ABSTRACT
This chapter aims to provide Shanghai's response to the latest round of fiscal decentralization and evaluate its gains and limits. It explains the basic pattern of Shanghai-central fiscal relations prior to the current reform period. The chapter analyses the changes in Shanghai's fiscal relations with the center in the context of the overhaul of China's fiscal management system. The latest round of fiscal decentralization, a key part of China's economic reform since 1979, has had a dubious impact on places like Shanghai, a provincial-level municipality. Shanghai served as the economic powerhouse and cash cow of the nation. Shanghai's pre-reform fiscal relations with the center symbolized the kind of relationship that tilted to central control but in a subtle way. Shanghai had been the nation's most important commercial center well before the 1949 revolution. Shanghai was able to produce more revenue than any of the provinces.
