Searching for Fiscal Responsibility: A Critical Review of the Budget Reform in China

Abstract

The 2008–2009 global financial crisis has made budget management and fiscal responsibility more imperative in many developed economies. A budget crisis has not occurred in emerging economies such as China. However, in China, the demands of fiscal responsibility have increased against the backdrop of bulging government revenues in recent years. Over the past decade, the Chinese government has started to promote self-constrained bureaucracy and strengthen its fiscal responsibility and accountability in budget formulation and implementation. The 1999 budget reform that aimed to improve fiscal responsibility was hailed a success by previous literature. Drawing on field research in five counties in China between 2008 and 2010, it is argued that though some achievements have been made, the budget reform has not substantially improved both accountability and transparency within the bureaucracy. The implication of this study is that top-down, supply-side reforms led by the state may not be effective.