The Illusion and the Reality of Chinese Budget Reforms: Does Budgeting Influence Corruption Perception?

Abstract

Anti-corruption campaigns have been part of Chinese governance for decades. In the late 1990s, the government began to transform its anti-corruption efforts into a permanent institution, and the effect on corruption control caused by budget reforms started to emerge. Some studies have discussed and explained how the transformation of government's financial structure and performance would reduce rent-seeking motives and control corruption at the provincial and central level. Whether those financial changes could also affect corruption perception at the individual level still needs to be verified. This study uses Chinese data (2010–2012) from the third wave of the Asian Barometer Survey (ABS) to explore how objective performance achieved by budget reforms affects subjective corruption perception. It also examines the citizen empowerment effect and its interaction effect with financial variables on corruption perception. The conclusion suggests that budgeting has a larger influence on the corruption perception of local government than on the corruption perception of central government. As budget transparency and audit have improved, local government should be perceived as less corrupt. Furthermore, budget transparency will gradually develop a new and different means for the public to supervise local government activities rather than through a formal political process like an election. Those citizens with low citizen empowerment will get more information from budgeting disclosures and may not think the government is corrupt. In addition, the budget deficit has non-linear effects on the corruption perceptions of both the local and the central governments.