Ⅱ．Improve Legal Transformation in Central-local Relation of Administrative Power
A．The Legal Protection of Local Power
After realizing the urgency of China's local government debt problem, we have a responsibility to rethink the institutional reasons why the administrative power in central-local relations for a long time has not been straightened out, while it involves the comprehensive evaluation of the financial law system and policy from more than 30 years of reform and opening-up in China．In fact, this reflection and evaluation have been conducting, except it is even more necessary in the current situation.
In general, a feature of the financial system in our country is that the division of fiscal income is relatively clear, but it lacks of formal partitions in government expenditure responsibilities．The tax-sharing reform in 1994 asked for the lower level governments to hand revenue to the higher level, but it did not adjust the spending tasks, the budget of local government became increasingly heavy in regions．Since the tax-sharing reform, in some important social services fields, such as education, health care, culture and science, etc., local governments spend more than 90％ of its total spending.[1]Chinese Decentralization and Local Governments Behavior—To Explore the Institutional Framework of Development Modes, Fudan University Press, 2010, p.101.>Compared with other countries, the public goods supply is often too tended for the governments, even some scholars believe that China's financial system can be summed up as “Predatory Fiscal Federalism”.[2]From the central, governments at all level always occupy a larger proportion of the fiscal revenue as much as possible, and put the responsibility to the government at a lower level.
Obviously, the administrative power in central-local relations at present is not perfect, and various problems and contradictions emerge endlessly．In this situation, the policy suggestions to improve the legal transformation degree of this relationship will naturally become a general consensus in our country, and these suggestions are expected to solve the disproportion of current financial powers and responsibilities of local governments．In this case, we might as well look at other countries' legal system and legal practice, and as a way of the reference object．For federalist states, the division of administration of central-local governments is a constitutional issue, the constitution or constitutional precedents defined the power of the central government or local governments, and the power that both of them share.[3]For unitary states, situations are more diverse．Some countries write directly the specific division of power in the constitution, such as Italian constitution in 1948, which has clearly listed the exclusive power of central government and the common rights in central and regions．Some countries do not list it, but it has defined the rights in some special areas, such as the Philippines constitution in 1987 stipulating that the Muslim autonomous regions legislative power over nine items．More unitary states' constitution stand for local autonomy, but there is no specific provision in the constitution text stipulated the way to share the power, they usually use specialized legislation (such as Germany's Fiscal Budget Law, Japan's Local Autonomy Law, Colombia's Regional Constitution Law) or by involving different items of special legislation to delimit the boundary of the central and local power.[4]Once this boundary is defined, the central and local governments shall not go beyond the line to exercise their power or shirk its legal responsibilities.
B．Lack of Rule of Law Causes the Disproportion of Administrative and Financial Power
Compared with advanced countries, the existing laws in our country, especially in the division of the administrative power in central and local government (and even compared with the countries that at the same stage with us) are immature and incomplete．The legal system is kind of vague and general, weakening the stability and applicability of rule．In our country, we can say the “national system”, the relationship between affairs and authorities in central and local governments, are generally still immature in terms of rule of law.
In China's legal system, the specific rules about the division of power are mainly reflected in the Legislative Law．Article 8 of the Legislative Law stipulates that “the following affairs shall only be governed by law: (1) affairs concerning State sovereignty; (2) formation, organization, and the functions and powers of the people's congresses, the people's governments, the people's courts and the people's procuratorates at all levels; (3) the system of regional national autonomy, the system of special administrative region, the system of self-government among people at the grassroots level; (4) criminal offences and their punishment; (5) mandatory measures and penalties involving deprivation of citizens of their political rights or restriction of the freedom of their person; (6) basic taxation systems, such as the institution of taxable items, the determination of tax rates, tax collection and administration, etc.; (7) expropriation and requisition of non-State-owned assets; (8) basic civil system; (9) fundamental economic systems and basic fiscal, customs, financial and foreign trade systems; (10) systems of litigation and arbitration; and (11) other affairs on which laws must be made by the National People's Congress or its Standing Committee”．There is no doubt that these 11 items (including the final matters) are defined as the exclusive power of the central government．At the same time, Article 65 of Legislative Law stipulates the State Council shall develop administrative regulations in accordance with the Constitution and laws．The following matters may be governed by administrative regulations: (1) Matters requiring the formulation of administrative regulations in order to implement the provisions of law; and; (2) matters within the administrative functions and powers of the State Council as provided for in Article 89 of the Constitution．Obviously, the central government can be self-development for power boundary through formulating these administrative regulations．While in local governments, Article 72 of Legislative Law stipulates that “the people's congresses or their standing committees of the provinces, autonomous regions and municipalities directly under the Central Government may, in light of the specific conditions and actual needs of their respective administrative areas, formulate local regulations, provided that such regulations do not contradict the Constitution, the laws and the administrative regulations”．At the same time Article 73 lists in the local rules and regulations the matters that the laws and administrative rules and regulations in local governments can involve, i.e．the matters for the local governments to make specific provisions in accordance with the actual conditions and the items belonging to local regulations to execute the laws and regulations.
The Legislative Law in our country has defined the legislative powers between the National People's Congress and the State Council and the central and local governments, but unlike other countries' constitution or special laws that give a list of rights for local autonomy, such as which powers belong to the central or local, which powers are shared by central and local governments．In 2015, Article 72 of the revised Legislative Law has stipulated that “In light of the specific circumstances and actual needs of a city with districts, the people's congress of the city with districts and its standing committee may formulate local regulations concerning matters of urban and rural construction and management, environmental protection, historical and cultural protection,”which clearly lists the legislative powers of “urban and rural development and administration”, “environmental protection”, “historical cultural protection”, but these three items neither covers all aspects, nor belongs to exclusive powers.
The key point is China's existing legal system has a deep-rooted concept that “lower-level law needs to obey higher-level law”, the power of the central government (including the National People's Congress and the State Council) is almost without restriction, and it can be infinite in theory．It can legislate in any fields, in the absence of a mechanism for judicial review, even the constitution also cannot give effective constraints to it; while in local areas (including the local National People's Congresses and local governments) the powers could be infinitely small in theory, because the legislation and the administrative rules and regulations of the State Council and the National People's Congress can arbitrarily increase local authority or reduce local responsibility, and can arbitrarily cut local authority or aggravate local responsibility．In the process of the game, the central government fully occupies a leading and active position, so in the current legal framework, the central government can according to its preferences arrange administrative authority relations without consent from local governments, and these arrangements may be based on a certain legal document, but in essence, they are just temporary policies without any stable guarantee, so the local governments are always at a very disadvantaged situation like “financial power needs to hand in, and responsibilities need to take”．Against this background, there is no wonder that local debt will be fast expanding.
Limited by the current degree of the rule of law, the unequal relationship between central and local governments in the financial system has become a normal state in the past few decades, and this situation often causes awkward situations like “the central gives a dinner, and the local has to pay the bill”．For example, in order to keep the promise of “open purchase surplus grain”, the central government has committed to the farmers, the State Council issued the Decision of the State Council on Further Deepening the Reform of the Grain Circulation System (the State Council, No.15 〔1998〕), and in the second part of this document it stipulated that “to reasonably divide the responsibility of the grain in central and local areas, fully apply the governor responsibility system”is the content of the division of the administrative power, the main responsibilities of the State Council are to “macro-control”, while the duties of local governments is to “do a good job in grain purchasing”．In other words, the central formulates policies and direct on a unified basis, but the specific responsibilities shall be taken by the local finance．Later, the fact proved that local finance could not pay the bill, and in order to reduce the financial burden on local government spending, the Ministry of Finance and other departments jointly issued the Notice of the Ministry of Finance on Unsettling Account of New Grains and Other Handing Policies of Unreasonable Taking up the Loans (the Ministry of Finance, No.484 〔1999〕) in 1999, the new grain payment and other loans need not unified digestion and carry out a principle of credit in other provinces, autonomous regions and municipalities, except Beijing, Tianjin, Shanghai, Guangdong.
In our country, the low level of their relationship in central and local also show as this phenomenon: even a single law has clearly stipulated the division of the power, but the central can based on some “extra-legal factors”change the existing pattern．In April 2004, for example, for the demand of using land policy to adjust the macroeconomic regulations, the General Office of the State Council issued “Emergency Notice On Carrying Out The Governance of Land Market And The Strict Management of Land”, this notice decided to suspend the decisions of the examination and approval of farmland transfer and non-agricultural construction land, the urgent construction projects need to be approved by the State Council．This notice was issued without any revision law, but it essentially changed the regulations of the land examination and approval authority division, which were formulated by the National People's Congress of the People's Republic of China Law on Land Management.
Thus it can be seen that whether in terms of expenditure responsibility, or the distribution of powers of governments, the central-local relations are not primarily based on the law, but on factors out of the law．On the one hand, local governments have to bear such heavy financial burden, on the other hand the policies were strictly limited, and the expansion of local debt also confirms the defects of the institutional in recent years.
In this situation, to improve the legal transformation of central-local relations in our country will be supported and responded by all walks of life．“Decision of the Central Committee of the Communist Party of China on Several Major Issues on Comprehensively Deepening Reforms”proposed to “improve legislation, clarify powers and functions, reform the tax regime, stabilize tax burdens, prepare transparent budgets, raise efficiency, establish a modern fiscal system, and give rein to the enthusiasm of both central and local authorities”, and “establish a system that ensures powers are compatible with spending responsibilities”．Specifically, in order to promote the rule of law of central-local relations, the priority is to establish the idea of “separation of powers”in constitution and other laws, and weaken the “hierarchy”,[5]and then to build highly transparent game relations between the central and local governments which is based on the rule of law．In this process, it should fully guarantee the independence of the local governance (like the concept of “local autonomy”), and cannot increase spending responsibility at will, at the same time it also should not arbitrarily deprive the basic power that based on the law.
[1] See Fu Yong,
[2] See Victor Shih, Mingxing Liu ＆ Qi Zhang, “Eating Budget”, the Logic of Fiscal Transfers Under Predatory Fiscal Federalism, FED Working Paper Series, No.FE20050009, 2005.
[3] See McCulloch v．State of Maryland, 17 U.S．［4 Wheat.］ 316 and Cooley v．Board of Wardens of Port of Philadelphia, 53 U.S．［12 How.］ 299.
[4] See Zhang Qianfan, National Sovereignty and Local Autonomy—The Legal Transformation in Central-local Relations, China Democracy and Legal System Publishing House, 2012, pp.90-92; Wen Zheng, The Authority Power in Central and Local Governments, China Economic Press, 2008, pp.92-109.
[5] For example, the Law of Regional Ethnic Autonomy in China provisions the proprietary rights of government offices in autonomous areas, the Basic Law of the Hong Kong Special Administrative Region and the Basic Law of the Macao Special Administrative Region stipulate the special power in Hong Kong and Macau, but we still have not a Local Autonomy Law, which has universal applicability in our country.