Abstract
This paper presents an overview of China's regional policy over the past thirteen years and analyses the policy's effects in the 1980s. It is argued that, although the decentralization process and the unbalanced regional policy stimulated some regions’rapid growth, it caused and exacerbated various distortions due to the fact that the administrative decentralization lacked the coordination of other reforms. These distortions found expressions in the following aspects: the decline of economic efficiency in the state sector, the loss of regional comparative advantage, the weakening of macroeconomic control, and the rent-seeking effects. A number of recently proposed policies addressing the central-local relation issues are also discussed.
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