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Research on the Causes and Responsive Measures of China’s Fiscal Expenditure Solidification

Received: 4 August 2018     Accepted: 23 August 2018     Published: 28 September 2018
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Abstract

The budget enforcement, as an important indicator for measuring the collection and use of fiscal funds, plays an essential role in the promotion of Chinese reform. However, in recent years, Chinese fiscal expenditure has shown the tendency of solidification, which slows budget implementation progress, makes a large amount of financial funds can’t be efficiently paid, and sharpens the contradiction between the coexistence of “shortage” and “precipitation” of funds. That is to say, in the practice of China’s budgetary expenditure, the expenditure solidification directly constrains the implementation effect of budget expenditure, making the expenditure cannot be effectively paid. Therefore, this paper starts from the existing problems in the fiscal expenditure, systematically analyzes the historical basis and current situation of China's fiscal expenditure solidification. Through the analysis, it can be found the recent fiscal expenditure shows the convergence trend. That is to say in the context of increasing economic pressure, China’s fiscal expenditure show a uptrend situation, instead of decreasing in response to the declined fiscal revenue. Moreover, in China, no matter in central government or local governments, the scale and structure of education, medical, health care and other expenses have shown the convergence trend. The phenomenon is called China’s fiscal expenditure solidification, and the reason for this phenomenon include the inertia of legally mandated expenditure, the flaws in transfer payments system, the unscientific and unstandardized budget management process, and the contradiction between policy and system arrangement and practice. And in order to solve the problem, it should be started from the top-level design, completing the relevant measures and strengthening modern budget management.

Published in Journal of World Economic Research (Volume 7, Issue 2)
DOI 10.11648/j.jwer.20180702.15
Page(s) 82-91
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2018. Published by Science Publishing Group

Keywords

Expenditure, Solidification, Budget

References
[1] Ministry of Finance. Guidance on further budget implementation [Z]. 2010-01-22.
[2] Ministry of Finance. Notification of measures to assess the progress of local budgetary expenditures [Z]. 2014-07-23.
[3] Ministry of Finance. Notice on strengthening the management of local budget implementation and accelerating the progress of expenditure [Z]. 2018-05-03.
[4] Shushen Liu. The Scientificity and Soft Constraints of Government Budget – An Empirical Analysis Based on the Implementation of China’s Fiscal Budget [J]. Chinese Public Administration, 2010 (2): 110-115.
[5] Guohai Duan. Measures to Break Solidification of Fiscal Spending [J]. Budget Management & Accounting, 2017 (6):45-48.
[6] Chuang Cai. The Analysis of the Historical Evolution and Cause of the Solidification of Fiscal Expenditure Structure - Based on the Perspective of National Governance and Fiscal Risk [J]. Journal of Hunan Taxation College, 2017 (4):21-27.
[7] Research group of China academy of fiscal sciences. Risks of Solidifying Fiscal Expenditure [J]. New Finance (government finance), 2017 (3): 83-86.
[8] Xiaolan Deng, et al. Research on Fiscal Sustainability's Problems and Solutions under the New Normal: Also Focus on Fiscal Supply-Side Reform Policy [J]. Journal of Central University of Finance & Economics, 2017 (1):20-27.
[9] Kegu Liu. China's fiscal and taxation reform has been in the past 30 years [M]. Beijing: Economic Science Press, 2008.
[10] Ministry of Finance. Measures for the administration of special transfer payments from central government to local governments [Z]. 2015-12-30.
[11] Ministry of Finance. Measures for assessing the progress of local budgetary expenditures [Z]. 2014.
[12] Ministry of Finance. The circular of the ministry of finance on further strengthening the management of local financial balance and transfer funds [Z]. 2013-10-21.
[13] Ministry of Finance. Notice of the ministry of finance on further strengthening the implementation and management of the budget of fiscal expenditure [Z]. 2014-5-21.
[14] NDRC. Opinions of the State Council on the implementation of medium-term fiscal planning and management [Z]. 2015-01-23.
[15] Guang Yang, et al. The Solidified Structure of Fiscal Expenditure: Reform is Imminent [N]. China Economic News, 2017-02-28.
[16] Qingwang Guo, et al. Fiscal Decentralization, Government Structure and Local Government’s Expenditure Size [J]. Economic Research Journal, 2010 (11):59-72.
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  • APA Style

    Li Yan, Peng Chao. (2018). Research on the Causes and Responsive Measures of China’s Fiscal Expenditure Solidification. Journal of World Economic Research, 7(2), 82-91. https://doi.org/10.11648/j.jwer.20180702.15

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    ACS Style

    Li Yan; Peng Chao. Research on the Causes and Responsive Measures of China’s Fiscal Expenditure Solidification. J. World Econ. Res. 2018, 7(2), 82-91. doi: 10.11648/j.jwer.20180702.15

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    AMA Style

    Li Yan, Peng Chao. Research on the Causes and Responsive Measures of China’s Fiscal Expenditure Solidification. J World Econ Res. 2018;7(2):82-91. doi: 10.11648/j.jwer.20180702.15

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  • @article{10.11648/j.jwer.20180702.15,
      author = {Li Yan and Peng Chao},
      title = {Research on the Causes and Responsive Measures of China’s Fiscal Expenditure Solidification},
      journal = {Journal of World Economic Research},
      volume = {7},
      number = {2},
      pages = {82-91},
      doi = {10.11648/j.jwer.20180702.15},
      url = {https://doi.org/10.11648/j.jwer.20180702.15},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jwer.20180702.15},
      abstract = {The budget enforcement, as an important indicator for measuring the collection and use of fiscal funds, plays an essential role in the promotion of Chinese reform. However, in recent years, Chinese fiscal expenditure has shown the tendency of solidification, which slows budget implementation progress, makes a large amount of financial funds can’t be efficiently paid, and sharpens the contradiction between the coexistence of “shortage” and “precipitation” of funds. That is to say, in the practice of China’s budgetary expenditure, the expenditure solidification directly constrains the implementation effect of budget expenditure, making the expenditure cannot be effectively paid. Therefore, this paper starts from the existing problems in the fiscal expenditure, systematically analyzes the historical basis and current situation of China's fiscal expenditure solidification. Through the analysis, it can be found the recent fiscal expenditure shows the convergence trend. That is to say in the context of increasing economic pressure, China’s fiscal expenditure show a uptrend situation, instead of decreasing in response to the declined fiscal revenue. Moreover, in China, no matter in central government or local governments, the scale and structure of education, medical, health care and other expenses have shown the convergence trend. The phenomenon is called China’s fiscal expenditure solidification, and the reason for this phenomenon include the inertia of legally mandated expenditure, the flaws in transfer payments system, the unscientific and unstandardized budget management process, and the contradiction between policy and system arrangement and practice. And in order to solve the problem, it should be started from the top-level design, completing the relevant measures and strengthening modern budget management.},
     year = {2018}
    }
    

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    AU  - Li Yan
    AU  - Peng Chao
    Y1  - 2018/09/28
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    DO  - 10.11648/j.jwer.20180702.15
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    JF  - Journal of World Economic Research
    JO  - Journal of World Economic Research
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    UR  - https://doi.org/10.11648/j.jwer.20180702.15
    AB  - The budget enforcement, as an important indicator for measuring the collection and use of fiscal funds, plays an essential role in the promotion of Chinese reform. However, in recent years, Chinese fiscal expenditure has shown the tendency of solidification, which slows budget implementation progress, makes a large amount of financial funds can’t be efficiently paid, and sharpens the contradiction between the coexistence of “shortage” and “precipitation” of funds. That is to say, in the practice of China’s budgetary expenditure, the expenditure solidification directly constrains the implementation effect of budget expenditure, making the expenditure cannot be effectively paid. Therefore, this paper starts from the existing problems in the fiscal expenditure, systematically analyzes the historical basis and current situation of China's fiscal expenditure solidification. Through the analysis, it can be found the recent fiscal expenditure shows the convergence trend. That is to say in the context of increasing economic pressure, China’s fiscal expenditure show a uptrend situation, instead of decreasing in response to the declined fiscal revenue. Moreover, in China, no matter in central government or local governments, the scale and structure of education, medical, health care and other expenses have shown the convergence trend. The phenomenon is called China’s fiscal expenditure solidification, and the reason for this phenomenon include the inertia of legally mandated expenditure, the flaws in transfer payments system, the unscientific and unstandardized budget management process, and the contradiction between policy and system arrangement and practice. And in order to solve the problem, it should be started from the top-level design, completing the relevant measures and strengthening modern budget management.
    VL  - 7
    IS  - 2
    ER  - 

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Author Information
  • School of Public Finance and Tax, Central University of Finance and Economics, Beijing, China

  • School of Public Finance and Tax, Central University of Finance and Economics, Beijing, China

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