China Provincial Fiscal Budget Implementation Deviation Analysis

Fiscal budget implementation is the procedure government arranges its activities according to budget, which has been audited and approved through legal requirement. By implementing the budget, the government makes budget plan to become reality and strengthens the budget management as well. During the implementation, there’re factors which affect the outcome to be different from original budget, and this is called fiscal budget implementation deviation (FBID). The factors which lead to FBID can be either objective or subjective, such as the incorrect economic and social expenditure forecast when making budget, intentional distortion of regional budget and provisional budget adjustment. The softening of budget constraints would seriously hinder the achievement of fiscal policy target, deteriorate the authority of policies, and even damage the governmental image and people’s benefits. Therefore, we need to study the budget implementation situation in China, master the region characteristics and the factors affecting the budget implementation deviation and analyze to strengthen the government budget constraint.Based on regional facts, this article systematically investigates and analyzes by using panel model and case study of the FBID in China, together with causes and countermeasures of prevention and remedy. This paper studies the FBID in31provinces in China (excluding Hong Kong, Tai Wan and Macau)From the research framework, this article can be divided into three parts. The first part is basic theory analysis, including the first chapter and the second chapter, reflects the overall structure of this article and theoretical basis of general introduction. First of all, we start from the current national and domestic environment background and pointed out the significance of research done in this paper, discussing the problems we should pay attention to in the FBID research. Next are research ideas and methods adopted by the simple introduction, the conclusion of this paper is scientific. Again on the literatures about FBID were summarized, shows the budget implementation at home and abroad research situation and research results. Based on the empirical research of provincial data analysis to our country budget implementation feasibility, we shows that the research is significant, the innovated, also with certain limitations. Government function theory, fiscal decentralization, budget management theory are the theoretical basis, to explore how local governments act under the existing distribution of power and responsibility, through effective budget management to achieve the functions of local government.The second part is the empirical analysis, including the third and fourth chapters. With a total of13years of31regions deviation data budgetary revenues and expenditures, the present situation of national and regional FBID is analyzed. Ward deviation method for clustering statistics are used to analyze the characteristics of the same income level in different parts of the deviation. Secondly,1998-2011budget income and expenditure discrepancy as dependent variables, income, consumption, investment and other aspects of the significant indicators as independent variables, are used in the least squares regression analysis to explore the significant impact on the FBID factors. Respectively through the panel model and case analysis method, the economic, social and political factors affecting deviation analysis are investigated, providing data support for budget management. Research shows that the consumer price index, interest rate, the natural population growth rate impact is significant to the FBID, and the influence of the budget income deviation directly affects the expenditure deviation. Political factors of the FBID have important influences, mainly reflected in the uneven distribution of the central and local fiscal power and responsibility, the conflict of time approval process, lack of transparency and the principal-agent conflict.The third part is the conclusions and policy recommendations, including fifth and sixth chapters. Based on the full impact on the FBID and comparison of oversea budget management system, the paper sums up the remedies from three aspects, including budget establishment, implementation and supervision.