Fragmentation And Reconstruction: A Research On The Institutionalization Of The Central-Local Relationship Of Power

The purpose of this dissertation is to contribute to an understanding of the institutionalized transformation of the central-provincial fiscal relationship. In particular, I look into the relevance between fiscal power fragmentation and fiscal institutionalization by analyzing the formation of the Tax-sharing system. I demonstrate that power fragmentation is positive to institutionalization. Firstly, high Transaction cost resulted from power fragmentation needs the institutionalization of central-local fiscal relationship; Secondly, power fragmentation provides sound actor-interactional conditions to the institutionalization; thirdly, power fragmentation prepares knowledge and technique accumulation for the institutionalization.My several interrelated findings can demonstrate the core view above:(1) I define the central-local fiscal relationship as "authoritative & interactional structure, which is an outcome of the fiscal power fragmentation and a production of the concurrence of political centralization and local fiscal autonomy. In the authoritative & interactional structure, central-local relationship is no long an order-obey pattern, but an interactional pattern.(2) Data of the provincial cadres' turnover indicates that central personnel control has a high and direct interrelation with local governments' fiscal contribution. In the authoritative & interactional structure, central government mainly wielded cadre management power to control local governments' fiscal behavior. Cadre management usually includes promotion, rotation, assimilation, etc.(3) I also find that provinces, on which the central put more personnel control, should bear more responsibility for the fiscal decline of the central government. It indicates that in the context of power fragmentation, the effect of the centralization of political power will be eroded little by little because of the shortage of institutionalization. Then, the fiscal decline of central government brings forward the requirement of institutionalization.(4) Another finding is that the degree of power fragmentation relates directly to the course of institutionalization. Power fragmentation not only gives rise to requirement of institutionalization, but also advances the accumulation of necessary knowledge and technique. By means of the degree of the power fragmentation, I explain why the fiscal institutionalization in 1986 failed, and why the tax-sharing system reform can succeed.(5) The fragmentation of power provides an actor-interactional pattern for the formation of institution. In the authoritative & interactional central-local structure, the course of institution's formation is not a pattern of "zero-game", but an interactional and deliberative pattern, from which both sides could benefit. The success of institutional creation depends both on the consensus within the central decision-makers and on the bargaining and compromise between the central and local governments.The political implication of Tax-sharing system's formation indicates that the rational remaking of central-local relationship should transcend the traditional thinking of centralization. The central-local relationship should be translated from controlling to mutual respecting, deliberating and bargaining, so as to come up with an institution that can accommodate and regulate the local decentralization.If being extended, the above conclusion may contribute to the general theory of the authoritative politics' institutionalized transformation. After a long period of development-oriented decentralization and market reform, the former highly centralized political-economical structure has been divided into different subjects of power and right, and exchanging, reciprocating and interdependence become the main way of interaction between different subjects. In the fragmental power structure, the traditional organized political centralization which used to be the main way of political integration, brought higher and higher transaction cost and eroded the political efficiency, which caused the urgent need of institution. So the erosion of political efficiency of centralization could promote the political transformation, i.e. the former political power structure focused on organized centralization gradually changed into one focused on modern state institution. The logic of institutionalized transformation has been reflected in the central-local fiscal relationship.