Fiscal decentralization in China affects how public goods are provided by different organizations. If not done well, it can lead to a lack of public goods and unmet social needs. Improving fiscal decentralization can make society better off. The focus should be on how public goods are divided between government, market, and non-profit groups, and then on how power is shared between central and local authorities. By expanding and deepening fiscal decentralization, social welfare can be improved.