Centre–province relations under the Chinese Constitution

Constitutions of countries provide for the federal/unitary systems, and define the principles for central, provincial, and local government domains, and their inter-relationship at different levels. Usually, in a unitary state, significant powers are vested in the central government.

People’s Republic of China is a unitary state under its 1954 constitution, framed under Chairman Mao Zedong. The country has a principles-based Centralized Model, where the central government holds the most power, which is delegated to various provincial units, local governments, and municipalities, which implement the economic, political, administrative, and other policies of the central government, and are functionally accountable to it.

The 1982 Constitution, adopted during Deng Xiaoping’s reform era, preserved unitary structure and simultaneously created one of the world’s most distinctive governance models of a centralized political authority coupled with extensive administrative and fiscal decentralization for creating an enabling environment for more effective implementation, with a predominant emphasis on economic policies. President Xi Jinping also brought about constitutional amendments to further strengthen this policy.

The important Articles that structured the institutional framework and set the strategic direction include Article 1, which provides for the political foundation for the CPC; Article 3 combines unified central leadership; Article 30 states a multi-level territorial administration; Article 31 authorizes the creation of Special Administrative Regions; and Article 62 establishes the apex body of the National People’s Congress to establish provincial-level administrative units. At the same time, Article 89 empowers the State Council (cabinet) for national level administration, centralized economic planning and coordination with sub-national governments.

China today comprises 23 provinces (including its claim over Taiwan), five autonomous regions, four centrally administered municipalities, namely Beijing, Shanghai, Tianjin and Chongqing, and two Special Administrative Regions, viz Hong Kong and Macau. Autonomous regions, including western provinces, accommodate ethnic diversity, whereas SARs enjoy a high degree of administrative and economic autonomy under the constitutional principle of “One Country, Two Systems.” China is more accurately and most often described as a de jure, constitutionally highly decentralized unitary state, while practically it runs a system of “de facto administrative federalism”. That’s why China’s system is distinguishable from most federal constitutions elsewhere.

The flexible constitutional structure allowed Hong Kong to retain a common law legal system, international financial institutions as before, separate “Customs Territory Status”, and freely convertible currency, and direct administration of Macao and special Municipalities, all fostering their rapid economic development as well as national unity. Provincial and local governments exercise substantial authority over project planning, infrastructure, education, healthcare, urban development, investment promotion, and public service delivery. Shenzhen’s remarkable evolution from a small fishing village into a global innovation hub in two decades illustrates how experimentation of such provincial initiatives, before nationwide adoption, became a laboratory of national reforms, and continuous development of the corporate sector. So is the case of special economic zones established to attract FDI, piloting of Taxes on Goods in Guangdong and on Services in Shanghai and later in Beijing.

The 1994 Tax-Sharing Reforms under President Jiang Zemin and PM Zhu Rongji reinforced the unitary model in fiscal realms as well, strengthened center’s fiscal capacity, and established a new framework for revenue sharing and intergovernmental transfers. These reforms created incentives for each province and their respective municipalities to compete for revenue mobilization to finance economic development, investment, industrialization, and improved public services, particularly housing and health.

The unique constitutional design facilitated China’s spectacular economic and institutional transformation through market reforms, globalization, and industrialization in urban and rural areas. Later, more emphasis was laid on urban development. However, as the country aspires to become the world’s largest economy (already No. 2 with nominal GDP of US$ 20.7 trillion against $31.8 trillion in respect of United States), to maintain the current status of No.1 trading nation with US$ 6.48 trillion trade in 2025 (US$4.5 trillion in seven months of 2026 and $ 1.2 Trillion trade surplus last year), and to win the race of global high-tech power, its constitutional framework has to be supportive of rising requirement for global leaders status.

For successful fighting on these fronts in highly global competitive landscape, China has to evolve further through institutional innovation, strengthen and motivate private enterprise instead of large SOEs, ensure higher legal predictability, financial and technological transparency, enhanced protection of intellectual property, more effective responses to demographic issues, removal of structural imbalances in economy, including income and regional inequalities, and transparently meeting the local governments’ debt & real estate sector challenges, among others. With its current position, unique constitutional structure, particularly centralized political authority with administrative decentralization, incentivized local initiatives, and abundant financial resources, institutional capacity and determination to move strategically, the country seems poised to remain the principal driver of future reforms, unity, political stability, and sustenance of requisite rate of economic growth for socio-economic stability.

Copyright Business Recorder, 2026