This paper explores the, as yet unresolved, crucial question of how best to conduct reforms aimed at controlling government size and improving relations between central and local governments. It suggests two ideas widely promoted and practiced in Japan, the ceiling control system and the fusion system of central-local relations. I argue that China could set up a ceiling control system to fix the total number of governmental departments and commissions and the maximum number of staff, and establish an institutionalized “fusion system” to promote decentralization. The paper demonstrates how these can be implemented to revise current reform practices.
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