[extract] As a consequence of economic decentralization, which is a main aspect of Chinese economic reform, local governments have obtained much more economic powers. This means that the local governments have become not only much more self-determining in relation to the central government, but have acquired much greater power to manage directly the economic entities within their jurisdiction, and even the main players of economic competition and development. In this situation, local governments tend to make every effort to maximize economic interests of their own.

Consequently, negative phenomena have largely emerged in recent years, such as heaps of duplicate constructions, over-consuming of natural resources, various preferential policies for absorbing capital, unsighted reduction of tax, low-priced or free lending of land and numerous ways of local protectionism. Economic division among administrative regions and local protection of native interests certainly hinder the freedom and fairness of trade, and the shape of a unified free market. Moreover, these have led to worrisome beneficial conflicts among administrative regions, which have showed disadvantages on the unified interests between the state and citizens. The conflicts are turning out to be serious, and thus noteworthy.