Modernizing the national financial governance system need to improve the financial management system below the provincial level and set up the public finance system to promote the equalization of basic public services.However,most expenditure responsibilities of basic public services were borne by county go-vernments in China.In order to achieve public services equalization,the most important thing is to narrow the financial gap between counties through financial transfers.In this paper,we built financial equalization index of 31 provinces using county fiscal data from 1995 to 2009,and then analysis how the vertical distribution structure of fiscal transfer effect financial equalization using provincial panel data.The results are shown as following:Firstly,the larger proportion of transfer payments the county got,the stronger effect of fiscal equalization in province the transfer payment got.Secondly,expenditure decentralization affected fiscal equalization effect of transfer payment.Thirdly,counties directly controlled by province-level governments could obtain more transfer payments since funds' allocation focusing on county and information channels is better built.After controlling variable of this reform,the conclusion still holds.Therefore,in order to improve the public service equalization,vertical distribution structure of transfer payment should be improved and reform of counties directly controlled by province-level governments should be accelerated.