How does decentralized governance work? Evidence from China

Decentralized governance is often viewed as an effective way to improve public services and government accountability. Many also document the negative dimensions of fiscal decentralization, especially in transition economies; thus, the combination of decentralization and centralized control has gained currency in some countries in recent years. Based on firsthand data and other documentary sources, and using civil service remuneration as an example, this paper attempts to explore how decentralized governance works in China and what hinders decentralization from performing better. The findings show that Chinese centralized control over expenditure in public sector remuneration primarily serves to enhance ministry control. Local bureaucrats, meanwhile, exploit better remuneration to boost their personal interests. This paper argues that political commitment rather than central transfer is greatly neededfor utilizing the benefits of decentralized governance. Copyright © 2013 Taylor & Francis Group, an informa business.