中国地方和区域政府手册：独特、复杂且动态的财政框架

Distinct, Complex and Dynamic Fiscal Framework China Localand RegionalGovernmentHandbook Distinct,Complex and Dynamic Fiscal Framework Decentralised Expenditure and Debt China’s local government frameworkexhibits avertical fiscal imbalancethat poses risksto itslong-term viability. Theserisksstem fromareliance onvolatile land concession revenue.However,this is mitigated bythesystem’sadaptive nature. China’slocal and regional governments (LRGs)exhibit significantvertical fiscal imbalances.Theyare responsible for90% of totalexpenditure, butonlycollect74% of total revenue.This gap is notfully covered by central transfers, necessitating debt financing. LRGs represent 58% ofChina’sgeneral government debt,includingcentraland local government liabilities.They also use local-government financing vehicles (LGFVs) for quasi public-sectorinvestment,which can further increase LRGs’debt stock andcontributeto general government debtif the debt is ultimatelyserviced by fiscal funding. Sherry Zhao, Senior Director atFitch Ratings Revenue and ExpenditureMismatch China’s LRGs categorise budgets by function, such as publicadministrationand transport,rather than by economicclassification, for instance,salariesorinvestment. This createsambiguity between operating and capital accounts. Fitch Ratings reclassifies LRG budgets based on economic nature inits analysis, rather than relying on China’s classifications, wherethegeneral public budget(GPB)is seen asanoperatingbudgetandgovernment-managed funds(GMF)as capital.Unlike other LRGframeworks, Chinese LRGs can transferfundsfromtheGMF totheGPB, whichcan undermine fiscalsustainability. However,this mismatch is mitigated by the generally robustexpenditure adjustabilityofChinese LRGs,as the share of inflexiblecosts,including education,social security,unemployment,healthcareandpublic safety,is commonly low. Macro, Local Factors InfluenceRiskProfiles Related Research China's Public Infrastructure Debt (March 2024)China's Land Concession Revenue–Role, Prospects andAlternatives (July 2024)China’s Local Public-Sector Debt Resolution (May 2024) Higher-tierLRGstend toexhibitstronger risk profiles than lower-tiercounterparts, particularly tier-one administrations, supportedbystable revenue bases, low staple expenditure andfavourablefinancing terms.In contrast, sub-provincial governments showgreater risk profile variation. Ourrating cases incorporate national-level macro assumptions andlocal conditions.Ournominal GDP forecastsserve as a baseline,which weadjust for gross regional product growth,based onhistoricaltrends.We also consider structural shifts in localeconomiccompositionifthesesuggest a fundamental change ineconomic prospects. Analysts Sherry Zhao+852 2263 9964sherry.zhao@fitchratings.com Samuel Kwok+852 2263 9961samuel.kwok@fitchratings.com Nicolas Painvin+33 1 44 29 91 28nicolas.painvin@fitchratings.com General Government Fiscal Federalism Snapshot HighlyDecentralised China’s government structureishighlydecentralisedin terms ofexpenditure share, with subnational governmentsaccountingfor90%of total government spending.This includes spendingdemanded bythecentral government to meet policyobjectives. Uniquely, China’s local governmentsalsoshoulderalarge share ofexpenditure responsibilitiesin public security, healthcare andeducation. These areas are commonlythe responsibilityof centralgovernmentsin other countries. GovernmentModel However, this decentralisation is not matched by sufficientrevenueautonomyorintergovernmental transfers. LRGs only collected 74%of total revenue from fiscal resources in 2024. UnitaryCountry Weregard China as a unitary country,as its LRGs areconstitutionally subordinate to the central government.LRGsexercise only powers granted to them by the central government.The Budget Law gives theState Council the power to set theresponsibilities and assign revenue sources between the centralgovernment and provincial LRGs. The People’sCongress at eachLRG reviewsand approvesthelocalbudget,but higher-tier governments maintain supervisoryauthority overlower-tieradministrations. FederalFeatures China’s unitary governance model exhibits some federalcharacteristics, withLRGsexercisinghierarchical authority overlower-tier governments in political,administrative and fiscalmatters.This is unique as compared to other countries. High Vertical Fiscal Imbalances ProvincialLRGshave more autonomyover fiscal decisions andexecutionthan lower-tier governments.They haveauthority todeterminetherevenue and expenditureallocationwithin theirjurisdictions, with theexception offive citiesdesignatedbytheStateCouncilin the 1980s:Shenzhen in Guangdongprovince,Dalian in Liaoningprovince, Qingdao in Shandongprovince, Ningboin Zhejiangprovince and Xiamen in Fujianprovince. These citiessplit their fiscal resourcesdirectly withthe central government,with theaim of stimulating economic development in China’scoastal areasby enhancing autonomy and efficiency. Thesignificant m