Reports
Discussion Papers
No.960 Sharing Governance Costs with Society: Case Studies in Zhejiang
by Zhe Ren
March 2025
ABSTRACT
This article explores the "reverse soft budget constraint" in Zhejiang, China, where local governments shift their financial burdens to enterprises and communities to exceed fiscal limits. Six case studies examine cost transfer mechanisms among rural, urban, and non-urbanized communities. The analysis emphasizes the negotiation dynamics between local governments and communities, indicating that rural communities with independent revenue sources are more susceptible to cost transfers. In contrast, urban communities rely entirely on government funding, which restricts their autonomy. The study contrasts cost transfer characteristics in coastal regions with higher economic development vis-a-vis those in inland regions.
Keywords: Financial burden, Cost Transfer, Local government, China
JEL classification: K11, K42, R52, O30
PDF available at https://hdl.handle.net/2344/0002001529
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