County Governance and the Promotion of Social Development in a Mixed Economy

Abstract

A large literature analysing the links between decentralization of the fiscal system and responsibility over the provision of public services and social safety nets has highlighted on the one hand the implementation difficulties of resource-poor county governments, and on the other hand the continued prioritisation of economic goals over social development by those same county governments. The current Chinese leadership’s aim of building a harmonious society, however, brought about a policy shift that emphasised the quality of economic growth. Through the case study of Hongtong County in Shanxi Province this paper examines the issues faced by a county government in the delivery of public services and in building a functioning social security system. It puts forward the constraints faced by the county government but also shows that there is willingness to act and a capacity to promote social development and social inclusion, though this has mainly been done through an active encouragement of private participation to fill in the gap of public provision. The case study shows that such a strategy can be successful during times of economic bonanza, but for it to become sustainable government funding remains crucial, alongside the need for better regulation of both public and private provision.