A Study On The Democratic Reform On Chinese Government's Budgeting

Government budget entails not only the issue of political interest and economic efficiency but also the justice of the social resources allocation. Democratic budgeting can be defined as people apply their rights in the financial decision-making process through legal procedures, basing on the philosophy that all rights belong to the people. It is only when democratic budgeting comes true that the government's financial legitimacy can be guaranteed. In terms of politics, democratic budgeting serves the important part for the construction of socialist democracy. Besides it is also an important step in a state's capacity building, which is the fundamental aim for a modern country. A state's capacity building contains the capacity of revenue and expenditure, which helps accomplish the state's objective effectively. In terms of economics, budget is important to the taxpayers' economic benefits, for they pay much attention to equality and efficiency. In this sense, the taxpayers'attention enhances the surveillance of government's budgets.China's budgeting system reform started from 1999. However, there still exits four main problems:lack of financial transparency; over-expansion of budget leading to the illegal expenditure and the over-load for the taxpayers; the poor expenditure structure; department budget conducted outside the legal framework. All these boil down to China's political system. The lack of financial transparency is subject to the vested interests of governments at all levels and interest groups. The over-expansion of budget is deeply rooted in the government dominance and the subordinate status of the People's Congress in budget formation. In addition, it has something to do with the soft income constrain. The expenditure structure is dominated by different governmental agencies and interest groups. To cope with these deeply-rooted issues, political restructure and democratic budgeting are urgently needed.The budgeting reform contains the technical aspect and political aspect as well. In China the economists tend to hold that the budgeting reform is a pure technical improvement, thus putting budget system at the priority of the reform. On the contrary, Wildavasky puts forward the political significance for the budget reform. The budgeting reform inserts its influence in the following three aspects-the transformation of the political power structure, the mode of decision making and the outcome.The political restructure in China should be progressive. With constitutionalism as the objective of the reform and People's Congress as its basic institution, efforts should be taken to perfect the people congress system, the change of CPC's governing style. And the reform in the administrative setup is also crucial in the process. (1) The establishment of the dominance of the People's Congress at all levels. Under the present situation, where the governments dominate the budgeting process, it is a realistic choice to restructure the relationship between the governments and the People's Congress, with the aim to establish a mechanism which can achieve the separation of powers and the power balance. (2) Expansion of the public's participation in the budgeting, and optimization of budgeting decision making mechanism. So as to let the majority's will manifested in the policies. (3) The establishment of the finance department as the core budget institution. For it can understand and conduct the policies and strategy on the basis of objectiveness and fairness, allocating the finance resources. (4) The enhancement of the financial transparency. So that the general public can have access to the governments' activities, thus they can supervise the governments' budgeting process.This dissertation contains eight chapters. Chapter One serves introduction; Chapter Two probes into the relationship between the budget state and the reform of democratic budgeting. Chapter Three, Chapter Four, Chapter Five and Chapter Six expound on the current situation of the budgeting system. They respectively dwell on the transparency of the budgeting, budget expansion and the budget expenditure structure. Especially Chapter Six observes the real situation in China, it offers cases of department budget in some places and government departments. Chapter Seven uses the historical process of the United States'democratic budget for reference. Chapter Eight puts forward some proposals on China's democratic budgeting reform. As a whole, this dissertation takes the vein of observation-analysis-solution to construct the whole structure.