About this paper

Expenditure assignment is the starting point and core of constructing intergovernmental fiscal relation and it is important to have a clearly defined expenditure assignment for a nation to build sound governance. Currently，expenditure structure in China contains many blurred assignments，characterized by unclear central government responsibilities，lack of service provisions by provincial governments，as well as overburden of local governments． In the future，China needs to initiate the expenditure assignment reform according to its present governance status and build a system that is incentive compatible． The reform should target to foster the reasonable relationship between market and government sectors． The reform should also be able to handle potential challenges raised by the fast urbanization process． Accordingly，the reform should motivate both the central and subnational governments to expand direct service provision． Eventually，China should form the governance structure in which the central government takes significant responsibilities，provincial governments play a significant role of service provision，and local autonomy is well protected．

Reference

Li Junsheng, Qiao Baoyun, Liu Leqi. Building Sound Governance through Clearly Assigning Intergovernmental Responsibilities [J]. Journal of Central University of Finance and Economics, 2014, 1(03):3