The Effects of Decentralization on Corruption in China

Does decentralization exacerbate Chinese corruption? This study uses unique quasi-experiments of “province-managing-county” and “county-power-expansion” reforms in China from 2003 to 2015 to investigate this question. Improving the measures of corruption, decentralization, and institutional conditions, this study finds that decentralization reduces corruption in China. The results remain consistent after controlling for potential endogeneity. Moreover, the establishment of appropriate institutions such as legal and the market system is found to be effective in controlling corruption, whereas the current supervision system has not contributed to reducing corruption