Research On The Performance Evaluation Of Public Project Expenditure

From the year of 1994 to 2014, public expenditure of China had raised from 579billion RMB to 15179billion RMB. The average growth rate is about 17.74%. The main functions of public expenditure exist in satisfying public demands, adjusting income allocation and boosting economy development. Its primary duty is solving public problems for the public, by providing public services or goods. The high speed growth of public expenditure has raised questions:what effects has the huge expenditure caused? Especially for project expenditure, has it solved the public questions effectively? In the administration system of China, financial expenditure performance assessment system has been designed to answer those questions. Public expenditure can be divided into two categories:basic expenditure and project expenditure. No matter the performance is good or not, basic expenditure, like administration expenditure or defense expenditure, must be provided. However, project expenditure stands for the key concerns in one period, and it is relatively flexible. The performance of project expenditure is related to the capability of financial management and administration management. The importance of performance evaluation in project expenditure area is obvious.Compared to the performance evaluation methods in developed countries, Chinese project expenditure performance evaluation has several shortcomings. For example, there is no clear boundary between Chinese performance evaluation and financial audit. The academic discussions never pay enough attention to the essence of public finance. Based on the importance of financial expenditure performance evaluation and the immature practice in China, this dissertation introduces the concept of policy performance, and then sets project expenditure as an example, to study the financial expenditure performance evaluation system, tries to propose an operational solution for Chinese financial expenditure performance evaluation.In the theory part, this dissertation introduces a public policy concept,’policy performance’, into the area of financial performance assessment explains the concept of policy performance from the perspective of public value. The policy-based property of project expenditure has been emphasized again and the principal -agent relation in the project expenditure process has been clarified. The essential property of policy performance evaluation is to avoid moral hazard from the mechanism during the project expenditure process. According to the principles of mechanism design, the principles of evaluation have been proposed and elucidated. The word of ’performance’ here should be regarded as a concept belongs to public values, which aims at better resource allocation. Public policies supported by project expenditure are the evaluation targets. The index design follows the public value categories from the perspective of policy target group, aiming at inspect the effect after the police conducted. It’s an open and bottom-up system. The starting point of policy performance evaluation is the realization of public values. Efficiency, effectiveness, equity and sustainability are chosen as the main public values in the policy performance evaluation system of project expenditure.In the practice part, two formula grant projects were employed to explain how the policy performance evaluation system of project expenditure works. One project is Rural Libraries Project in Zhejiang Province, which is a cultural infrastructure construction project. The other one is Subsidy Project for Better Seeds of Rice, which is a subsidy project. These two cases prove that the policy performance evaluation system of project expenditure has its practical value.