Among the many explanations for China's rapid economic growth, fiscal decentralization, a institutional factor, has received long-term attention from academia since the late 1980s. How to objectively understand the institutional changes of fiscal decentralization in China? It is undoubtedly of great significance to sort out the issues of "what" and "how" about this system. This paper draws on the research paradigm of Historical Institutionalism and based on China's fiscal system itself to explore the institutional changes of fiscal decentralization in China. The findings are as follows, China's fiscal decentralization can be divided into four stages: the decentralization reform stage (1949-1978), the decentralization and concession reform stage (1979-1993), the tax distribution reform stage (1994-2012), and the modern fiscal and tax system reform stage (2013-present); China's fiscal decentralization has the legitimacy of institutional generation, and also exhibits the integrity of path dependence, the stability of fractured equilibrium, and the inclusiveness of gradual transformation; the localization of interests promoted by China's fiscal decentralization has shown significant positive incentives in supporting national governance, achieving common prosperity, improving social security, and coping with public crises. At the same time, we should also see the moral hazard problems induced by the localization of interests, especially the frequent occurrence of resource mismatch and waste caused by information asymmetry and insufficient capacity, as well as the negative impact of improper fiscal competition that has made intergovernmental collaboration and regulation more difficult. This paper provides an analytical framework for institutional change from the perspective of change process, change logic to institutional effectiveness, which provides ideas and enlightenment for interpreting the evolution of central and local fiscal relations and rationalizing China's fiscal system in the new era.
