Fiscal decentralization has been a key feature of China’s economic reforms, leading to the devolution of responsibilities over both revenue collection and public expenditures to lower levels of government—the province, county, township, and village. While a decentralized system improves incentives for local governments to generate revenues and to be responsive to local needs, it can hamper efforts to meet goals of distributional equity.
Li, L.; Park, A.; Wang, S. School equity in rural China. In: Education and reform in China. Routledge, Taylor & Francis Group, Oxfordshire, UK (2007)