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Zurich Open Repository and Archive University of Zurich Main Library Strickhofstrasse 39 CH-8057 Zurich www.zora.uzh.ch Year: 2017 Local authority debt – Problems and solutions Braun Binder, Nadja ; Wieland, Joachim Posted at the Zurich Open Repository and Archive, University of Zurich ZORA URL: https://doi.org/10.5167/uzh-141608 Published Research Report Published Version Originally published at: Braun Binder, Nadja; Wieland, Joachim (2017). Local authority debt – Problems and solutions. Speyer: Deutsches Forschungsinstitut für öffentliche Verwaltung. Yukai WANG / Gisela FÄRBER (ed.) Comparative Studies on Vertical Administrative Reforms in China and Germany Speyerer Forschungsberichte 285 Yukai WANG / Gisela FÄRBER (ed.) COMPARATIVE STUDIES ON VERTICAL ADMINISTRATIVE REFORMS IN CHINA AND GERMANY DEUTSCHES FORSCHUNGSINSTITUT FÜR ÖFFENTLICHE VERWALTUNG SPEYER 2016 Gefördert durch die Bundesrepublik Deutschland Bibliografische Information der Deutschen Bibliothek Die Deutsche Bibliothek verzeichnet diese Publikation in der Deutschen Nationalbibli- ografie; detaillierte bibliografische Daten sind im Internet über http://dnb.ddb.de ab- rufbar. (Speyerer Forschungsberichte ; 285) ISBN 978-3-941738-23-2 Herstellung: DEUTSCHES FORSCHUNGSINSTITUT FÜR ÖFFENTLICHE VERWALTUNG SPEYER Alle Rechte vorbehalten Umschlagentwurf: © 8/97 TRIFTY ART Grafik Design • 67550 Worms • Hauptstr. 32 • Tel.: 0 62 41/95 15 38 V Preface June 2016 The “Sino-German Comparison of Vertical Administrative Reforms” is an in- ternational cooperation project initiated during the preparation period of China Society of Administrative Reform (CSOAR) from 2009 in cooperation with the German Research Institute of Public Administration and the German University of Administrative Sciences Speyer. It was supported by the Sino- German Public Policy Dialogue Program of the Deutsche Gesellschaft für In- ternationale Zusammenarbeit (GIZ). In 2010, the Sino-German cooperation project had officially launched and lasted for more than 3 years till its closure in October 2012. There are two reasons for choosing the topic of vertical administrative re- forms for cooperation. On the one hand, the social and economic structures of China have been changing significantly after more than 31 years of reform and opening-up. Changing the dual structure of urban and rural areas, boost- ing the strategy of urban-rural integration, accelerating the progress of in- dustrialization and urbanization, expanding prefectural right of economic and social development, promoting counties directly under the management of provincial governments and achieving equivalence of public services etc. have a magnificent and profound impact on China's longitudinal administra- tive levels, provincial, municipal and prefectural jurisdiction, public govern- ance mode, finance and taxation, investment, and personnel management system. On the other hand, although Germany is a federal state, it has abun- dant historical accumulation and practical exploration in terms of various ver- tical levels of governments and administrations. It has accumulated plenty of experience especially in promoting urban-rural integration by functional and territorial reforms. There are many things that both parties can learn from each other, which deeply requires comparative studies. Both parties have hosted four major international academic conferences over more than three years: the first was the academic seminar of "Sino-Ger- man Comparison of County Governance" hosted by the Chinese Academy of Governance in October 2010 followed by the "Territorial and Functional Re- forms in China and Germany - A Comparison of Reforms of Sub-provincial / Sub-state Governance - " hosted by the German University of Administrative Sciences Speyer in September 2011. The third was the academic seminar of "County Public Finance Reform under Urban-Rural Integration" hosted in VI Hangzhou, China, in March 2012; the fourth was the academic closure con- ference "Administrative Reforms in China and Germany against the Back- ground of the Financial Crisis" hosted by the Chinese Academy of Govern- ance in October 2012. Among all those academic conferences, the partici- pants not only include experts and scholars from both China and Germany as well as scholars from other European countries, but also a certain number of officials from actual government sectors. They conducted profound compar- ison and discussion as well as provided a batch of papers with high academic level. During more than three years of cooperation, both parties have appointed experts, scholars and government officials to visit the other country for field study and academic communication many times. It gave them a better under- standing of each other, enhanced their relationship, strengthened coopera- tion, which is beneficial for both parties. The 31 papers collected in this book are the outstanding results of mutual cooperation. This book has a collection of 31 pieces of research results of Chinese and German experts, scholars and government officials. They are categorized into four sections: 1. Introduction and analysis of the current situation of Sino-German admin- istrative systems, such as experimental units of counties directly under the management of provincial governments in the progress of China's ur- banization, comparison of the Sino-German intergovernmental jurisdic- tion division, history of the German administrative regions and local fi- nance of Germany etc.; 2. Sino-German challenges faced by the administrative systems, such as challenges of reform of counties directly under the management of pro- vincial governments in China, urban-rural imbalance in the progress of modernization of Germany and impacts of population change on local ad- ministration management.; 3. Sino-German exploration and experience in administrative reform, such as experience and inspiration of the administrative hierarchy reform of Hainan, China, efficiency and expectation of strategies of “urban-rural in- tegration” in Chengdu, China, inter-municipal cooperation in Germany – design and limits of shared service, multilevel function reformation of Rhineland-Palatinate, Germany; 4. Sino-German strategies of administrative reforms under the financial cri- sis, such as influences of economic and financial crisis on German admin- istration, strategies of China's urban-rural integration and optimization of VII longitudinal administrative levels under financial crisis, promotion of equivalence of public services with fiscal balance. After publication of the Chinese conference papers “中德行政体制改革比较 研究”, the English version of the conference papers has suffered an unfortu- nate delay due to problems of translation. The papers represent the differ- ences in cultures of academic publication between both countries. As only very few information about the vertical administrative reform in China and corresponding reforms in Germany are available in English the publication will fill this knowledge gap. Both partners have agreed to continue common research on the implementation of the administrative reforms in China and Germany, their implementation and actual complementary issues of reform. It should be highlighted that without the sponsorship of GIZ, the "Sino-Ger- man Public Policy Dialogue" Program would not be implemented success- fully, and CSOAR as well as the two Speyer institutions have also provided us with great support. Moreover, GIZ covered the traveling costs of the German and European experts to and in China and those of the Chinese partners in Germany. Hereby, as the directors of this program, we would like to express our sincere gratitude to GIZ, CSOAR, Chinese Academy of Governance, Ger- man University of Administrative Sciences Speyer, German Research Insti- tute of Public Administration Speyer and all the experts, scholars, govern- ment officials and related personnel who put efforts in the program and the book. We also thank Dominique Köppen, Stephanie Hengstwerth, Patricia Sander and Ursula Jungkind for all their efforts to prepare the proofs. Meanwhile, valuable opinions are welcome from readers and friends who are interested in this book! WANG Yukai Gisela FÄRBER Vice-chairman of CSOAR, German University of Chinese Academy of Governance Administrative Sciences Speyer VIII IX Contents 1. THE CHINESE AND THE GERMAN ADMINISTRATIVE SYSTEM IN COMPARATIVE PERSPECTIVE 1 WANG Yukai: Research on Vertical Administrative Reform in China 3 Stefan FISCH: Public Administration going down to Rural Areas: Organizational Designs in History 13 ZHANG Zhanbin: The Pilot of Province Governing Counties Structural Reform and Its Implication for Policies in the Progress of Urbanization 21 REN Jin: Vertical Government Relationship in China and Germany: A Comparative Perspective 35 Sabine KUHLMANN: Local Government in Germany: Key Features and Current Reforms 51 Gisela FÄRBER: Local Finance in Germany 69 Marco SALM, Stephanie HENGSTWERTH: Local Taxes in Germany – Problems and Reform Approaches 83 Nadja BRAUN-BINDER, Joachim WIELAND: Local authority Debt – Problems and Solutions 97 Gunnar SCHWARTING: Financing Counties in Germany -with specific Regards to the Situation in Rhineland-Palatinate- 105 Jochen DIECKMANN: Local Fiscal sovereignty, Financial Supervision and Local Budgetary Rules 119 X XU Zhengzhong, WANG Zhijie: A Comparative Study of the Sino-German Public Financial Support Mechanism to the Vocational Education 127 2. CHALLENGES OF LOCAL GOVERNMENT IN CHINA AND GERMANY 139 Stefan FISCH: Rural-Urban Inequalities,