Bu (ed.), Yijiu balingnian caizheng guizhang zhidu xuanbian (Selected Documents on the 1980 Fiscal Administration) (Beijing: Zhongguo Caizheng Jingji Chubanshe, 1982), p. 37Google Scholar.

63. Ibid. p. 37. According to interviews by Audrey Donnithorne, Shaanxi retained 88.1% of the industrial and commercial tax, i.e. income shared by adjustment in 1980; Henan 75.9%, Sichuan 72%, Anhui 58.1%, Shanxi 57.9%, Gansu 53.2%, Hubei 44.7%, Hunan 42%, and Zhejiang 13%; see Donnithorne, , Centre-Provincial Economic Relations, p. 5Google Scholar; also Yinong, Tian et al. , On Reforms of the Fiscal Management Structure, pp. 88–89Google Scholar.

64. Selected Documents on the 1980 Fiscal Administration, p. 37; Yinong, Tian et al. , On Reforms of the Fiscal Management Structure, pp. 88–89Google Scholar.

65. The State Budget (1982), p. 52.

66. Other provinces only got 3% of the budgeted expenditure as the contingency fund.

67. The State Budget (1982), p. 54. The central government established a special fund for the development of border regions, minority autonomous regions, revolutionary base areas, and the economically under-developed areas. This special development fund was to be increased gradually up to 2% of the total state expenditure, and was to be disbursed by the Finance Ministry; see State Council, “Notice on implementing the fiscal management system of ‘apportioning revenue and expenditure, and contracting to different levels’,” 1981 Jingji nianjian (Beijing: Beijing Jingji Guanli Zazhishe, 1982), 11–130Google Scholar. From 1980–82 1.5 billion yuan of this development fund was allocated; see Hua, Xing, “The important reforms on the fiscal management structure,” p. 10Google Scholar.

68. See Hua, Xing, “Yijiu wujiu nian kaiqi shixing ‘zong e fencheng, yinian yibian’ di caizheng tizhi” (“The tentative fiscal management system of ‘sharing overall revenue by annual adjustment’ begun in 1959”) Caizheng, No. 5 (1983), pp. 10–12Google Scholar; Guoqing, Cao and Qiquan, Yong, “Shanghai Caizheng Tizhi Gaige Chutan,” (“Preliminary study of reform of the Shanghai fiscal administrative system) Fudan Xuebao, No. 1 (1982), pp. 21–24Google Scholar; included in the Renmin daxuefuren baokan zhiliao, F6 No. 3 (1982), pp. 29–32Google Scholar; Shanghai jingji, 1949–1982 (Shanghai: Shanghai Renmin Chubanshe, 1982), p. 74 for a description of the systemGoogle Scholar.

69. According to The State Budget (1982), p. 55, the above-budget revenue would be shared on the basis of the sharing rate. For Shanghai, this means that the municipality could only retain around 10% of the above-budget revenue. In 1982, however, it was reported that Shanghai could actually retain 30% of the above budget revenue, see Shanghai jingji, 1949–1982 (Shanghai: Shanghai Renmin Chubanshe, 182), p. 74. It is not clear whether this was a new policy in 1983 that was applicable to Shanghai only or to Beijing and Tianjin as well.

70. Zhonghua renmin gongheguo guomin jingji he shehuifazhan de liu wunianjihua ming qi jieshi (An Explanation of Terms in the Sixth National Economic and Social Development Five-Year Plan of the People's Republic of China) (Beijing: Renmin Chubanshe, 1983), p. 59Google Scholar.

71. Shanghai jingji (1983), p. 74. It is also not clear whether this provision applies only to Shanghai, or also to the other two municipalities, since The State Budget (1982) has not mentioned this provision.

72. See Donnithorne, , Centre-Provincial Economic Relations, p. 6Google Scholar.

73. In 1980 total national revenue was 108.5 billion yuan; see Zhongguo tongji nianjian, 1985, p. 523. In the same year, the revenues of Beijing, Tianjin, and Shanghai were 5.12 billion, 4.02 billion, and 17.2 billion respectively; see Beijing ribao, 27 March 1982; Tianjian ribao, 24 October 1981; and Jiefang ribao, 19 April 1981.

74. See Yinong, Tian et al. , On Reforms of the Fiscal Management Structure, pp. 88–89Google Scholar, and Fujian ribao, 15 March 1982, p. 2.

75. Weizhong, Fang (ed.), Chronology, p. 630Google Scholar.

76. These were Hebei, Liaoning, Zhejiang, Anhui, Shandong, Hubei, Hunan, Sichuan, Shaanxi, and Gansu; see Guochun, Han, “A brief introduction to the system of apportioning revenues and expenditure between the central and local authorities, while holding the latter responsible for their own profit and loss in financial management,” Caizheng, No. 7 (07 1982), pp. 8–9Google Scholar, trans, in China Report: Economic Affairs, No. 2273 (19 10 1982), pp. 16–19Google Scholar. Jiangxi, Jilin and Heilongjiang did not shift over to the Jiangsu system because they could retain all local fixed income and the industrial and commercial tax under the existing system; see Yijiu balingnian caizheng guizhang zhidu xuanbian (Selected Documents on Fiscal Management System in 1980), p. 37. It is not clear, however, why Henan and Shanxi did not make the change.

77. The sharing rate was computed on the basis of most but not all the major revenue sources and expenditure categories. It is unclear which ones were included. The 1982 edition of the Caizheng Fagui Huibian is unavailable outside China to shed light on this arrangement.

78. Shukun, Cui and Bekun, Zhao, “Tantan yijiu basan nian caizheng guanli tizhi” (“A discussion of the 1983 fiscal management system”), Caizheng (07 1983), p. 37Google Scholar; Yanchu, Cai, “Wunian lai caizheng tizhi he shuishou caiwu zhidu gaige qingkuan” (“The situation in reforms of the fiscal, taxation and financial systems in the past five years), Caizheng, No. 8 (1984), p. 28Google Scholar.

79. Yanchu, Cai, “The situation in reforms,” p. 28Google Scholar.

80. Shukun, Cui and Bekun, Zhao, “Tantan yijiu basan nian caizheng guanli tizhi” (“A discussion of the 1983 fiscal management system”), Caizheng (07 1983), p. 37Google Scholar.

81. Ibid.

82. 1983 Tongji nianjian (1983 China Statistical Yearbook), p. 446.

83. Ibid.

84. The new fiscal regime in 1985 also comprised: (1) 15 provinces and cities in the overall sharing mode (Hebei, Liaoning, Jiangsu, Zhejiang, Anhui, Shandong, Sichuan, Shaanxi, Shanxi, Henan, Hubei, Hunan, Beijing, Tianjin, Shanghai); (2) the eight national minority provinces and autonomous regions (Guangxi, Nei Monggu, Guizhou, Yunnan, Xizhang, Qinghai, Ningxia, Xinjiang); (3) Guangdong and Fujian; and (4) four provinces receiving central subsidies-Jiangxi, Jilin, Heilongjiang, and Gansu, which since 1983 had become a deficit province; see Yinong, Tian et al. , On Reforms of the Fiscal Management Structure, pp. 88–89Google Scholar. See also fachu, Guwuyuan “Guanyu shixing ‘Huafen shuizhong, heding shouji, fenji baogan’ caizheng guanli tizhi de tongji” (“Notice of the State Council on implementing the system of ‘Dividing tax categories, approving revenue and expenditure, while holding each level responsible for its own profit and loss’”), Caizheng, No. 5 (1985), pp. 10–12Google Scholar; Yi, Xu, Jingquan, Xiang, Di Liu jie wunian jihua shiji de guojia caizheng (National Finances during the Sixth Five-Year Plan) (Beijing: Zhongguo Caizheng Jingji Chubanshe, 1987), pp. 68–76Google Scholar.

85. In the 1980 fiscal year, the central government borrowed around eight billion yuan from the local governments, see Yilin, Yao, “On readjusting the 1981 national economic plan and the state financial revenues and expenditure report,” Renmin ribao, 8 03 1981Google Scholar.

86. Shukun, Cui and Bekun, Zhao, “A discussion of the 1983 fiscal management system,” p. 37Google Scholar.

87. Ibid. The subsidy was introduced in February 1979 to expand county industrial development; see Caizheng shiliao, p. 199.

88. Shukun, Cui and Bekun, Zhao, “A discussion of the 1983 fiscal management system,” p. 37Google Scholar.

89. In the First Five-Year Plan (1953–57), these funds were only 7–8% of the total government budget. Their share increased to 20% in the following decade ending in 1967. They passed the 50% mark in 1981, reaching 77% of total government revenue in 1982, and remained at that high level through 1985. See Hai, Li, “Cong yijiu bayinian guojia yusuan zhixing jieguo tan dangqian de caizheng wenti” (“The final accounts of 1981 and the problems of fiscal administration of today”) Caizheng yanjiu ziliao, No. 80 (30 10 1982), pp. 2, 10Google Scholar; Bingqian, Wang, “Guanyu caizheng fangmian de ruogan wenti” (“Some questions of fiscal administration”) Caizheng yanjiu ziliao, No. 53 (15 09 1980), p. 10Google Scholar.

90. China's total money supply in 1982 year's end was 43.91 billion yuan, see Zhongguo tongji nianjian, 1985 (China Statistical Yearbook, 1985) (Beijing: Zhongguo Tongji Chubanshe, 1985), p. 526Google Scholar.

91. China's total cumulative budget deficits from 1975 to 1984 were 47.58 billion yuan, see China Statistical Yearbook, 1985, p. 523; Renmin ribao, 16 April 1986, p. 3.

92. China's cumulative internal and external debts from 1975 to 1984 amounted to 40.57 billion yuan, see China Statistical Yearbook, 1985, p. 523; and Zhongguo jingji nianjian, 1984 (Economic Almanac of China, 1984), 0–26.

93. Yijiu bayinian caizheng guizhang zhidu xuanbian (Collection of 1981 Financial Regulations and Systems) Vol. 1 (Beijing: Zhongguo Caizheng Jingji Chubanshe, 1985), pp. 12–17Google Scholar.

94. China Statistical Yearbook, 1985, p. 526.

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99. Economic Almanac, 1984, 0–23, IX–78.

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105. Ibid. IV–47; IX–107.

106. Economic Almanac, 1983, VIII–57, 58.

107. Economic Almanac, 1984, IX–42, 43.

108. Ibid.

109. Ibid. IX–102.

110. Ibid. lV–27, 28.

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