The rationalization of public budgeting in China: a reflection on participatory budgeting in Wuxi.

Author:Wu, Yan
Position:Case study
  1. INTRODUCTION

    In recent decades, China's economic growth brought by modernization and marketization has generally enhanced the income and material living standards of Chinese people. However, the transformation of the political and administrative systems is lagging behind the soaring economic development. Meanwhile, the growing citizenship awareness is appealing for an introspection of the relationship between the state and the society. An increasing number of conflicts between the state and the society reveal a rising social dissatisfaction towards the authority. This dissatisfaction reduces the capacity of governments to make and implement public policy (Pierre and Peters, 2000; Scott, 2007). Budgetary decision-making plays a decisive role in public policy. Budgeting is politics (Wildavsky, 1964), because it is about distributing scarce resources and making choices on alternative plans for government operation. Obviously, public budgeting is closely related to public interests and social welfare as well as the state-society relationship. Hence, budgeting plays a significant role in mitigating social dissatisfaction and consolidating state legitimacy. However, few existing studies discussed these issues from the perspective of public budgeting.

    Given that market-oriented economic reforms have fundamentally changed China's economic structure and the relationship between the state and citizens as taxpayers, strengthening the rationality and democracy of public budgeting has been one of the major tasks in China's fiscal reform (Ma, 2005). In view of this demand, citizen participation in public budgeting processes, often labeled participatory budgeting (PB), has been introduced to some local governments in China as a new method to improve the financial accountability of the government (Ma, 2009) and the rationality of the current decision-making procedures of public budgeting.

    PB came into existence in Brazil for the first time. After its first implementation in Porto Alegre in 1989, many countries, developed or developing ones, began to adopt this model. Up till now, PB has been adopted in many countries and regions, including Europe, North and South America, and Asia. In 2005, some cities in China began to implement PB and have made some substantial progress, setting a great example for the development of PB in China. The first group of pilot cities to implement PB includes Wenling in Zhejiang province, Wuxi in Jiangsu province, Harbin in Heilongjiang province, and Shanghai (Chen, 2007). In 2010, more cities have joined in this reform, including Jiaozuo in Henan province, Ninghai in Zhejiang province, and Yunlong County in Yunnan province (Meng, 2010).

    Though citizen participation in public budgeting processes has received attention for decades, research in this area still has significant limitations. We are in the early stage of theory development for PB. Though there has been quite some empirical work in this area, largely case studies, few definitive statements can be made on what makes PB successful or unsuccessful and if we can generalize the conclusions to all stages of the budgeting process and for all participants in different localities (Ebdon and Franklin, 2006). We choose to study Wuxi based on the following considerations. First, this study adds to the literature on PB in developing countries. Second, PB in Wuxi has developed a relatively stable pattern. Among those pilot cities, only Wuxi and Wenling have implemented PB continuously since 2005 (Wenling stopped once temporarily in 2007). Third, PB in Wuxi has not attracted enough academic attention. In comparison, Wenling has been well-studied because it first introduced public participation into the budget decision-making process in Local People's Congress. Wuxi has achieved a great success in PB in a different way but a comprehensive analysis on Wuxi's experience is still not available in the literature. Finally, Wuxi introduces public participation into the budget compilation process of the government's budgetary decision-making, which not only has a significant influence on policy outcomes but is more feasible to be promoted in other localities than a political reform in people's congresses.

    This paper intends to provide a comprehensive analysis on participatory budgeting reform in Wuxi, focusing on the driving forces for its implementation, the procedures of citizen participation, the outcomes of participation, and the future challenges in implementing the reform. To begin with, this paper gives a description of PB and provides a theoretical framework for the evaluation of PB from the perspective of budgetary decision-making. Then it analyzes the challenges of public budgeting in China's contemporary context, followed by a comprehensive case study of Wuxi on its implementation of PB reform and its future challenges. The final section concludes.

  2. PARTICIPATORY BUDGETING AS A REFORM TO ENHANCE BUDGET RATIONALITIES

    2.1 What is Participatory Budgeting?

    PB is a creative decision-making process that involves citizens to decide or help decide how to deal with disposable public resources. It is regarded as an important tool for an inclusive and responsible government to implement its policies. In PB, local citizens will be able to gain first-hand information about government operation and directly influence policy-making. With their involvement in decision-making and participation in related forums and meetings, citizens will have opportunities to play a role in allocating resources, prioritizing social policy programs and supervising the use of public expenditure. Citizens and social organizations can discuss the priority of different projects and vote on the expenditure plan, allowing local citizens to audit and supervise the budget and expenditure of the government (Ahah, 2007; Chen, Jiagang, 2007; Participatory Budgeting Unit, 2009; Wampler, 2000). Traditional participation mechanisms include "public hearing, citizen forums, community or neighborhood meetings, community out-reaches, citizen advisory groups, and individual citizen representation. Citizen Surveys and focus groups, the Internet, and e-mail are also used" (Wang, 2001: 322).

    PB was initiated in Porto Alegre, Brazil in 1989. It was adopted by the Workers' Party, a progressive political party founded during the military dictatorship from 1964 to 1988, to help poor citizens and neighborhoods obtain higher levels of budget resource (Wampler, 2000: 3). As of 2004, 194 of the approximately 5.56 thousand Brazilian municipalities, including most of the state capitals and larger cities, allocated part of their budgets on the basis of participatory budgeting (Medeiros, 2007: 131).

    Although the procedures of participation vary across cities, Wampler (2000: 7-8) generalizes the following common features of the procedures in municipal governments in Brazil: (1) Sustained mobilization of participants and year-long mobilization of their elected representatives (citizen-delegates); (2) The division of the municipality into regions to facilitate meetings and the distribution of resources; (3) The municipal government creates a Quality of Life Index to measure the level of poverty, size of population, and quantity of infrastructure across regions. Each government designs its own formula to ensure that regions with higher poverty, larger population size, and less infrastructure receive a higher proportion of resources than those better-off neighborhoods; (4) Public deliberation and negotiation between participants and the government over resource allocation and other relevant policies, the results of which become part of the public record.

    Rules of PB vary from city to city, and from state to state, given that they are designed by government officials "with input from citizens" (Wampler, 2000: 7). Thus, PB will gain new features when it is introduced in the Chinese context. Based on the experiences from other countries, six questions need to be considered in order to implement PB. First, what is the procedure of PB? It is mainly consisted of mobilization, deliberative discussion at different levels (community assemblies, local and departmental meetings, and municipal-level assemblies etc.), polling, budget execution, and evaluation. In a majority of cases, participatory budgeting is combined into the decision-making process of annual governmental budgeting. Hence, the timing of citizen participation should be subject to the schedule of governmental budgeting. Second, who has the authority to organize PB? Special agencies are often set up for participatory budgeting in some places. With regard to their functions, some of these special agencies are designed for the convenience of budget discussion, such as the budget sub-committee of the local Community Committee in Bradford, Britain (Lavan, 2007); some are for coordinating budgeting preparation, such as the Neighborhood Coalition's Finance Committee in Guelph, Canada (Lerner and Wagner, 2006), and the Finance Sub-committee of People's Congress in Xinhe Town, China (renda caijing xiaozu) (Niu, 2007); some are for supervision over project construction, such as the Local Committee in Brazil (Medeiros, 2007). Third, what are the criteria of resource distribution? There are two ways of distributing budget resource: One way is to use certain criteria to determine the budgeting priorities among regions at different levels of development. For example, Brazil uses a Quality of Life Index, and Canada has a Budget Matrix System to evaluate the priorities of programs (Wampler, 2000). The other way is to determine the ranking of programs according to citizens' votes. Fourth, what should be decided through PB? Contents of discussion can be sorted into two kinds. One is focusing discussion on specific public infrastructure projects. The other concerns the general expenditure of public policies (Wampler, 2000). Fifth, what mechanisms should be used to...

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