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Political Science
Lynette Ong

Lecture#10-  Why should we separate local and Central government responsibilities? o More generic reason: different levels of states have different objectives and goals. That is why we should separate local and central government  Central government is concerned with survival of the Communist Party, Economic Growth Rate, local officialsCareer advancement, local economies are their primary concerns  Bigger issues such as legitimacy of the CCP is not so much the worries of local officials as long as it does not affect their job opportunity or career advancement. Categories of Peasant Burdens  Fiscal decentralization and Cadre evaluation system allows for local officials to collect taxes. o How cadres are evaluated: Increased tax revenue is often a hard target (component that is important to career advancement) o List of things that cadres must achieve in order to get bonuses  There are three categories: priorities, priorities with veto power (population control), social stability (keep petitioning cases under control) , hard target (increasing tax revenue for purposes of getting bonus, raising economic growth rate, urbanization growth rate, how much you can raise for investments)  Raising local growth rate. o Soft target  If you meet them then it’s good  Farmer’s income, literacy rates, health care provisions  The things that you thought was supposed to be important are a soft target instead.  All local governments devote financial resources to finance companies and they pressure banks to give up money TVES  Developed throughout rural China and you wonder what is the rationale behind the existence of TVES if you do not have raw materials at cheaper prices, more advanced technology or even a readily made consumer market? o It might exist b/c the government has plenty of money to pump in and allow it to run.  IN turn, geography is very much important to the success of the TVE. o Two aspects of geography:  1) proximity to metropolitan cityit means that if enterprises is close to a city, it might be successful b/c there is a ready market for your goods. Advanced technologies might exist there as well. On the other hand, you can have an enterprise in the middle of nowhere that it will fail. Coast regions easily have a market but there are few rural successful enterprises in central/Western China.  Local officials in central/western China, where there was few profitable enterprises often resort to collecting taxes and fees from peasants.  All the taxes listed below were used until HU Jintao came into power and abolished ALL of them. (it used to be a major source of rural unrest in the early 1990s and 2000s). Peasants were sick and tired of getting taxes incessantly. o Unfunded Mandates  Some governments have mandates to fulfill but unfunded.  State taxes o Legal taxes imposed by central government mainly agricultural tax and surcharge. Special products like fruit and meat tax, farming utilization tax….This added a lot of stress for people. o When counties wanted to collect taxes for schools, they would make levees for taxes.  Township and Village Levies  Monetary equivalent of corvee labor services  Fees, assessments and fundraising o If you violate a traffic rule in China, you get fined (esp. vigilante at around moon cake festival)  Fines o Birth Control fines$100 000 per extra kid as one example for a County in the East o County is more concerned about revenue generation rather than population control but central government is obviously trying to control the population.  Mothers are forced to abort if they are unable to pay for the extra child. (before the baby is even borne. Forced abortion) o A set income tax is predictable but fines, and arbitrary fees mess up the budgets of peasants (they can plan ahead for a set income tax but they cannot foresee random taxes)  Peasant burdens were the major cause of social unrest in the early years of 1998-2001. (See graph on the ppt slide “Taxes and Fees Paid by Township (Zhou) Residents” o If you cannot pay the arbitrary tax, the peasants can take outa loan and get charge for the interest as well o Usually peasants in central regions face more taxes than coastal regions, b/c coastal have well established TVEs and they make money off another source.  The Tax system is very regressive in China much like the United States system at the present moment. o Capitalist argument: you want to tax capitalists less b/c they will further invest into the markets. From a social perspective, this does not make sense. Higher Paid people should be able to pay more tax. o In poor areas with low income and lack of profitable enterprises, there is greater need for extractions of money. The areas with greater profitable enterprises, taxes and fees for peasants are relatively lower.  This is not right…. o In the East where there are greater number of more profitable enterpriseswho then contribute revenue to governmentLess imposed taxes on peasants. (Chain reaction)  Powerpoint slide with the diagram “local governments need to increase revenue” in the center o Two sources: (for local governments need to increase revenue)  Fiscal Reform  Cadre Evaluation system o Develop enterprises (give out money) o Collect taxes and fees from peasants (take in money) abolished in early
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