Hongsheng Fang, Wenjun Shuai, Linhui Yu, Jun Zhang. "Is Fiscal Revenue Concentration Ratio in China Too High?", The World Economy , 2019;1–29.

School of Economics, Zhejiang University, Hangzhou, Zhejiang, China

Institute for Fiscal Big-Data and Policy of ZheJiang University, Hangzhou, Zhejiang, China

School of Economics, Fudan University, Shanghai, China

This paper challenges the viewpoint that fiscal revenue concentration ratio in China is too high. Firstly, this paper estimates China's nominal and real fiscal revenue concentration ratio at both budgetary and full‐caliber levels, and makes an international comparison using all available data of the IMF's GFS database for both developed and developing countries, revealing five stylized facts that expresses serious doubts about the statement that fiscal revenue concentration ratio in China is too high. Secondly, the paper proposes four indicators to measure asymmetric degree of China's central fiscal revenue concentration ratio and expenditure concentration ratio to identify whether fiscal revenue concentration ratio in China is too high. The results show that (1) central fiscal revenue concentration ratio is lower; (2) compared with asymmetric degree of China's central budgetary fiscal revenue concentration ratio and expenditure concentration ratio, asymmetric degree of China's central full‐caliber fiscal revenue concentration ratio and expenditure concentration ratio is more serious, indicating that the central full‐caliber revenue concentration ratio is much lower. Therefore, this paper not only falsifies the view that China's fiscal revenue concentration ratio is too high, but also shows that China's fiscal revenue concentration ratio, especially at a full‐caliber level, is much lower. Further international comparison shows that asymmetric degree of China's central fiscal revenue concentration ratio and expenditure concentration ratio is ranked 3rd in the world, and Chinese central government has the lowest ability to undertake full‐caliber fiscal expenditure among the world's countries. Finally, following the State Council's guidance on properly increasing central authority, the paper argues that it is necessary for the central government to improve central fiscal revenue concentration ratio, especially at the full‐caliber level.

asymmetric degree of China's central fiscal revenue concentration ratio and expenditure concentration ratio, budgetary concentration ratio, full-calibre concentration ratio, international comparison