Using Gini coefficients of financial independence rates(FIR) and financialautonomy rates(FAR), this paper analyzes the effects of the generalintergovernmental grants on fiscal equalization. The main findings are asfollows. First, in all types of local governments but autonomous districts, theGini coefficients of FIRs have been stable since mid-2000. The coefficients ofFARs which include general grants are much lower than those of FIRs. Thecoefficient of the autonomous districts’ FARs is bigger than those of the othergovernmental types and shows a rapidly increasing trend. Second, the paperdecomposes the differences in the Gini coefficients between FIRs and FARsinto gap-narrowing and reranking components, and presents that the trends ofthe sizes of each component are largely unstable. The reranking componentsin provinces or autonomous districts are rather small but those in counties arelarge enough to dominate the gap-narrowing components. These resultsprovide some policy implications that the fiscal equalization scheme amongmetropolitan areas has to be strengthened and that an overall reform of theintergovernmental transfer system is needed in order not to reverse the fiscalcapacities of local governments.