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longer an effective budget unit. Instead, the county government manages the township directly.
Local Government Expenditure Responsibilities As defined by the State Council Regulations on the Implementation of the Tax-Sharing System (TSS) in 1993, the central government is mainly responsible for national security, international affairs, the operating costs of the central party and its organs, adjustment of the structure of the national economy, coordination of regional development, and adjustment and control of the macroeconomy. Those responsibilities include national defense; the cost of military police; international affairs and foreign aid; administrative costs of the central government; centrally financed capital investments; technical renovation of central enterprises; new product development costs; agricultural support; debt; costs of central culture, education, and health; price subsidies; and other expenditures. Subnational governments are mainly responsible for the operating costs of the local party and its organs and for local social economic development. Those responsibilities include local economic development; part of the operating costs of the military police and militia; locally financed capital investments; technical renovation of local enterprises; new product development costs; agricultural support; urban maintenance and construction; costs of local culture, education, and health; price subsidies; and other expenditures. The assignment of responsibilities to subprovincial governments is at the discretion of the provincial government. Although there are differences in the assignment of expenditure responsibilities across provinces, the common practice is for local governments at various levels to share the responsibilities defined as local by the central government. Fundamentally, local governments at any level are responsible for delivering (a) day-to-day public administration; (b) social and public services such as education, public safety, health care, social security, housing, and other local and urban services; (c) local economic development; and (d) local industrial policy (Wong 2000; World Bank 2002). Purely local responsibilities mainly include urban maintenance and construction, environmental protection, city water supply, and community services. They are assigned mainly to prefecture, county, and township governments (table 4.2). In essence, expenditure responsibilities among governments are not clarified because of wide concurrent expenditure assignments. The major public services are actually carried out by local governments at different levels, especially subprovincial governments, under a hierarchical structure. In particular, the actual responsibilities for such services as education and health care are
