Reform of Budget Performance Management and Local Financial Pressure in China

Abstract

As the situation of tight fiscal balance among local governments in China continues to intensify, research on how to release local fiscal pressure has attracted much attention. At the national level, the reform of budget performance management has significantly reduced the financial pressure on local governments; Mechanism analysis shows that reform can alleviate local fiscal pressure through two channels: improving fiscal expenditure performance and optimizing regional institutional environment; The analysis of regional heterogeneity shows that the reform only reduced the local fiscal pressure in the eastern region, while the fiscal pressure in non eastern regions did not decrease but instead increased. Finally, this article proposes suggestions for addressing the issues of unbalanced and insufficient reforms, which provide policy insights for China's subsequent efforts to improve the quality and efficiency of budget performance management.