The central government has been giving money to local governments for projects since 2002, which has led to a unique way of governing called project institutions. This has made local governments borrow more money, especially in poorer areas, because they feel less pressure to pay it back. The central government should make project applications fair, clarify who is in charge of spending money, and be stricter about how much debt local governments can have. The research shows that project institutions make local governments borrow more money, mostly for public projects, and this effect is stronger in poorer regions.