Abstract:

For local finance， China has established a two-tier regulatory system of central and local decentralized supervision. However， this system lacks a “single line of communication” for local governments to express their ideas and suffers from an unbalanced allocation of regulatory powers and responsibilities. China's existing state management system， the structure of central and local affairs distribution， China's Tiao-kuai relationships， and the core institutional requirements of the “centralized leadership” of local financial supervision， have all led to a system of local financial supervision that can only develop and improve along the direction of dual leadership. This requires the establishment of a local financial department within the State Council at the central government level to assume local financial supervision and management authority. Such a body must clarify the specific responsibilities of local financial supervision and the risk management of local governments， with the goal of smoothing the top-down management pattern from the central to the local level.

Key words: local finance, regulatory system, two-tier supervision, Tiao-kuai relationship