The Economic Analysis Of Fiscal Competition And The Opium Trade In The Late Qing Dynasty

This article discussed fiscal competition under fiscal decentralization through analysis of the financial competition in the late Qing and the opium trade. This study:1the substantial fiscal decentralization caused around the property rights division between the central government and local authorities that led to the opium trade, no formal system of f fiscal decentralization leads to malignant fiscal competition and the grabbing hand. This paper gives a reasonable explanation that local governments choose to encourage and condone acts of smuggling opium. From the angle of economics, this paper reseach of the relationship between various economic variables in the history of opium trade in late Qing. It reveals that fiscal decentralization systemthe cause the central and local fiscal competition, it explain financial system production and evolution in the history. It is an important angle of view to study the history of this period.2it is an inevitable problem is the financial competition under the decentralized economy.Fiscal competition includes not only the level of competition, also includes vertical competition. However, previous literature rarely rearched the problems in the framework of standard Decentralization, give more attention to competition between the government at the same level,give not enough attentionto to that better reflect the nature of the upper and lower levels of government decentralization between vertical competitive, this paper is concerned with the relevant problems that is the central and the local vertical fiscal competition.3this papar explores the normative fiscal decentralization system and provides academic support for the field of political economy gradual reform in China.This article rearches the history of the financial competition and the opium trade from the economic perspective, the fiscal decentralization as the main line, launches from three levels:First it discussed in the late Qing Dynasty Central local fiscal relations and opium trade. Central and local governments in late Qing government formed the substantial fiscal decentralization, but its essence is the difference:the central to the local rights transfer is passive rather than active. The local government has no clear independent tax power, but in fact it has partial autonomy in the financial revenue and expenditure. There is no formal rules to rule all enjoyed the percentage of tax, no formal legal system, to define and constrain rulers, bureaucratic, taxpayers rights and obligations, it runs with tacit knowledge between bureaucrats, the national fiscal and taxation system is based on a "soft budget constrainf".This leads that the local government income outside system is a kind of finance income fund, to fill the vacancy of finance income, so the local government has a strong incentive to increase the income, not only syndroming tax for the agricultural transition, also began killing on business. War makes agricultural economy is backward, the card is bristly that makes commercial development lag taxes low, while the opium into China's circulation, the fiscal gap through the acquiescence of opium smuggling collection collect to fill the very income.Secondly, it analysis the path of the central and local fiscal competition and the grabbing hand. Local government initially controlled the private source of opium and obtained the income outside system, there are an intermediate zone between the central and local finance rights, local governments through the income outside system in fact expanded their fiscal share. But this adjustment once beyond the central ability of government's tolerance, the central government will put the income outside system into the national standard tax system, with political rights to redistribute the financial rights. To the Guangxu and Xuantong period, the international and domestic environment changed so that the central government was more difficult to fulfill their functions, expansion of the functions of local government provided the conditions to expansion of the right, property right down toward the depth direction. Under the purpose of central authority, the central government began to make policy adjustments and institutional reform, the central and local power situation appears. For the type of fiscal relations in the late Qing Dynasty in fact formated the tax sharing system, the Opium tax system change manifests the outstandingly. The central government adjusted three reform---levy Opium Tax and Likin apart, levy Opium Tax and Likin together, tax rectification of homebred opium---to strengthen the central financial power, most of the Opium tax into the regular budget, strengthen control of the local government income outside system, but also the formation of local financial revenue and expenditure gap, the local government will find new income outside system to deal with the centralized adjustment pressure, through the connivance of tax evasion, withhold the taxes to deal with local fiscal expenditure, which makes the income outside system further increased, resulting in the income outside system of central finance extrusion, the central government had to rely on again tax system reform to strengthen its financial rights center.The loss of the central authority lead that the local government income outside system can not be controlled, forced the central government to find a new source of income, using the remaining rights to compete with local fiscal, this malignant fiscal competition "grabbing hand"Thirdly, A brief review of the history of economy again can be found i " land finance" n the current similar to the Qing government to rely on "Opium finance" that carry out the self-improvement reform in late Qing Dynasty, nearly ten years, urban area expansion, local infrastructure expansion, land development transfer and assignment of climax emergence, some local government excessive depends on land revenue, it is behavioral patterns that a local government seek in tax restricted beam. although the land finance in promoting development of Chinese city, but it has also been criticized for the arch-criminal of rising prices. of local government under fiscal decentralization system existed an informal financial activities tax, to the extra-budgetary income to compensate for taxation, tax adjustment process did not achieve the fiscal power and responsibility unified and matching, so that local governments have more strong incentive to expand extra-budgetary income, increase grabbing region economy.The history of the central and local fiscal competition and opium trade provides a case that intergovernmental competition under fiscal decentralization caused by extended "grabbing hand","Market-preserving federalism" is focused on fiscal federalism bring the local government on the "grabbing hand"restraint, but the lack of local government the microcosmic basis of analysis, he lack of the understanding of the central government and the local government competition and the central government in the entire government system role, it has neglected the decentralization effective and necessary conditions, it is difficult to analyze the negative effect of decentralization.The history of fiscal competition and the opium trade in late Qing Dynasty enlighton the present reform. Literature about "market maintenance of fiscal federalism" suppose the area between the endowment difference is not as a problem. Although this assumption simplifies the analysis, but it try to generalize to all developing countries and the transition state as a general rule, which may be dangerous, when poor resource endowment areas do not have enough money to create the soft environment, only through raids to keep rigid fiscal expenditure. There is no formal law which can stipulate the rights and obligations of the central and local. Lack of constraint in decentralization, so that blurring of the boundaries of financial rights and obligations of the central and local government. the central government through political centralization advantage to expand its fiscal share, while the local government can use informal financing system for financial tax revenue distribution rights in fact adjustment, it did not develop economy and political incentives to promote the transformation of local government behavior between the center and local governments, thus no change in local government progress of economy of block up place "predatory". Enough authority of the central government who can play a positive role is the premise condition of the decentralization and administer interval competition. Decentralization may shorten the government and social information distance, but widens the Intergovernmental information distance, thus increasing the difficulty of central supervision (Rodden,2002). If the central government is not strong enough, it is unable to effectively coordinate the relationship between local governments and the implementation of government fiscal discipline, local.government is very likely hitchhike behavior and excessive grazing behavior.