In transitional period, China’s budget expenditure management system of governmental departments has dual characteristics of investment controlled budget management system suiting to plan economy and governmental performance budget management system suiting to market economy. The path selection for the reform of budget expenditure management system of governmental departments reflects the core value orientation of current public financial system reform. Based on new institutional economics theory, budget expenditure performance management of departments is the reform of governmental budget management to fit for market system and will largely decrease the transaction cost of budget management. The reform of department budget expenditure performance management is the objective requirement for the evolution of China’s governmental budget management system, has comprehensive characteristics of the evolution of the two systems with temptation and enforcement and also embodies the characteristics of evolutionary system change.