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china mapPopulation: 1,350,695,000

HDI ranking: 101/187

HDI score: 0.699

China has followed a stop-and-go decentralization pattern, cycling through periods of greater devolution and greater central control. Most recently, the country’s decentralization agenda has been tied to economic development and fiscal reforms. While China has established grassroots democratic self-government at the most local level of village and neighborhood committees, deeper political decentralization has not occurred.

Local governance at a glance

  • The country is divided into provinces, autonomous regions and municipalities that are under control of the central government. Municipalities are under central government control and large cities are divided into wards and districts (UCLG, 2010).
  • Local government administrative units are divided into a three-tier system of provinces, districts, and townships.
  • Autonomous districts or provinces are divided into autonomous prefectures, districts, autonomous districts, and cities. Districts and autonomous districts are further divided into townships, ethnic townships, and towns (UCLG, 2010).
  • China has 34 provinces, 333 prefectures, 2,862 counties or districts, and 41,636 townships (UCLG, 2010).
  • Hong Kong and Macao are considered special administrative regions with a significant degree of self-government (UCLG, 2010).
  • China has begun to establish a democratic self-government system on the highly localized level of rural villagers’ committees, urban neighborhood committees and conference of works and staff enterprises. Citizens directly elect members and the committees create groups for people’s mediation, public security, public health and other issues to manage public affairs and social services and convey residents’ demands to the people’s government (UCLG, 2010).

Civil society actors include

Capacity building institutions

  • The ICMA China Center was established in 2011 with the China University Political Science and Law to improve the quality of city management in China through providing information and services to Chinese city officials.
  • The China Association of Mayors is an organization composed of voluntary members by incumbent mayors and vice mayors of all the cities in China as well as chief executives and vice executives of district municipalities under central government authority. The Association works to serve the development of cities and the work of mayors through conducting studies on common issues concerning urban development, discuss current problems and best practices, provide training for mayors and to promote information exchange between mayors.

Fiscal control

  • Economic decentralization to local governments has been substantial in terms of expenditures. Local governments can regulate the local economy, have large expenditure power and manage 80% of state-owned enterprises (UCLG, 2010).
  • The central government and local governments share tax revenues. Taxes are divided into central government taxes, shared taxes and local government taxes. Shared taxes are usually related to economic development, while local taxes include those from local industry and agriculture (UCLG, 2010).
  • Formally, local governments have minimal tax and spending discretion as all tax bases and rates are set by the central government. Higher levels of government also mandate local expenditure responsibilities. However, local governments have a high degree of freedom in the use of non-tax revenues including land development and real estate business fees (UCLG, 2010).
  • Intergovernmental transfers compose 60% of subnational revenue (UCLG, 2010).

Key initiatives for participatory local governance

  • Article 95 of China’s Constitution mandates the creation of people’s congresses and people’s governments in provinces, municipalities, districts, cities, municipal districts, townships, nationality townships and towns. Autonomous regions, autonomous prefectures, and autonomous counties establish their organs of self-government. Article 96 provides for local people’s congresses at different levels as local bodies of state power. Article 105 established local people’s governments at different levels that function as executive bodies of state power and state administration at the various levels of government (UCLG, 2010).
  • In 1992, China initiated significant financial system reforms and unveiled a new financial structure to meet the socialist market model by 1994. The structure included a taxation system that divides central, local, and shared taxes (UCLG, 2010).
  • The Organic Law of the Villagers Committees passed in 1987 and was revised in 1998 to ensure self-government by the villagers in the countryside, enabling villagers to administer their own affairs according the law. Specifically, each Villagers Committee is directed to “manage the public affairs and public welfare undertakings of the village, mediate disputes among villagers, help maintain public order, and convey the villagers’ opinions and demands and make suggestions to the people’s government” (, 2013).

Challenges for participatory local governance

  • China’s growth model has eroded certain social and institutional arrangements and structures and created issues of urban poverty, out-migration from rural areas, sharp income inequalities and service delivery of education and health care to mitigate some of these issues and meet the needs of changing demography remains uneven (World Bank, 2008).
  • Despite greater health concerns in rural, poorer communities, per capita government allocations in health services increasingly favor wealthier areas and higher quality health services are increasingly being delivered to urban areas. China’s healthcare reforms to remedy this problem are proving difficult to achieve due to local governments’ reliance on national earmarked funding instead of appropriate prioritization of basic services in sub-provincial government resource allocations. The increasing disparity in public expenditure on social service delivery requires reforms to improve the local governance and central-local fiscal relationships (World Bank, 2011).
  • Local governments have increased infrastructure spending since late 2008, but have also been under increasing pressure to allocate additional funding to society security, education and healthcare. Local government finances are becoming increasingly strained and they have increased their investments in state-owned-enterprise-type entities, as local governments are unable to borrow. These investment plans will continue to strain local government budgets and increase their debt if these projects do not prove profitable (World Bank, 2010).

Recent posts on this website about this country:


List of sources (in order of citation):

United Nations Development Program (UNDP), 2012: “International Human Development Indicators: China”

United Cities and Local Governments (UCLG), 2010: “Gold Report: China Country Profile”, 2013: “Organic Law of the Villagers Committees of the People’s Republic of China”

World Bank, 2008: “Public Finance in China: Reform and Growth for a Harmonious Society”

World Bank, 2011: “China’s Health Reform Push Faces Challenges at Local Government Level”

World Bank, 2010: “China’s Local Government Debt –What is the Problem?”