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On December 15, 1993, the State Council decided to introduce financial management of divided tax system.

In 1994, China launched the reform of financial management of divided tax system.
Since then China formally kicked off the reform of intergovernmental fiscal transfer payment system and gradually established a fairly standardized intergovernmental fiscal transfer payment system.

Combined with the income tax revenue sharing reform in 2002, China basically established the framework of financial system that can meet the demand of socialist market economy.

This is the most widely spread, the strongest and the most influential institutional innovation concerning intergovernmental fiscal relations since the founding of the country.