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