Local Fiscal Crisis in China
It is this best of time (for the central); it is the worst of time (for local governments). A recent issue of China’s “Outlook Weekly” focuses on local governments’ fiscal crisis that are looming large ahead.
Since the 1994 Tax-Assignment Reform, China’s central government has seen dramatic increase of fiscal capacity, while its local governments -- especially lower level ones, such as county or below -- are forced to maintain their services with unusual and unsustainable means, such as leasing public land, selling public assets, illegal exactions, or irresponsible borrowing.
(I would thank Wanghui and Robert Woo for providing the link.)