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  • Russian Federation and People’s Republic of China: similarities and distinctions in the fiscal relations between central and regional authorities

Russian Federation and People’s Republic of China: similarities and distinctions in the fiscal relations between central and regional authorities

TERRA ECONOMICUS, , Vol. 15 (no. 2),

The paper compares legal foundations as well as practices of intergovernmental fiscal relations between central and regional authorities in the Russian Federation and in the People’s Republic of China. The relevance of such cross-country comparative analysis follows from the huge importance of intergovernmental fiscal relations now in both countries. Equally faced with the challenges of mitigating regional disparities, of developing lagging regions without prejudice to regions driving economic growth, of creating incentives for regional authorities to develop their own revenue sources, Russia and China currently adhere to rather different approaches to solving these problems. Meanwhile, in terms of many indicators of socio-economic development, such as per capita parameters of budgets, Russian and Chinese regions are quite similar. With this in mind, some elements of the Chinese practice of intergovernmental fiscal relations and of the organization of the budget system in general can be of interest for the Russian Federation. They can be viewed as examples of good practice, the effectiveness of which is confirmed by higher rates of socio-economic development, which People’s Republic of China demonstrates for many years. Notwithstanding certain constitutional restrictions related to the federal nature of the Russian state, it can be argued that some elements of the Chinese model can at least be seen as possible strategic alternatives when choosing ways of improving or reforming Russian budget system. The centralization of revenues along with the radical decentralization of expenditures is probably the most interesting specific feature of the Chinese budgetary system; it appears to be a possible solution to ensure the commitment of subnational governments to regional development while maintaining the instruments of control over them by central authorities.

Keywords: Russia; China; regions; fiscal system; subnational finance; intergovernmental relations; intergovernmental transfers

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Publisher: Southern Federal University
Founder: Southern Federal University
ISSN: 2073-6606