Study on the Equalization of Basic Public Services in China

Abstract

From institution perspective, the existing fiscal transfer payment system and tax system were attributed to exacerbate inequalization of basic public services in China. Furthermore, the cadre's performance evaluation system contributed to Chinese prosperity, due to inadequate incentives mechanism inhabited in these reforms, some local governments kept their eyes glued on economic growth, especially GDP increases, in day-to-day works, and they devoted less attention to the development of basic public services. A series of equalization programs are already put forth by the central government. However, compared with the central government, local governments have information superiority in public service provision according to decentralization theorem. In order to encourage local governments to play a more important role for basic public services provision, "Perfect supervision system" is recommended as another mechanism to realize equalization of basic public services, besides of "Providing enough incentive".