Since 2008, Chengdu’s Special Funds Policy has enabled the implementation of wide scale participatory budgeting at the grass root level, reaching over 4,300 villages and neighbourhoods and 15 million residents by 2018, and distributing an annual budget of over 232 million USD.
Problems and Purpose
Unbalanced development between urban and rural areas, such as the increasing disparity of incomes or social welfare, has been a prominent problem for the Chinese government in recent years. Moreover, the binary urban–rural structure has also been a challenge to officials for years, especially in view of the inequality of public service provision between the two environments.
To further improve the public service and social management systems in rural areas, to raise the quality of public service and social management, and to bridge the gap of basic public service between urban and rural areas, the Chengdu government launched reforms for the public service and social management system of rural areas in 2008. This was specifically meant to build the village-level public service funds system (referred to herein as Special Funds), which also marked the beginning of participatory budgeting (PB) in Chengdu.
The practice of participatory budgeting in Chengdu affords all residents the right to provide better infrastructure to their own community, to make public services more responsive to their demands, to create more transparency and less corruption, as well as to generate fewer complaints toward local governments. More importantly, their awareness of participation and self-governance has also been significantly improved.
Background History and Context
1. Inception stage: 2008–2011
From 2007, the Chengdu municipal government initiated a series of reforms to bridge the gap between rural and urban areas, as well as to facilitate development overall. Against this backdrop, in 2008, the Chengdu Municipality introduced a policy for Rural Public Service and Social Management Funds, inspired by a local practice in one village, and to be carried out officially in 2009. Accordingly, every rural community would annually receive a specific amount of funds that can only be used to improve local public service and public management.
2. Developmental stage: 2012–2018
In 2012, after four years of implementation, this policy was scaled up to include the entire municipality and to promote citizen engagement and to creatively enhance social management in both rural and urban neighborhoods. It meant that urban communities could also have a say on how to spend this part of the public budget, with the participation of every resident.
By then, the implementation of the policy in the urban area covered 654 communities in and around the city. As such, it led to the establishment of the Special Fund system. More importantly, it was a groundbreaking measure in terms of the scope and extent to which the Chengdu government encourage citizen participation to improve public service and engage in the budget decision-making process.
3. Reforming stage: Mid-2018 to present
Since May of 2018, Chengdu Municipality carried out a policy of “innovation on incentive mechanism and safeguard system for funding to improve community development in urban and rural areas’’ (General Office of Chengdu Municipal Committee, 2018), which sets up two types of Special Funds, namely the Community Support Funds and Community Incentive Funds.
The Community Support Funds remains the overall funding system, integrating both rural and urban areas. The Community Incentive Funds, on the other hand, are used as an innovative measure to transfer funds from less active to more proactive villages/neighbourhoods. It serves as a form of incentive to encourage communities with remarkable achievements around neighborhood services, community planning, and residents’ self-governance.
Organizing, Supporting, and Funding Entities
Funds comes from the municipal and district governments’ public budgets. At the beginning of every year, the district- and municipal-level governments decide on allocations at the local level and distribute the Special Funds down to the village or community level, in accordance with different funding standards for each village or household.
Regardless of the type of funds to be disbursed, there are policies stipulating their permissible uses. For instance, infrastructure or culture-related spending is commonly approved, while debt payment or items such as property management fees and garbage clearance fees in private areas are strictly prohibited.
A non-government organization, Participation Center, China, has been active in researching, policy advocacy and capacity building with the practice since the beginning. Participation Center is committed with citizen engagement and social equality, especially on public budget, taxation and public services.
Participant Recruitment and Selection
Since 2008, all residents registered within the community have the right to participate in the decision-making process regarding the Special Funds, as part of the PB. This includes both the residents with the Hukou, or household registration, as well as residents outside the province who are registered locally. Council members are elected in their respective rural or urban communities and hold the power to vote and decide on the final projects to be implemented. These council members are typically community leaders, proactive and enthusiastic residents, and often supported by the local party cadres.
Methods and Tools Used
Generally speaking, the participatory budgeting process follows a cycle of proposing, decision making, monitoring, and evaluation. The method has been complemented by a number of innovative local policies as well as data collection and participatory monitoring methods to gather public opinion, inform decision making, and ensure proper implementation and follow up.
What Went On: Process, Interaction, and Participation
The process for participatory budgeting and disbursement of the Special Funds generally followed six steps, albeit with some variations in different communities:
Step 1: Publicity and mobilization
By means of posters, banners, leaflets, and social media outlets, village and community officers inform villagers and residents about the total amount of funds as well as the policy regulations on the funds. The target awareness rate for the funds and rules is 80% of residents.
Step 2: Collecting public opinions
Households submit their opinions or project proposals on how to allocate the funds by filling in a questionnaire. Either the village council or community council will collect these proposals for classification and deliberation. The target number of questionnaires to be received is no less than 30% of the total number of households. To achieve this, a process of outreach—Each Household, One Questionnaire—is led at the beginning of each year (usually in March), whereby communities or villages start the process of participatory budgeting. Staff from community or village offices visit every household located within their jurisdictions and hand out a questionnaire for the family to fill in. The form, aside from the space allocated for residents to fill in, presents the policies and regulations related to the Special Funds disbursed in that year, as well as an explanation as to how the community or village used the funds received in the previous year. Finally, it states the amount available for the current year.
The Each Household, One Questionnaire approach to gathering opinions enables every resident a chance to express their ideas on how to allocate funds to benefit the community, and brings those ideas to the government’s attention.
Step 3: Opinions sorting, deliberation and discussion
Members of the Village/Community Council sort the household proposals, including omitting those that do not qualify, and then convene the council meeting where projects are collated and the members form a summary file of candidate projects.
The Council is not only a body elected by the residents, but also an important forum for deliberation and for making decisions on which projects should be implemented. Generally, at the council meeting, decisions are made based on a majority vote (minimum of 50% of votes). The Council guarantees that the allocation and use of Special Funds effectively reflect the opinions of residents and are not dominated by individuals or government officials. This not only improves the quality of local public services, but also brings real benefits to the residents in delivering desired outcomes.
Step 4: Project selection
Along with a Village/Community Supervision Committee, the Village/Community Council formulates the project budget and convenes a meeting to discuss and review each project and bidder. Then, the Council votes to determine final results.
Step 5: Implementation and supervision
During project implementation, every resident reserves the right to supervise the process and to report any doubts to the Supervision Committee. At this stage, residents with certain expertise may be heavily engaged. Where projects require infrastructure development, construction, or other technical or specialized knowledge or skills, local professionals and experts from the neighborhood are either voluntarily involved or invited to form an expert group to provide concrete suggestions or to monitor or supervise the construction process. For example, in villages where many villagers work in construction sites as rural migrants, they would know very well if the cement or steel meets the quality standard or if the construction procedure is reasonable.
Another key monitoring function is performed by a Community Supervision Committee (CSC), which is elected by residents and responsible for supervising the implementation of the project. If residents have any doubts or questions about the project, the CSC is responsible for organising the project implementing body to respond publicly. This system guarantees the participation of residents in the implementation of the projects allocated through the Special Funds, as well as the accountability of the government and the safeguarding of residents’ interest.
Step 6: Evaluation and Adjustment
Construction projects are subject to on-site evaluations, and other service management projects undergo centralised evaluation by villagers or residents.
As an illustration of the process, the following is an example of how Special Funds were used within one urban community: Community 842.
Community 842 is a 30-year-old community located in the Qingyang district of Chengdu. After being informed of the Special Funds policy in 2018, the residents reached a consensus to use the Special Funds to do a “makeover” to their homes, working along with several local community-based organizations.
Pinpoint the real needs for renovation and beautification. To promote the project, five residents were nominated to be the core members of the project, based on their reputation and enthusiasm for the community and the project. Project members decided to visit every household to gather information regarding their needs.
Residents’ gathering and debates. Every two weeks, a residents’ debate meeting was held as a way to communicate to the residents on the progress of the project, as well as to learn about their suggestions or concerns.
Draw up renovation plan. After six months of collecting information on residents’ needs, project members gathered to sort and prioritize the needs. It became apparent that most residents were concerned about the condition of the community gate. Therefore, a beautification plan was finally drawn and put up on a public board to collect feedback regarding the upgrading and reconstruction of the gate.
Implementation. A brand-new gate was successfully built for Community 842 community, together with a “memory lane” presenting the community’s history and transformation. The journey to what seemed like a simple project of new gate construction is filled with extensive participatory efforts and demonstration of community spirit. What was heartening to observe in this project is the level of engagement beyond the deliberative participatory elements present in proposing and selecting an appropriate contractor. Residents went the extra mile to help with some clearing up of the old rubble and rubbish in the community. Moreover, there was actually insufficient PB funds allocated, and the residents took it upon themselves to raise additional funds to make up for the shortfall. Also, volunteers, usually the resident committee and party members, helped to supervise these efforts.
Influence, Outcomes, and Effects
From 2009 to the end of 2014, the Chengdu Government invested nearly 5.8 billion CNY in village-level Special Funds, implementing more than 12,000 projects in total. Meanwhile, 580 million CNY has been allocated in the participatory budgeting processes to implement 435 infrastructure projects for villages. This not only greatly improved the basic public service quality of rural areas, but also improved the conditions of infrastructure such as roads and water pipes, in response to villagers’ urgent needs.
The scope and scale of participatory budgeting efforts in Chengdu was recognized in 2012, when this policy innovation of the Chengdu government won the Nomination for the 6th Chinese Local Government Innovation Award. In 2014, it further won the “Best Citizen Participation” award given by International Observatory on Participatory Democracy.
The Chengdu Special Funds policy has had far-reaching influence on the local public service system and on community development of both urban and rural areas. For instance, it has improved the quality of public service with the residents who are able to demand for it through the new communication channels, such as the participatory budget. Furthermore, it has created a direct participatory channel connecting residents to the government, helping to better satisfy the needs of the people. More importantly, the Special Funds policy has enabled the resolution of real, urgent problems facing the population in a more democratic way through deliberative participatory methods.
At the same time, it has boosted a significant policy trend around participatory community planning in the city, motivating communities to improve their living conditions and articulate their own cultural features. And as a result of the increased transparency in budgeting and through open debates, there is less tendency for corruption to happen, and fewer complains are made to local governments.
Analysis and Lessons Learned
The Special Funds Policy represents more than just a pioneering work of the Chengdu Government. There is no doubt that it is a remarkable case of participatory budgeting as well, dealing with an astonishing amount of public money, establishing a full coverage of budgetary processes, and involving a huge number of beneficiary population, as compared to other countries and jurisdictions. In 2018, the Policy had an annual budget of $232 million USD, and 15 million rural and urban residents are entitled to participate directly.
The Policy contains many innovative measures and methods from which one can draw lessons and learning. Some of these strategies worth highlighting include the Council Meetings, the Monitoring Committee, the means of engaging local experts, the information gathering methods, and the Democratic Financial Management Groups. The interaction between these aspects and how these facilitate a deeper level of deliberative participation must be recognized, as local engagement innovations and practices have achieved better local public services and budget performance with local residents.
However, many challenges do admittedly remain, especially pertaining to the implementation of PB. These include inadequate representation, a transparency deficit, and low capacity of participants (for both the local officials and residents).
A first critical challenge to address has been the insufficient representation in the PB process which has not included the participation of women, children, the elderly, or persons with disabilities. As a result, the needs of such vulnerable social groups are marginalized in terms of the allocated public service budget, since most of it is allocated to economic development projects or general public services.
Secondly, an important challenge has been the lack of available information, which is one major reason explaining the absence of vulnerable social groups in PB. Access to information is important for citizen participation in budgeting because citizens require knowledge about the budgetary process prior to, and during the discussions. Information regarding the PB process is usually disseminated through word-of-mouth or through information bulletin boards located only in front of the community or village offices. Hence the information does not reach all concerned citizens in an equitable manner, which presents rather limited opportunities for many residents to get informed about PB events.
Additionally, citizen engagement through PB requires certain competencies and capacities, both from the organizers and the participants, and here too there have been shortcomings. While PB has been gaining traction in Chengdu, a lot more could be done to ensure a more efficient and competent deliberative budgetary process, which would make space for more effective and meaningful participation from local government officials, residents, social organizations, and other individuals or groups involved.
Despite these challenges, the emergence of such a groundbreaking policy innovations that opened up the budgetary processes to citizen participation remains remarkable. With sufficient political will and the continuous enthusiasm from local officials, academia, and citizens, there is tremendous potential for further development and improvement of deliberative participatory budgeting in Chengdu.
Cabannes, Y., & Ming, Z. (2014). Participatory budgeting at scale and bridging the rural−urban divide in Chengdu. Environment and Urbanization, 26(1), 257–275.
General Office of Chengdu Municipal Committee. (2018, July 12). Opinions on innovating the urban and rural community development governance funding incentive mechanism. Retrieved from https://mp.weixin.qq.com/s/FqvUAovyglCg1VsVBSNWSQ
Participation Center: http://www.participation.cn
General Office of Chengdu Municipal Committee: https://mp.weixin.qq.com/s/FqvUAovyglCg1VsVBSNWSQ
International Observatory on Participatory Democracy https://oidp.net/en/
The first submission of this case was produced and submitted by Ming Zhuang (Chengdu Academy of Social Sciences), Su Yun Woo (University of Zurich), and Ray Liu (Participation Center).
This case was produced and submitted by a graduate of the Coady International Institute at St. Francis Xavier University with the support of its staff, Julien Landry & Rachel Garbary.