ABSTRACT
This chapter attempts to trace the trajectory of changing central-local relations by reconstructing the patterns of China's fiscal politics between the center and the provinces. It shows how the central government's hold over financial resources has eroded, why the central state has lost its battle over the control of crucial political resources to competing local governments, and what have been the direct and indirect economic, social, and political consequences of the loss of central fiscal control. Due to China's unique form of central-local shared control of enterprises, local governments tended to resist the center's encroachment on local sources of revenues as much as they could. Although fiscal politics between the state and society is largely nonexistent, fiscal politics between the central government and local governments assumes prominence. Fiscal politics between the central and local governments results in the former trying to maximize its collection and the latter trying to minimize its contribution.
