Local Governments Are Growing More Financially Dependent on Beijing

(Bloomberg) — China’s local governments are growing increasingly reliant on money transferred from Beijing to pay for public services, as a drop in tax revenue and jump in “zero-Covid” costs pushed them further into the red last year.

Transfer payments from the central government to local levels to pay for education, health care and other general spending are expected to hit 10 trillion yuan ($1.4 trillion) this year, the Ministry of Finance said in its budget report last week. That’s equivalent to 86% of the income local governments are forecast to make from taxes and fees this year, up from 66% in 2015, according to Bloomberg calculations based on MOF data.