Breaking the “Base Number” Dependency to Optimize Public Spending
China’s comprehensive zero-based budgeting (ZBB) reform, mandated by the Third Plenum of the 20th CPC Central Committee, represents a fundamental shift in fiscal governance. The initiative, currently piloted across 16 central ministries and multiple provinces, aims to replace traditional incremental budgeting with needs-based allocation to address fiscal constraints and improve spending efficiency.
Core Reform Components
| Traditional Budgeting | Zero-Based Budgeting |
|---|---|
| Automatic baseline adjustments | Full expenditure reevaluation |
| Departmental silos | Cross-agency priority ranking |
| Input-focused | Performance-driven allocation |
Implementation Drivers
Three critical factors necessitate the reform:
- Fiscal pressures: 2025 Q1 general public budget revenues fell 1.1% YoY
- Policy agility: Requires dynamic resource reallocation for strategic priorities
- Waste reduction: Anhui’s pilot recovered ¥8.87B in inefficient funds
Provincial Pilot Outcomes
- Guangdong/Shaanxi: Established personnel and project standards since 2015
- Anhui: Reduced provincial projects by 22% in 2023 through ZBB
- Central Ministries: 2024 pilot optimized 185 expenditure policies
Implementation Framework
Key reform mechanisms include:
- Comprehensive budgeting: Integrating all fiscal resources under unified management
- Interdepartmental coordination: Breaking bureaucratic barriers through institutional design
- Performance metrics: Quantitative evaluation systems for objective prioritization
- Support systems: Dynamic adjustment protocols and technical capacity building
“This isn’t just accounting change – it’s governance transformation,” explained fiscal policy expert Xi Penghui. “By forcing justification of every expenditure against strategic objectives, China can better align limited resources with its modernization agenda.”
The reform faces implementation challenges including departmental resistance to transparency and the technical complexity of cross-agency comparisons. Success will depend on sustained political commitment and the development of robust performance evaluation frameworks.
Related topics：
