Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

The aims of China’s leadership were thus clear. And it is tempting to imagine these priorities being rolled out across the country by an all-powerful one-party state. But in practice, Chinese central government is stretched thinly across the giant bulk and complexity of the world’s most populous nation. Though responsibility for revenue collection falls heavily on central government, government expenditure directly controlled from Beijing has amounted to no more than 4 to 5 percent of GDP since the 1990s, a very small figure by comparison with its American or European counterparts. In China, 80 percent of government spending is done at the regional and local levels, where expenditure has surged between 1994 and 2008 from 8 to 18 percent of GDP, even as China’s national income quintupled.27 The regime thus operates through decentralization and indirect mechanisms, which amplify its power and extend its reach, but also distort and distend Beijing’s intentions.