Multi-source strategic interaction in China’s public services: a spatial econometric analysis

Abstract

Evolution of provincial governments' discretion: The parallel system of fiscal decentralization and political concentrationThe administrative system in China is made up of multiple levels of central and local governments.As these governments' administrative behaviors are usually embodied in the form of financial expenditures, administrative restructuring and fiscal reform tend to go hand in hand (Zhang, 2003). As illustrated by Zhu and Peyrache (2017), three typical stages can be used to explain the evolutionary process of intergovernmental fiscal and administrative relations.In the first stage of the socialist period before 1979, the central and provincial governments were under a consolidated fiscal system. The revenues were primarily derived from state-owned enterprises' profits and taxes, and the spending priorities were established by the central government; local governments were just state-owned enterprises and had little discretion. In this case, the administrative system was driven through top-down hierarchical control, and the functions of territorial administrative jurisdictions were marginal (Zhu and Peyrache, 2017). In the second stage, from 1980 to 1993, China underwent a transition period of central-local government fiscal relationships with a market-oriented transformation. Specifically, a fiscal revenue sharing system replaced the highly centralized system for collecting revenue in 1980. Beyond that, a reform called the "fiscal contracting system" was completed during the period from 1988-1993, under which only a part of the provincial fiscal revenues was handed over to the central government. Local governments still kept the surplus revenues and had full discretion in spending. Both of these reforms were attempts at decentralization between central and local governments and an incentive from the central government for local governments to develop (Song, 2013). In the third stage of 1994, the tax-sharing reform changed the authority boundary between central and local governments, as financial power was transferred upward and administrative power was delegated (Zhang, 2006). Specifically, the tax revenues were separated into central revenue, local revenue, and shared revenue. The central government obtained the majority of tax revenues through the tax-sharing system, redistributing them to local governments through transfer payments, with the local governments still maintaining high discretionary power over expenditures. Additionally, 2 Information Classification: General local governments were equipped with more rights regarding administrative affairs, including formulating their economic growth planning, promoting regional development, and providing public services. It should be noted that the devolvement of administrative power from central to local governments is a process of delegating autonomy rather than hollowing out of the state. As a one-party state, China currently maintains vertical control through cadre management and requires local governments to be responsible to upper-level governm...

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“…Through this kind of mechanism, this study could directly learn the real climatic sensitivity of energy firms and avoid interferences from other unimportant factors. Referring to Sas (2017) and Song and Yuan (2021), this study gets raw data of cost and revenue 3 of energy firms from Wind database and equalizes them to generate interaction items.…”

“…Through this kind of mechanism, this study could directly learn the real climatic sensitivity of energy firms and avoid interferences from other unimportant factors. Referring toSas (2017) andSong and Yuan (2021), this study gets raw data of cost and revenue 3 of energy firms from Wind database and equalizes them to generate interaction items.The estimated results are shown in Table8. The coefficients of TDEV are still consistent with our expectation: climate change increases the profitability of energy firms.…”

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