The Politics of Mandates in Financing Local Government Operations in China: An Administrative or Fiscal Dilemma?

China has a highly decentralized fiscal system, but its unitary administrative system is centralized. When the higher-level government issues a large number of mandates for which they provide no funding, financial conditions at the local levels deteriorate further. Based on a case study, this article begins by summarizing the administrative structure and financial conditions of Chinese local governments in various provinces. It finds that in the financing of local government operations-including personnel and office-related expenditures-local officials have to adapt various coping strategies. Their financing dilemma is the combined result of China's centralized administrative structure and its decentralized fiscal system.