Analyzing the Causes of Expenditures Budget Deviation in China: A Perspective on Budget Adjustments

The budget reflects the country's strategies and policies, and reflects the scope and direction of government activities. Excessive deviation between the budget and the final accounts means that the budget constraint is insufficient, and there may be implementation deviation of the planned strategies and policies. This paper takes the budget and final accounts of provincial-level expenditures as an example to explore the causes of the deviation of the budget and final accounts in China and to provide reference for the enhancement of budget constraints. The study initially finds that the expenditures budget deviation in China is relatively high, with contributions from deviations formed through budget adjustments being dominant. Accordingly, the paper further collects 468 publicly available provincial-level budget adjustment reports from 2014 to 2022, analyzing the forces triggering budget adjustments. It identifies that the main reasons are the issuance of government debts, the allocation of transfer payments, and the utilization of budget stabilization adjustment funds, especially the former two. Given the former two are managed in a top-down management manner, this implies that budgetary deviations in China are embedded in the budget management system. Further empirical research also supports this conclusion. Compared with the existing (especially some empirical) studies focusing on individual factors, this paper, based on a budget adjustment perspective, provides a panoramic examination of the causes of budget deviation in China from the perspective of budget management practices. This study has significant implications for accelerating the development of a modern budgetary system.