Research Brief | Tibet Autonomous Region (TAR) Fiscal Policy Under the Hu-Wen AdministrationPosted: March 3, 2015
The TGP Research Brief is a new series produced by the Tibet Governance Project at the Elliott School of International Affairs to make academic research and scholarly analysis of critical issues of governance and policy challenges in contemporary Tibet available to a broader policy interest community and the general global public.
Dramatic surge in subsidies in TAR after 2008
A study of fiscal policy in the Tibet Autonomous Region (TAR) from 1990 to 2012 indicates a dramatic intensification of Beijing’s prevailing economic strategy of massive state subsidization of the region in the post-2008 period. Andrew M. Fischer’s 2015 study demonstrates that while under the Hu-Wen administration, state subsidies and investment increased moderately across the ten western provinces of the PRC, subsidies surged dramatically in the TAR after 2008, reaching levels from 2010 onwards never before observed in any other province or in any other period of the PRC.
In 2010, direct budgetary subsidies from the central government to the local government of the TAR exceeded 100 percent of the TAR gross domestic product (GDP) for the first time – exceeding even the levels reached during the peaks of subsidization during the Maoist period in the late 1960s and 1970s. Thereafter, subsidization continued to surge, reaching almost 116 percent of GDP by 2012.
By comparison, budgetary subsidies to the government in Qinghai reached 44 percent of GDP. In Guizhou, the poorest province of the PRC, subsidies reached 16 percent, while in Gansu, the second poorest, they reached approximately 18 percent. Subsidies were increasing in these other provinces, but nowhere to the extent they were in the TAR. Unlike in TAR, the economies of these other poorer provinces slowed as the Chinese national economy has slowed.
TAR the only provincial-level unit to meet growth target in 2014
Given the unprecedented flow of subsidies to the region, it is perhaps not surprising that the TAR was also recently announced as the only provincial unit of the PRC to have met its economic growth target in 2014. The TAR economy grew by 12 percent — precisely on the target set by the local government. Since economic activity in the TAR is essentially driven by government spending and investment, the government is able to meet its targeted growth rate by adjusting the flow of subsidies. To a large extent much of economic growth in the TAR has thus been an accounting illusion.