Abstract: Since the tax-sharing system reform, the reliance on central government's transfer payment for financial expenditure has
become a prominent feature of Yunnan Province. After investigating the relationship between the transfer payment and provincial
finance in Yunnan, it is found that Yunnan has changed from tax deliverer to a net subsidized province. This developmental path is
different from other provinces, and major reasons are analyzed from the following two aspects. On the one hand, the distribution of
shared tax sources under the current tax-sharing system is seriously unbalanced between the central government and Yunnan Province.
On the other hand, the revenue of Yunnan has its own peculiarities. Continuous upgrading the transfer payment system and
strengthening fiscal construction of Yunnan Province are the major approaches to improve the relationship between central finance and
provincial finance.