Problems and Purpose

Before 1999, China's state finances were facing great challenges due to the lack of effective administrative control within the government and legislative oversight of government finance [1]. For example, at that time, some local governments were facing a problem that they were unable to make a complete budget due to the lack of authority on the budget. What's more, at the end of a fiscal year, there was a large deviation between government's budgeted and actual revenues and expenditures.

Therefore, starting in 1999, China began its budget reform, and Wuxi was selected as one of the budget reform pilots by the China Development Research Foundation. As one of the research programs of budget reform, Wuxi’s participatory budget reform practice aimed to break through the limitations of traditional government finance. The organiser hoped that through giving citizens more rights to decide and supervise the use of funds, the efficiency and transparency of the use of fiscal funds could also be improved, thereby solving the problems that the old finance system had. Besides, the CDRF also expected that Wuxi's practice on participatory budgeting could bring some professional experience to promote the research on participatory budgeting and the application as well as development of participatory budgeting in China.

In addition, the participatory budget reform was also an attempt by the Wuxi Government to seek the transformation of Its functions. Through the implementation of participatory budgeting, the local government hoped to attract more citizens to participate in policy making so that they could achieve the functional shift from decision-making to service provision.

Background History and Context

Wuxi is located at the lower reaches of the Yangtze River and has a very advantageous geographical environment, thus it has become one of the national industrial and commercial bases. The rapid development of local industry and commerce also greatly contributed to the establishment of industry associations. As of 2005, there were 288 registered trade associations, covering a wide range of sectors such as services, transportation, catering, machinery, and so on [2]. To a certain extent, the ideas and opinions of these trade associations on policies are referred to by the government in the formulation of public policies.

Despite the development of economy, the implementation of participatory budgeting in Wuxi was also a result of “Sunshine Project” which was launched by Weize Yang, the mayor of Wuxi, in November 2004. Yang was the first mayor elected by the provincial committee of Jiangsu Province. Encouraged by this form of election method, he launched the “Sunshine Project” which was aimed to regulate the operation of public power by following the principles of "openness, transparency, promotion of democracy and effective control” [3]. Particularly, as the initiator of this project, Yang emphasized that improving budget transparency was the core goal of “Sunshine project”. He hoped that through the Sunshine Project, government finance could be placed directly under the supervision of citizens so that its transparency and efficiency could be greatly improved.

Organizing, Supporting, and Funding Entities

Participatory Budgeting in Wuxi was organized by the China Development Research Foundation (CDRF), a national organisation whose establishment was supported by the China State Council. As the organizer of the public budget reform experiment, the China Development Research Foundation selected a total of three cities as pilot sites in 2006, and Wuxi was selected to be one of the pilot participatory budget reform sites. Wuxi's participatory budgeting project was also funded by the China Development Research Foundation and as a non-profit organization, the main source of funds for the China Development Foundation is donations from domestic and foreign enterprises, institutions, and individuals.

The participatory budgeting reform in Wuxi lasted for three years with a total investment of approximately RMB 58 million. In the first year, two communities were selected as pilots and a total of RMB 3 million was spent. In the second year, the scope of the participatory budgeting program was expanded to a budget of RMB 25 million with most money invested in the "safety guarantee" projects. And in the third year, more money was spent on participatory budgeting, with a total cost of RMB 30 million (Financial Bureau of Wuxi City).

In addition, the Wuxi Municipal Government was also one of the organisers of Wuxi's participatory budgeting project. However, the China Development Research Foundation and Wuxi Municipal Government played different roles in this project. The former mainly provided policy guidance and led the direction of participatory budget project, while the latter mainly participated in the specific implementation of this project.

Participant Recruitment and Selection

Instead of being elected by residents' congress, the participants of Wuxi's participatory budgeting were all selected through the recommendation of community committee and these representatives recommended by residents all had a high reputation in the community. It is also worth mentioning that these participants come from all walks of life, including retired people, migrant workers, and self-employed workers [4], regardless of occupation and age.

Methods and Tools Used

Reference letter

Using a reference letter was one of the important methods of Wuxi's participatory budgeting project. Different from other participatory budget projects, the participants in Wuxi's participatory budget project were representatives elected by residents rather than all residents. Residents could write a letter to the Residents' Committee to name the representatives that they prefer. After receiving these reference letters, the Residents' Committee would select representatives based on the number of times each representative had been nominated along with their usual performance. The Wuxi Municipal Government hoped to use reference letters to help quickly select the persons that residents think can best represent them.

Door-to-door survey

What's more, in the early stage of the participatory budget project, the Wuxi City Government chose to conduct door-to-door surveys to collect residents’ real views and opinions on their community lives to identify the fields that need to be improved. After that, the Government would make proposals for these fields that need to be improved and then allow the representatives to make their choices.

Meetings

Before these representatives made their choice, the government would organise meetings specifically for these representatives to introduce all the information for each candidate project, including its budget and process. By doing this, the government hoped that each candidate could make their final decision with more deliberation.

Mass media

Given that participatory budgeting was still new to the citizens at that time, people knew little about it. Because mass media has the advantage of transforming information quickly and covering widely, the Wuxi government decided to use the mass media as an advocacy tool to explain what participatory budgeting is to citizens and attract more people to participate in this project.

What Went On: Process, Interaction, and Participation

There were four stages of Wuxi's participatory budgeting project:

1. Preliminary preparation stage
2. Project selection stage
3. Project implementation stage
4. Project evaluation stage

In the preliminary preparation stage, the Wuxi government first selected talents from each department to form a leading group which would be responsible for planning and carrying out the entire participatory budgeting project. This is because in China's institutional environment, the decisions of the leaders are very important and decisive [5]. After the establishment of the leading group, the leading group began to draft a plan which includes designing process and defining the experimental area. The experimental area for participatory budgeting in Wuxi was designated by the government rather than chosen by citizens. In 2006, the Wuxi government chose two communities from Beitang and Binhu districts as experimental sites. In 2007, 16 of the city's 25 streets had implemented participatory budgeting. By 2008, participatory budgeting had been implemented across the whole city.

The second stage is project selection. In this stage, the leading group cooperated with the community to collect residents’ opinions on cultural, environmental, medical, and other projects that were closely related to their lives through door-to-door surveys or holding meetings. Each community was expected to submit a project and these projects were to be reviewed by the government. The government would select those projects that were easy to implement and closely related to residents’ lives and send them to the agency companies for a simple budgeting to create preliminary proposals. In 2006, for example, after community proposals and government review, four candidates were eventually formed. At the same time, the leading group also organized the community to start the election of representatives. Through using recommendation letters, residents could choose the community members they thought could represent them by voting in this participatory budgeting project. After determining the candidate projects and the representatives, the leading group organized meetings to introduce each candidate project to the representatives in detail and let the representatives vote for the project that they thought was appropriate. In 2006, two projects were selected for the Wuxi's participatory budgeting: the Golden Harbor Home Care Service Centre and the Wuheyi Community Activity Centre.

In the third stage, the representatives continued to play a very important role. They would be required to attend the selection meeting organised by community where they would hear reports from various construction companies and select the best one to build the buildings for the projects. During the implementation of the project, the community also organised visits to the project sites and monitored the progress of the work. In fact, among all the supervision, the supervision by residents was the most powerful because these projects were near them, and they could check them anytime they wanted.

At the end of the project, financial audits, representatives, and relevant experts were commissioned to evaluate the performance of the project. The results of the audit and evaluation would serve as a basis for the success of the experiment and the financial allocation. At the same time, the practical experience would be summarised and accumulated to provide reliable information for further reforms.

Influence, Outcomes, and Effects

First, participatory budgeting in Wuxi ensured effective public participation through a standardised process and it greatly increased citizens' enthusiasm to participate in the management of public affairs. According to statistics, the number of participants in the first year of the Wuxi’s participatory budgeting was 102, covering 2 streets, while in the second year (2007), the number of streets in Wuxi’s participatory budgeting increased by 14 compared to the first year, and the number of representatives who voted also increased by nearly 10 times [6]. The implementation of participatory budgeting has not only introduced a new democratic method to citizens but has also raised their democratic awareness to exercise their political rights. Hence, participatory budgeting in Wuxi has indeed achieved its goal of educating citizens.

Wuxi's participatory budget had also greatly improved the transparency and efficiency of the public budget. Whether in the selection of candidate projects or in the selection of construction companies, the leading group would organize meetings to clearly introduce the budget of each project to the representatives and give them the right to choose. Therefore, the citizens not only had access to know where the funds would be spent but also had the right to decide how funds would be spent. Therefore, to a certain extent, participatory budgeting broke through the limitations of traditional finance and effectively prevented deviation and corruption in the use of fiscal funds, thereby promoting social fairness and justice.

It is reported that from 2006 to 2008, a total of RMB 58.49 million was invested in Wuxi's participatory budget, covering a wide range of areas such as environmental improvement, cultural construction, and healthcare. A total of 34 projects to renovate old communities and improve the environment had directly benefited about 250,000 people. There were 11 elderly services and health care projects which had enabled about 80,000 elderly and disabled people to receive appropriate care [7]. As a result, by improving the infrastructure and providing better public services, Wuxi’s participatory budgeting project greatly improved the quality of residents’ lives.

Analysis and Lessons Learned

What Wuxi's participatory budgeting did well is local government put much effort into making sure that these projects were what residents needed and could really benefit from. Wuxi’s participatory budget also attached importance to deliberation. For example, before the representatives chose the final projects, the local government would organise group meetings to introduce detailed information of each candidate projects to the representatives. This face-to-face deliberation aimed to improve the quality of the representatives’ decision making. In addition, when it comes to professional knowledge such as budgeting and building construction, local government would invite professional companies to be involved. Therefore, participatory budgeting in Wuxi considered feasibility and effectiveness more than anything else, so that people could actually benefit from the projects.

One of the shortcomings is that participants in Wuxi’s participatory budgeting were not highly representative which means that as the representatives, their choices couldn’t well express the residents’ true opinions. Obviously, the participants in Wuxi’s participatory budget were neither all residents nor elected by all residents. They were representatives recommended by citizens. Compared with the election of residents, the recommendation of representatives by residents is not a highly objective method and this is because the final results could be easily affected by residents' personal interest. Therefore, in Wuxi's participatory budgeting, the degree of public participation had indeed increased, but the coverage of public participation was still relatively small. These two points suggest that when defining the method of selecting participants, the Wuxi government did not consider both the objectivity of the method and the promotion of widespread public participation. Therefore, inclusion and popular control could still be improved in future participatory budgeting.

Another shortcoming is that the local government interfered too much in participatory budgeting so that the influence of citizen participation is weakened. In Wuxi's participatory budgeting, many important procedures were discussed and decided by the city council rather than chosen by the residents' representatives. For example, the budget participation process was established before the selection of resident representatives. Another example is that the pilot sites for participatory budgeting were also chosen by a leading group organised by the government rather than by resident representatives. Therefore, the local government did not give citizens much room for participation and in the future, the government should try to do “subtraction” which means the government should give more power to participants and increase their influence.

See Also

Participatory Budgeting

Participatory Budgeting in Xihu District, Nanchang City

References

[1] Ma, J., & Hou, Y. (2009). Budgeting for accountability: a comparative study of budget reforms in the United States during the progressive era and in contemporary China. Public Administration Review, 69, S53-S59.

[2] Wuxi Committee of China Association for Promoting Democracy. (2009). Jiaqiang Hangye Zuzhi Jianshe He Guanli, Fahui Hangye Zuzhi Yingyou De Zuoyong, http://www.wxmj.org.cn/web101/czyz/ztdy/855352.shtml.

[3] Wang, H. (2007). Experimenting with "participatory budgeting" to build a sunny finance. Jiangnan Forum (02), 31-32.

[4] Sun, A & Wu, C. (2007). Wuxi's first "participatory" budget. Public service projects must pass the people's test. Leadership Decision Information (24), 23.

[5] Wu, Y., & Wang, W. (2011). The Rationalization of Public Budgeting in China: A Reflection on Participatory Budgeting in Wuxi. Public Finance & Management, 11(3). https://www.researchgate.net/publication/228124685...

[6] Sun, A & Wu, C. (2007). Wuxi's first "participatory" budget. Public service projects must pass the people's test. Leadership Decision Information (24), 23.

[7] Jiang, X. (2010). Implementing participatory budgeting to promote the construction of sunshine government. China Monitor (22), 39.

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Notes