Time: April 12th, 2013
Topic: Fiscal Federalism and China
Lecturer: Feng Xingyuan
Commentators: Ma Jinhua, Zhang Deyong, Zheng Xinye

Prof. Feng Xingyuan, the lecturer of the seminar, redefined the concept of “Fiscal Federalism” using Ohlbrecht’s analytical framework, which means that there is existing competition on a wide range of internal and external government. Fiscal Federalism means that the government system is a hierarchical one, dividing different functions of government on different government levels and allocating financial tools to governments at all levels. So we need to understand what functions and tools should be concentrated and what should be scattered. The nature of fiscal federalism in China is the decentralized fiscal system under centralization. In other words, the centralized system is a big framework and there are several kinds of decentralized systems under it. However, the basic point of China’s system is not protecting individuals’ liberty and rights, which is contrary to the real fiscal federalism. Based on this, Prof. Feng Xingyuan analyzed the questions of the traditional fiscal federalism, and pointed out the eight principles of fiscal federalism and their correction. Finally, Prof. Feng Xingyuan stated that China is a country carrying out quasi-fiscal-federalism, which has many defects. Furthermore, China must follow the principles of legalization, liberalism and democratization.

Prof. Ma Jinhua introduced the background of the practice of fiscal federalism in China, and pointed out that principle of subsidiary and individuals’ liberty is critical from traditional fiscal federalism to perfect fiscal federalism. We need to establish a limited government and implement the rule of law. Prof. Zheng Xinye spoke highly of the research on fiscal system. Prof. Zhang Deyong analyzed the fiscal system reform in China from the reform and opening to present-day China in aspects of practice and policy. He pointed out that the fiscal system in China is centralized, the same as the international trend. The fiscal federalism theory after 1994 is a field of research, which deserves further research and greater attention from scholars. Finally, he looked into the reconstruction of the fiscal relationship between central and local governments.