People often focus on China's top down central planning...

People often focus on China's top down central planning system. However, local governments (provinces, cities, villages, etc.) account for 85% of the country's expenditures while the OECD average is... 33%.

Whilst on avg countries spend 66% of their expenditures centrally, China's central gvt only spends 15%, letting local authorities spend the rest.

Doing so, it empowers them to do a lot of local experimentation, which can be emulated countrywide if successful.

https://tnsr.org/2023/04/paying-the-defense-bill-financing-american-and-chinese-geostrategic-competition

While the reforms overhauled some aspects of China’s fiscal system, they also left certain core features in place. First, China remains, by quantitative measures, among the most decentralized political systems in the world.125 Local governments — starting at the provincial level and working down to prefectural, county, township, and village governments — account for 50 percent of government revenue and almost 85 percent of expenditures. In Organisation for Economic Co-operation and Development countries, the averages are 20 and 33 percent, respectively. China’s central government commands just 15 percent of total government expenditure, compared to the Organisation for Economic Co-operation and Development average of 66 percent.12é Second, China continues to rely almost entirely on business taxes, collected through a value-added tax on business-to-business transfers and a corporate income tax. Since 1990, these business taxes have made up between 60 and 75 percent of tax revenue. Consumption taxes (7 percent) and individual income taxes (6.3 percent of total revenue in 2021) are relatively unimportant. The remaining 15 percent of government revenue comes from central and local fees.127

Like 5 Apr 2023 at 12:50 | Open on mas.to