Research on Policy Recommendations for Mitigating City-County Fiscal Vertical Imbalance and Narrowing County-Level Urban-Rural Disparities
Narrowing county-level urban-rural disparities is a core task for achieving rural revitalization and common prosperity, while the city-county fiscal vertical imbalance at the fiscal system level constitutes the deep institutional root cause of the widening urban-rural disparities. Based on fiscal decentralization theory, urban-rural dual structure theory, urban-rural integrated development theory, and capability approach theory, this paper constructs a theoretical analysis framework and conducts empirical testing using panel data from 122 counties in Guangdong Province from 2017 to 2024. The study finds that city-county fiscal vertical imbalance has a significant positive effect on county-level multi-dimensional urban-rural disparities. On this basis, this paper proposes policy recommendations from seven dimensions: deepening fiscal system reform below the provincial level, improving the transfer payment system, optimizing county fiscal expenditure structure, strengthening fiscal investment in "agriculture, rural areas, and farmers," establishing fiscal incentive mechanisms for urban-rural factor mobility, hardening county fiscal budget constraints, and improving city-county collaborative governance mechanisms, providing practical references for mitigating city-county fiscal vertical imbalance and narrowing county-level urban-rural disparities.
References
- The Central Committee of the Communist Party of China, & State Council. (2025, April 7). Plan for Accelerating the Building of a Strong Agricultural Nation (2024–2035). Retrieved April 9, 2026, from https://www.gov.cn/gongbao/2025/issue_11986/202504/content_7019260.html.
- Tiebout, C. M. (1956). A pure theory of local expenditures. Journal of Political Economy, 64(5), 416–424.
- Oates, W. E. (1972). Fiscal federalism. Harcourt Brace Jovanovich.
- Montinola, G., Qian, Y., & Weingast, B. R. (1995). Federalism, Chinese style: The political basis for economic success in China. World Politics, 48(1), 50–81.
- Rodden, J. (2006). Hamilton’s paradox: The promise and peril of fiscal federalism. Cambridge University Press.
- Lewis, W. A. (1954). Economic development with unlimited supplies of labour. Manchester School of Economic and Social Studies, 22(2), 139–191.
- Ranis, G., & Fei, J. C. (1961). A theory of economic development. American Economic Review, 51(4), 533–558.
- Sen, A. (1999). Development as freedom. Oxford University Press.
- Wu, Y. B. (2017). Bias in investment under Chinese-style decentralization. Economic Research, 52(6), 137–152.