This paper first discusses the reasons for fiscal decentralization and the limit of the decentralization.
The relationship between fiscal decentralization and the size of local government has been researched deeply by western scholars, but promotion incentive is not involved.
Based on China 's fiscal decentralization reform, it explains the changes of local governments' enterprise behavior from the Angle of enterprises-based fiscal mode and land-based fiscal mode.
The further increase in fiscal decentralization or slackening in extra-budgetary fund management will result in many adverse effects on Chinas economy.
Due to fiscal decentralization, provincial government owns the fiscal rights, and accordingly it should take responsibility for local economic development and social stabilization.
After that the article defined the concept of fiscal decentralization and clarified different opinions about it.