Growth versus equity: the effects of centralized fiscal transfers on Chinese provinces

Kian Ong, Kent Matthews, Baoshun Wang

Research output: Journal PublicationArticlepeer-review

1 Citation (Scopus)


Centralized fiscal transfers to the provinces are the principal means of reducing income inequalities in China. The coastal provinces are the main transfer donors to the poorer provinces. We evaluate if the equity objective sacrifices aggregate growth using four panel vector auto-regressions (PVARs) for four geographical regions of Chinese provinces. The PVARs are estimated for centralized transfers, government spending, taxes and output from 1994 to 2018, whether or not transfers sacrifice growth depends on geography. Transfers reduce inequality and generate growth in the middle provinces; reduce inequality but sacrifice growth in the western provinces; and worsen inequality and sacrifice growth in the northeast provinces.

Original languageEnglish
Pages (from-to)2307-2322
Number of pages16
JournalRegional Studies
Issue number11
Publication statusPublished - 2023


  • China
  • decentralization
  • fiscal multipliers
  • fiscal transfers
  • regional growth
  • regional inequalities

ASJC Scopus subject areas

  • General Environmental Science
  • General Social Sciences


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