Association for Public Policy Analysis & Management

Public trust in government is an essential foundation of the legitimacy of modern states. Past decades have seen a decline of public trust in government in the developed industrialized countries. Decentralization, with its promises to improve the relation between the government and its citizenry and increase the efficiency of government services, is considered an effective measure to revive public trust in government. Local government is in a better position to more effectively serves local needs with a shorter distance of information and more direct opportunities of public participation. In the context of fiscal decentralization, local governments gain greater fiscal autonomy to be able to attract qualified personnel and strengthen their capacity to provide better public services, thereby improving public trust in government.

However, most existing studies on the role of decentralization on political trust rest on the assumption that fiscal decentralization is aligned with the extent of administrative and decentralization. Such alignment, which may be true in most democratic countries, is not so in authoritarian states. For instance, although China is known for its fiscal decentralization during the economic reform, its administrative system remains top-down. Local officials in China are held politically accountable to their superiors and heavily engaged in competition for promotion opportunities controlled by the central government. Previous studies have shown a trust deficit among the Chinese public on local government compared to the central government.

How has the asymmetric decentralization contributed to the decline of public trust in local government in China? We argue that more fiscal autonomy, a result of fiscal decentralization, has granted local officials more fiscal capability to invest in areas better aligned with their preferences. Yet, the top-down administrative system and the upward accountability and personnel control system have strengthened local government’s preferences in promoting economic development rather than public services. Such expenditure distortion toward economic development investments as opposed to public services – contributes to lower trust in local government.

We present an empirical analysis to demonstrate the causal impacts of asymmetric decentralization on political trust in China, combining a micro-level dataset from the 2010 China General Social Survey (CGSS) and city-level public finance dataset. We conduct multilevel ordinal regression analysis to test the following hypotheses. First, all else equal, citizens in cities with greater fiscal autonomy tend to have a higher level of trust in their respective local governments. Second, expenditure preference of local governments plays a mediating role on the impact of decentralization on political trust. In particular, cities with more fiscal autonomy are more likely to spend a greater share of fiscal revenues on economic development as opposed to public services; additionally, citizens are more likely to trust local governments with more expenditure on public services and less on economic development.

This research offers additional empirical evidence on the relationship between decentralization and public trust in government by highlighting asymmetric decentralization in the authoritarian state of China. This research would also contribute to the understanding of the ongoing governmental reform in China in a broader context of institutional transformation.