Budgetary Resource Allocation Guided by Strategy and Policy

A fiscal budget is the fiscal revenue and expenditure plan of a government at any level. The formulation of expenditure plans—that is, budgetary resource allocation—is a fundamental issue in budgeting, and its underlying logic is a central focus of budget research. Effectively linking budgetary decision-making with the policy process is crucial to ensuring the successful implementation of national strategic initiatives under budgetary resource constraints. Using data on central government departments' budgeted and final-account expenditures from 2016 to 2022 and the division of responsibilities for key tasks set out in the State Council's Government Work Reports, this article examines the relationship between the allocation of budgetary resources among central government departments and the policy tasks assigned to them. Because the central government's strategic initiatives are largely implemented through interdepartmental cooperation on disaggregated policy tasks, the article defines its core explanatory variable using social network analysis and then conducts an econometric analysis. On the one hand, the findings show that departments assigned heavier task loads within the cooperation network experience larger increases in budgeted and final-account expenditures. This indicates that horizontal budgetary resources at the central government level are generally allocated in accordance with national strategic initiatives and policy priorities, reflecting fairly good integration of budgetary decision-making with the policy process. At the same time, the logic of budgetary resource allocation also exhibits some heterogeneity across different types of tasks and different collaborating departments. On the other hand, given the structural isomorphism of responsibilities between higher- and lower-level governments in China, the article also examines whether the central government departments' pattern of allocating policy tasks guides budgetary resource allocation by the corresponding provincial departments, finding that the latter's response is generally limited. These conclusions suggest that budgetary decision-making in China contains a fairly strong rational component, and that strategic and policy shaping is an effective way of breaking with incremental budgeting. However, further thought is needed on how to better leverage higher-level policy-task orientation to guide budgetary arrangements at lower levels.