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China - Managing public expenditures for better results : country economic memorandum (English)

Despite its high economic growth, China's public expenditure management faces profound challenges: 1) The retrenchment of the Plan puts more of the burden for the macro and microeconomic policy on the budget. 2) Extra-budgetary funds and quasi-fiscal operations of the banking system undermine fiscal discipline, which contributed to the repeated bouts of inflation. 3) Shifting spending to the Government's priorities is slow, and is in part undone during budget implementation. Over time, this could threaten sustainable growth and equitable growth. 4) While overall social indicators are high, regional disparities remain large. Government services seem overstaffed, which could escalate costs if wages continue to rise. To address these challenges, China needs to reform its public expenditure management. China's first priority is restoring fiscal discipline - to delineate a clear budget constraint for every line ministry and unit, and break down the sectoral budgets into organizational budgets. To forge a stronger link between the State Council's policy priorities and the budget, China needs to revamp its budget process. The State should focus on articulating the government's strategic priorities, but leave detailed planning for achieving these priorities to line ministries. Decentralized administration can be a major asset for cost-effective service delivery, if accountability for performance is improved.

Details

  • Document Date

    2000/04/25

  • Document Type

    Country Economic Memorandum

  • Report Number

    20342

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    China,

  • Region

    East Asia and Pacific,

  • Disclosure Date

    2015/10/09

  • Disclosure Status

    Disclosed

  • Doc Name

    China - Managing public expenditures for better results : country economic memorandum

  • Keywords

    public expenditure management reform;State Economic and Trade Commission;public expenditure management system;budget deficit;regional per capita income;medium term expenditure framework;standing committee on finance;social and economic development;gross fixed capital formation;township and village enterprise;high degree of centralization;public sector wage bill;efficiency of service delivery;increases in tax rate;line item budget;fiscal discipline;public sector deficit;social security fund;public sector performance;budget process;intergovernmental fiscal relation;general government expenditure;medium-term expenditure framework;incentives for performance;social indicator;government service;level of performance;access to sanitation;aggregate fiscal discipline;hard budget constraint;failure of performance;weights and measure;annual budget haggle;costs of policies;per capita revenue;tight fiscal policy;civil service system;world war ii;intergovernmental macroeconomic coordination;cooperation and development;value added tax;pension system reform;decentralization of responsibility;public goods provision;safe drinking water;state planning commission;secondary enrollment rate;implicit pension debt;accountability for performance;reformed budget process;assignment of responsibility;portfolio evaluation plan;national performance review;high growth rate;civil service wage;perception of corruption;placement of bond;probability of repayment;department of finance;emerging market economy;objects of expenditure;cash flow adequacy;annual budget cycle;secondary school enrollment;newly industrialized country;bank of england;social security policy;source of funding;budget speech;regional disparity;budgetary policy;budget system;budgetary resource;real expenditure;budgetary expenditure;expenditure limit;Macroeconomic Stability;earmarked grant;Infant Mortality;staff ratio;competitive bidding;evaluation capacity;off-budget funds;budgetary reform;fiscal risk;expenditure proposals;budgetary institution;budgetary management;expenditure growth;fiscal adjustment;budgetary procedure;contingent liabilities;labor input;net lending;policy priority;contingent liability;Public Services;budgetary fund;budget request;gdp deflator;delivering services;bank restructuring;fiscal resource;primary focus;fiscal deficit;banking system;budgetary adjustment;Performance Budgeting;foreign trade;budgetary outcome;political commitment;financial reporting;sectoral budget;budget proposal;detailed planning;popular participation;local expenditure;education standard;fiscal system;expenditure demand;provincial authority;state administration;local budget;treasury department;social outcome;life expectancy;global budget;outcome measure;marriage contract;financial balance;improving information;government outcome;budget decision;bottom-up approach;upward pressure;expenditure cut;borrowing requirement;state enterprises;implicit liability;loan guarantee;program budget;tax increase;personnel cost;balanced budget;government size;bond issue;increasing share;productivity increase;high spending;fiscal increment;institutional framework;budget appropriation;expenditure policy;market mechanism;unemployment rate;shadow economy;income share;illiterate population;extrabudgetary fund;investment outlay;limited contribution;fiscal liability;premium payment;Industrialized countries;Ethnic Minorities;classification system;expenditure classification;cost center;cost information;working capital;technological transformation;government worker;fiscal consequence;pension policy;government liability;bank failure;Labor Market;official estimates;international standard;government bond;additional revenue;bank profits;lending rate;sustainable deficits;loan classification;tax base;government revenue;comparator country;macroeconomic instability;secondary market;education indicator;price reform;market incentive;policy tool;decentralized government;medium-term framework;running cost;equalization transfer;federal highway

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Citation

China - Managing public expenditures for better results : country economic memorandum (English). Public expenditure review (PER) Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/755191468240587169/China-Managing-public-expenditures-for-better-results-country-economic-memorandum