How Does China's Local Fiscal Decentralization Promote Common Prosperity? An Analysis of the Mediating Role of Rural Revitalization

China has established a governance system characterized by fiscal decentralization and political centralization. The level of fiscal decentralization in local governments naturally influences rural revitalization and common prosperity. This study uses provincial panel data from China for the years 2010–2021 to examine how fiscal decentralization and rural revitalization affect common prosperity. The TOPSIS entropy-weight method is used to evaluate the level of rural revitalization in five dimensions across provinces. A fixed-effects model is applied to analyze both the direct impact of fiscal decentralization on common prosperity and the indirect effects mediated by rural revitalization. The findings indicate the following. 1. Both the level of rural revitalization and the degree of common prosperity have generally increased across provinces, although significant regional disparities remain. 2. Fiscal decentralization fosters the development of common prosperity. A one-unit increase in fiscal decentralization corresponds to approximately a 1.44-unit increase in common prosperity, with the indirect contribution via rural revitalization accounting for roughly 46% of the total effect. 3. The impact of fiscal decentralization on common prosperity exhibits regional heterogeneity, with stronger direct and indirect effects observed in the eastern regions than in the central and western regions. Policy recommendations based on these findings are to deepen fiscal decentralization reforms, sustain the rural revitalization strategy, and promote balanced regional development. JEL CODE: P25 · R11 · R58