This paper provides a discussion of the political dimensions of budgeting at the county level of Chinese government. Based on findings from field studies in three poverty-stricken counties in northwestern China, the research documents a rudimentary incrementalist budgeting system in the county governments.
First of all, a ‘base number method’ is employed for budget formulation of personnel expenditures. Second, non-personnel expenditures are de facto not budgeted and decisions of allocation are made on an application-basis by county governors and finance departments. Third, there is no existing mechanism to ascertain citizens’ demands and preferences in the budgeting process.
It is argued that such an institutional arrangement for budget formulation enables the budgeting process to involve few participants and thus reduces the number of political players and potential conflicts arising from their competing demands to a minimum. This arrangement has not received any serious challenge except reform initiatives engineered from the centre, which have not been implemented with any sincerity at the local level. The separation of demands of citizens and spending priorities of county government, has resulted to some extent in the lack of social equity in the provision of public services, and the most serious problem is that the needs of the poorest and the most needy citizens are overlooked.
Because of this separation, citizens have to be self-reliant in solving the problems outside the purview of government budgeting. In the end the paper argues that the spending priorities of county governments have to be changed and the political configuration behind such priorities has to be challenged.