46 The uneven availability and affordability of health-care resources across geographical areas is also reflected in various health indicators, such as life expectancy, infant mortality, maternity mortality rates and underweight among children in different areas of the country.<sup>93</sup> Indeed, in some especially poor rural areas in the west and north, the health status does not seem any better than in some of the most impoverished regions in the world. In the poorest Chinese villages, there is still a high incidence of various types of infectious and endemic diseases, including chronic worm infections (World Bank, 2001). At the same time, in certain other areas, such as in the Shanghai region, both health care and health status is approaching the standard of developed countries.

An important background factor for the huge regional and local variation in both education and health is, of course, that the per capita tax base varies dramatically across villages and municipalities.<sup>94</sup> The inter-government money flows sent down from the central authorities to lower government levels partially compensate poor local governments for their limited powers of taxation. The compensation is quite modest, however. On their way down to local governments a considerable fraction of these money flows tend to be siphoned off – in more or less the same way as some Chinese rivers, which are full of water inland, turn out to be nearly dry when they reach the coast. As a result, transfers from the central government have not prevented an increasing gap in fiscal spending across geographical areas during the period of economic reform.<sup>95</sup> Indeed, in some poor areas, this has resulted in a combination of relatively high taxes and deficient human services.

Summing up: when China gradually shifted to a new economic system and the old arrangements for education and (in particular) health care broke down, the authorities were slow in building up new arrangements. This is, of course, a parallel to the slowness

> 93 For instance, in 1999, infant mortality was 37 per 1000 live births in rural areas, as compared to 11 per 1000 in urban areas; maternity mortality rates were 61 versus 33; underweight for children below five years of age was 14 versus 3 percent; and stunting rates for children under five were 20 versus 2.5 percent, respectively. While life expectancy is reported to be about 66 years in the least advanced provinces, it is 80 years in the most advanced ones (UNDP, 2005, p. 98).

> 94 Local authorities finance most of the government spending on both education and health care. An important background factor is the administrative decentralization of financial responsibilities within the public sector initiated in the early 1980s – the principle of _feng zou chi fang_ (“eating from separate pots”). Although some recentralization has taken place since then, the resources for providing human services still vary dramatically among provinces and municipalities.

> 95 The distribution of per capita public spending across provinces seems to be at least as uneven as the distribution of per capita GDP, perhaps even more so (China Human Development Report, 2005, p. 75); OECD, 2005a, Fig. 4).