Why money cannot be spent as budgeted? Lessons from china’s recent budget reforms¹

Abstract

To modernize budgeting system is a challenge issue in many developing countries. To some scholars (Schick, 1998a, 1998b; Ma, 2009a), developing countries must first put into place basic budgetary controls before moving to more advanced models of budgeting. This approach of “basic first,” however, is questioned by others (e.g., Andrew, 2006). Drawing on China's recent budget reforms, this essay reconfirms the validity of the “basics first” approach. In China, budget reform since 1999 has begun to install budgetary controls for state finance, leading to an enhancement of budgeting capacity and financial accountability. However, governments at the same time have begun to be plagued by the unexpected problem of delays in spending and the accumulation of significant underexpenditures. Contrary to what many people may believe, we contend that this somewhat odd problem arises not because the new budgeting system has exercised too much control but rather because the new system is not yet effective in exerting budgetary controls.

Citation

Ma, J. and Yu, L. (2012), "Why money cannot be spent as budgeted? Lessons from china’s recent budget reforms¹", Journal of Public Budgeting, Accounting & Financial Management, Vol. 24 No. 1, pp. 83-113. https://doi.org/10.1108/JPBAFM-24-01-2012-B005