Abstract: The reform of the tax distribution system can strengthen the strength of the state revenue, while at the same time, it has also brought in the problems of asymmetry of property rights and powers of the local governments and regional financial differences. Then transfer payments have become the important means of the central government to balance these financial differences. However, this means dose not have the proper effect of equalization. Among them, the special transfer payments was heavily criticized but still grew steadily. The research shows that under the conditions of China’s special political and economic system, the existence of the special transfer payment has its rationality. The empirical analysis based on the urban minimum life guarantee confirms that special transfer payment can really play a role in promoting the equalization. At present, its due effect should be developed by establishing a supervision mechanism, designing a system of effectiveness evaluation, changing the examination system of local governments, and so on.

Key words: fiscal decentralization; special transfer payments; general transfer payments; subsistence allowances for the urban poor; equalization effect