Decentralised growth: have central fiscal transfers changed the landscape of the Chinese social security regime?

Abstract

ABSTRACT China’s social security expenditure has increased more than twentyfold since 2000. Most studies attribute the increase to local governments, which are responsible for most social expenditure, but some research emphasizes the role of central fiscal transfers. Using provincial-level panel data spanning 2000 to 2017, we find that special transfers significantly stimulate both social assistance expenditure and social insurance expenditure and that general transfers significantly encourage social insurance expenditure. Disparities among social assistance and insurance expenditure across provinces remain largely unchanged. It reveals that central state’s fiscal capacity plays a major role in the expansion of a decentralized social security regime.