Sichuan: deepening scientific fiscal management by taking budget performance management as starting point

To thoroughly implement the major decisions and deployments of the CPC Central Committee and the State Council on the comprehensive implementation of budget performance management, and to accelerate the modernization of the fiscal governance system and governance capabilities, the Sichuan Provincial Department of Finance, anchoring the core orientation of “accountability for every expenditure and responsibility for ineffectiveness”, has taken budget performance management as the core tool for deepening scientific fiscal management.

After more than 20 years of continuous iteration and upgrading, it has built a comprehensive, full-process, and all-encompassing modern budget performance management system, promoting a qualitative improvement in the efficiency of fiscal resource allocation and the effectiveness of fund utilization throughout the province, and laying a solid governance foundation for the high-quality development of Sichuan’s fiscal undertakings in the new era.

I. Deepen institutional iteration and build a systemic integrated governance system

Sichuan’s budget performance management system began its pilot and implementation in 2004 and progressed through three main developmental stages before entering its current integrated phase: exploration and experimentation, expansion and incremental implementation, and full implementation. In 2024, it officially entered the “system integration and serving the overall situation” stage, achieving a fundamental shift from a single performance evaluation technique to a comprehensive fiscal governance tool.

The Sichuan Provincial Party Committee and provincial government issued implementation opinions on the full implementation of budget performance management in 2019 and a notice on further implementing budget performance management in 2022, clarifying the timetable and roadmap for reform across the province. In 2025, the Sichuan Provincial Department of Finance participated in formulating an implementation plan for deepening the reform of fiscal performance supervision and management, simultaneously and systematically advancing local legislation on performance management. It also issued supporting measures for the “three controls and three musts” of fiscal performance supervision, as well as five core management measures for performance evaluation, objectives, monitoring, evaluation, and results application.

This established a closed-loop system encompassing “pre-assessment for source control, in-process monitoring for dynamic correction, and post-evaluation for rigid constraints”, reversing the fragmented situation of previous performance systems and transforming performance requirements into mandatory management rules for all financial entities.

II. Focusing on core pain points and opening up key pathways for optimal resource allocation

To address the pain points of traditional budget management, such as resource dispersion, rigid base figures, and ambiguous responsibilities, Sichuan has systematically solved governance problems by using performance management as the core pillar. An innovative “performance coefficient” mechanism has been established, directly linking the overall departmental performance results — based on quantitative indicators such as the quality of provincial departmental budget preparation, general expenditure control, and asset revitalization rate — to the following year’s departmental budget allocation.

This promotes the concentration of limited financial resources in major provincial strategies and high-performance areas, achieving a situation where “high performers receive more resources, and low performers relinquish space”. The performance concept is deeply embedded in the entire zero-based budgeting process, using “expenditure necessity and input-output ratio” as performance judgments to break the long-standing rigid budgeting pattern of “base figure + growth”, constructing a new budget allocation mechanism that prioritizes “ensuring what is necessary, highlighting key areas, and prioritizing performance”. Implementation measures for promoting the effective implementation of the “three managements and three musts” of fiscal performance supervision have been issued, clarifying the boundaries of responsibility for “managing funds, projects, and policies, and must also manage performance and supervision”.

These measures respectively solidify the responsibilities of the finance department in leading and coordinating, the competent department in industry management, and the project implementation unit in direct responsibility, overcoming the misconception that “performance management is solely the responsibility of the finance department”.

III. Refine implementation measures to unleash the comprehensive effectiveness of performance management.

Over the past three years, the province has organized provincial departments to complete self-assessments of over 7,000 projects, conducted fiscal assessments of 529 key projects, and directly canceled or reduced unreasonable budget applications by 6.3 billion yuan, thus preventing inefficient fund allocations from the outset. Standardization of core performance indicators for over 100 provincial departments as a whole and 30 provincial special projects has been completed. Performance targets for provincial departments as a whole and provincial special projects have been submitted to the Provincial People’s Congress for review, actively accepting supervision from the People’s Congress and the public.

Over 18,000 provincial department projects have been included in the scope of routine performance monitoring. The integrated budget management system automatically freezes project indicators for projects that have not completed early warning procedures, recovering a total of 1.127 billion yuan of idle, inefficient, and ineffective funds. Focusing on the province’s major strategic deployments, fiscal evaluations have been completed for 82 special projects, 8 expenditure policies, and 70 provincial departments, involving funds exceeding 1 trillion yuan, with evaluation points covering 21 cities (prefectures) and 183 counties (cities, districts) across the province. A performance results application mechanism of “three linkages and one rectification” has been established. In the past three years, the initial budgets of 44 provincial departments have been increased and 50 have been reduced.

The budget scale of 5 special projects has been reduced. The allocation of provincial transfer payments to lower levels has been optimized by 27.9 billion yuan. The rectification of problems in 77 provincial departments and 94 special projects has been promoted. Core references have been provided for the revision and improvement of the management methods of 37 provincial special funds, such as science and technology plans and SME development. The performance constraints have effectively promoted the scientific management level of the province’s finance to a new level.