China's Fiscal Decentralisation and the Financing of Local Services in Poor Townships

Abstract

This article examines the implications of the decentralisation of public finance for the provision of rural health services. It compares two townships (the lowest level of government) to demonstrate the increasing inequalities in local government finance. Rural enterprises make a significant contribution to government revenues in the richer township, enabling it to finance a range of local social services. In the poor township, although agricultural house-holds bear a heavier tax burden, revenues barely cover the salaries of government staff and health services receive insufficient funding.