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Prosper or PerishCredit and Fiscal Systems in Rural China$
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Lynette H. Ong

Print publication date: 2012

Print ISBN-13: 9780801450624

Published to Cornell Scholarship Online: August 2016

DOI: 10.7591/cornell/9780801450624.001.0001

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The Implications of Cadre Evaluation and Fiscal System for Local-Government Behavior

The Implications of Cadre Evaluation and Fiscal System for Local-Government Behavior

Chapter:
(p.76) 4 The Implications of Cadre Evaluation and Fiscal System for Local-Government Behavior
Source:
Prosper or Perish
Author(s):

Lynette H. Ong

Publisher:
Cornell University Press
DOI:10.7591/cornell/9780801450624.003.0004

This chapter examines bias in the lending practices of rural credit cooperatives (RCCs) across all locales from the perspective of institutional design. More specifically, it shows how the Chinese Communist Party's cadre evaluation system and the fiscal system combine to create overpowering individual and collective fiscal incentives for local governments to pursue local industrialization and revenue maximization at all costs. After providing an overview of the cadre management system in Chinese townships, the chapter discusses the short-term opportunistic behavior and outcome orientation of the cadre evaluation system. It also considers how fiscal reforms have made it an imperative for local authorities to promote industrialization and maximize revenue at the collective level.

Keywords:   bias, lending, rural credit cooperatives, Chinese Communist Party, cadre evaluation system, industrialization, townships, local governments, revenue maximization, fiscal incentives

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