Budgets, Extra-budgets, and Small Treasuries: Illegal monies and local autonomy in China

Abstract

In the wake of repeated crackdowns on the 'three disorders' and 'small treasuries', it is obvious that local governments in China collect substantial amounts of illegal monies. What is not immediately obvious is how illegal monies matter. In this article, I assess both the amount of illegal monies that local governments collect and their significance relative to local autonomy. I find that because illegal monies are not rival to legal monies but rather complementary, although illegal monies may give local governments a greater ability to pursue their own particularistic agendas, they do not fundamentally alter the principalagent structures that link the localities to the center.