Reforms to the relationship betwen central and local government in China.
The government last month issued two blueprints for a sweeping reorganisation of the country's bureaucracy (here and here, links in Chinese). They include policies that significantly alter the balance of power between central and local government institutions. These aim to overcome foot-dragging and poor policy implementation at local levels by improving incentives and supervision, and eliminating overlapping responsibilities and conflicts of interest.
With the backing of an increasingly powerful Xi, much of the agenda is likely to be implemented.
In key policy areas such as the environment, local bureaus should have more reliable access to funding.
New taxes and constraints on borrowing should strengthen local government finances and help reduce their debt burden.
Local governments may have less leeway to offer business incentives such as tax breaks and other regulatory incentives.
