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The Government of China has placed strong emphasis on addressing problems related to agriculture, farmers, and rural society, with the development of a "New socialist countryside" designated as a top priority for the Eleventh Five-Year Plan (2006-2010). The financing of public services in rural areas will be a key determinant of the Plan's success. This paper analyzes the performance of the intergovernmental fiscal system - the financing of rural development through counties, townships, and villages - and the impact of recent reforms. The authors show that achieving the government's objectives will require channeling substantial new resources to rural areas.
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