Effects of the Supervision Down to the Countryside on Public Spending: Empirical Evidence from Rural China

Suwen Zheng, Chunhui Ye () and Weibin Hu
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Suwen Zheng: School of Economics and Management, Zhejiang University of Water Resources and Electric Power, Hangzhou 310018, China
Chunhui Ye: China Academy of Rural Development, School of Public Affairs, Zhejiang University, Hangzhou 310058, China
Weibin Hu: China Academy of Rural Development, School of Public Affairs, Zhejiang University, Hangzhou 310058, China

Sustainability, 2025, vol. 17, issue 18, 1-27

Abstract: Improving the supply of rural public goods serves as a driving engine for rural revitalization and provides fundamental assurance for achieving self-sustained development in rural areas. This study examines how China’s supervision down to the countryside (SDC) policy affects village-level public expenditure, addressing broader debates on grassroots governance reforms. Using 2005–2019 panel data from 100 villages across five provinces, we employ a multi-period staggered difference-in-differences (DID) design to identify causal effects. Empirical results indicate that SDC implementation significantly reduced overall village public spending and investment in new public goods, primarily driven by enhanced budget constraints. Case analysis reveals that this occurs through procedural formalization and participatory oversight. Heterogeneity analysis shows that the effect is more pronounced in villages with weaker clan influence, lower economic development, and absence of factional competition. The findings of this study provide empirical evidence for the perspective in village power supervision theory that “top-down, external, institutional supervision requires clearly defined boundaries” and provides a reference for policies aimed at promoting the sustainable development of rural governance.

Keywords: supervision down to the countryside; public spending; governance standardization effect; process specification (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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