On May, 9th, 2018, US local time, at the invitation of Stanford University, Professor Li Junsheng, Director of the Center for China Fiscal Development and Institute of New Public Finance, gave an academic lecture on “Reforming Fiscal Relationship between Central-Local Governments in China: Challenges and Opportunities" at Institute for Economic Policy Research（SIEPR）of Stanford University. Many professors and PhD students from the Department of Economics, Department of Sociology, Asia-Pacific Research Center, and UC Berkley have attended the lecture and joined the discussions. 

At the Professor Li's lecture 

In China, fiscal relationship is the core issue of the inter-governmental relationship in interest allocation. The key to address the relationship between the central and local governments is to deal with the fiscal relationship between the two. Based on that, Professor Li first answered the questions of “how to reform the fiscal relationship from the perspectives of the division of financial authority and administration authority of the Chinese government. Specifically, he believed that in financial authority, the local government’s authority needs to be guaranteed while the financial authority of the central government should be properly strengthened. Moreover, the shared financial authorities should be redefined to form a mechanism to dynamically adjust the financial authorities of the central and local governments. The authorities of administrative affairs should be divided based on the different financial authorities of the central and local government, and the shared authorities should be defined based on the shared power of the central and local government. Professor Li analyzed and interpreted the fiscal relationship between the central and local government by understanding the formation and relations among the four tables of central fiscal budget with Chinese characteristics, and he began with China’s fiscal budget making process. Due to the significant differences in the budget policy making process between China and the US, Professor Li’s lecturing based on China’s fiscal practice has aroused the discussion over this topic by many well-known Chinese and foreign scholars. The lecture was full of interactions. 

Professor Li discussing with the scholars in the lecture

Next, Professor Li explained in detail the theoretical framework of  the “New Public Finance” which he has proposed based on China’s fiscal and tax reform practice. Currently, the mainstream fiscal theory represented by Anglo-Saxon school contains quite a few defects in guiding China’s fiscal reform practice, and is not able to give good interpretation on the central-local government relationship and that between the government and the market. The essence to this problem is that the research model of economics and the analytical framework that the main stream fiscal science upholds fail to analyze adequately the fundamental questions in fiscal science. Therefore, Professor Li attempted to propose the “New Public Finance”, and took the lead to establish the Institute of New Public Finance, CUFE. He tries to reflect and reconstruct the theoretical base of the mainstream fiscal science theory through tracing the theory origin, analyzing the government and market relationship, as well as understanding the research models. Such a practice and theoretical view have gained recognition and praise from professors from Stanford University and Berkley. Professor Li Hongbing said that “New Public Finance” is an important attempt to summarize and extract the fiscal reform experience with Chinese characteristics based on China’s national conditions and development practices. 

After the meeting, the top-notch scholars of the world such as Professor Zhou Xueguang and Li Hongbing had a heated discussion with Professor Li. The two scholars said that they are willing to join the research of the Institute of New Public Finance in the future. In addition, on behalf of the Center for China Fiscal Development, Professor Li also confirmed the long-term academic cooperation with relevant schools and departments of Stanford, and clarified the specific areas of research cooperation in the future.