The Theoretical Mechanism and Reform Path of Fiscal Vertical Imbalance on the Gap between Urban and Rural Areas in Counties

Yongxin Mo; Ziqi Guo; Jiayi Zhang

doi:10.54691/s129mk07

Authors

Yongxin Mo South China Agricultural University, Guangzhou, Guangdong 510642, China
Ziqi Guo South China Agricultural University, Guangzhou, Guangdong 510642, China
Jiayi Zhang South China Agricultural University, Guangzhou, Guangdong 510642, China

DOI:

https://doi.org/10.54691/s129mk07

Keywords:

Vertical Fiscal Imbalance; County Urban-rural Gap; Urban Expenditure Preference; Equalization of Public Services; Feasible Capability.

Abstract

Narrowing the gap between urban and rural areas in counties is the core task of realizing rural revitalization and common prosperity. The vertical fiscal imbalance between cities and counties at the level of the fiscal system is the deep institutional root that leads to the widening gap between urban and rural areas.Based on the theories of fiscal decentralization, fiscal competition, urban-rural dual structure, urban-rural integration development, and feasible ability, this paper constructs a systematic theoretical analysis framework.The study finds that the vertical fiscal imbalance between cities and counties leads to the structural imbalance of basic public service allocation such as education and medical care by strengthening the fiscal pressure of county-level governments and under the superposition of the asymmetry of urban and rural public service supply costs, and ultimately weakens rural residents. The feasible ability to improve income and well-being, thereby solidifying and expanding the multi-dimensional urban-rural gap in the county.This paper further analyzes the correction function of transfer payments in theory and the multiple reasons for their failure in reality, and puts forward some reform paths, such as deepening the reform of the financial system below the provincial level, optimizing the structure of transfer payments, and strengthening the supervision of budget performance. This study provides a new theoretical perspective for understanding the urban-rural gap under Chinese fiscal decentralization.

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