ABSTRACT
China’s public sector has changed dramatically during the last three decades of transition. During this period, China undertook fiscal decentralization reform and restructured public service provisions. Fiscal decentralization led to the expansion of spending mandates by lower tiers of government without provision for adequate financial resources. This has particularly been a problem for poor rural areas with a limited tax base. At the same time as fiscal decentralization reform was undertaken, public service provisions were restructured and previously free education and health care programs were abolished. These provisions were replaced by public services in which formal and informal fees became essential for the financing of local government. This had a negative effect on equality in public service provision and excluded the poorest segments of society from essential services.
