Budgeting under central economic planning in China, 1949-1978

This paper examines public budgeting in the first 30 years of China under central economic planning and one-party system. The research question is whether budgeting operates as it does under market economy in a democratic system. Analysis of historical documents finds that as a subordinate to central economic planning, budgeting was not able to play its functions. Though China was successful in employing all fiscal and monetary means to channel resources into targeted policy areas, budgeting was not effectively used as an administrative instrument. In the 30 years examined, the country seemed to be searching in vain for a workable budgeting system so as to avoid repeated financial frustrations.