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Cover Stories Series 2013> Web Trap> Archive
UPDATED: December 5, 2011 NO. 49 DECEMBER 8, 2011
Turning Transparent
Despite some progress government finances still lack transparency

IN PUBLIC: Zhang Yingshang, head of Baimiao Town of Bazhong in Sichuan Province, explains the township government's finance on December 23, 2010 (LI XIANG)

In mid-April, an online posting revealed that the Guangdong branch of Sinopec, a high-profile state-owned petroleum company, spent more than 1 million yuan ($146,413) on expensive liquor.

After the scandal broke out, the branch's general manager, Lu Guangyu, was removed from office. An investigation showed that he had purchased dozens of bottles of liquor, each costing more than 10,000 yuan ($1,464).

In order to curb extravagant public spending and increase transparency the Central Government began to publicize its expenditure related to the three public consumptions this year.

At a meeting on March 23, the State Council, China's cabinet, decided that the budget of the Central Government for the three public consumptions would be disclosed in June and reaffirmed the government's commitment to cutting the spending in these three areas.

In April, the Ministry of Science and Technology released the 2011 figures for its expenditure on these three items, which amounted to 40.18 million yuan ($5.88 million), the first to make public its spending on the three items.

Many other ministries and ministry-level government agencies have also released their spending on the three public consumptions.

Wang Xixin, a professor at the Law School of Peking University, told Xinhua News Agency that the move will make government spending more transparent, adding that making government budgets and financial accounts public had been the objective of China's public fiscal reform.

"If the three public consumptions were left unrestrained the government's credibility would have been undermined," said Wu Zhongmin, a professor at the Party School of the Central Committee of the Communist Party of China.

A long way to go

Although the publication of the central government departments' budgets was seen as a step toward greater transparency, the expenditure shown in their reports was much less than the public had anticipated.

Zhu Lijia, a professor at the Chinese Academy of Governance, said the government should be given credit for its efforts to make its financial accounts and budget implementation more accessible to the public.

However, what mattered most was not merely a sum of the total expenses, but detailed accounts, down to each specific purchase or trip paid with taxpayers' money, Zhu said.

He also recommended that prior audits should be conducted by an independent party to give more credibility to the official data released in government agencies' financial accounts.

Ye Qing, Deputy Director of the Hubei Provincial Bureau of Statistics, said the official figures sounded less credible as the three items were not listed under separate headings in the annual budget.

"Most of the figures are tucked away among other budgetary items," Ye said. "It is common for local governments to divert money from other projects to fund the three consumptions."

Government departments began disclosing information on the three public consumptions as early as 2007. On January 1 of that year, the reform of government revenue and expenditure proposed by the Ministry of Finance was put into action in order to set up a modern budget administration.

Since then the amount of money spent on these three items has been recorded in the accounts of government revenue and expenditure.

In 2008, the State Council issued the Regulations on the Disclosure of Government Information, which requires administrative agencies to disclose information that involves citizens' interests to ordinary citizens.

Following the introduction of Regulations on the Disclosure of Government Information, more than 70 central government departments made public their budgets, but the information about the expenditure on the three public consumptions was excluded.

This year, the information was included in the reports of the 98 government departments under the State Council, but the figures were criticized for being vague and devoid of substance.

"China does not have budget categories which take into account expenditure on those three items. As a result, many ministries just ignore them in their official releases," said Ren Jianming, Director of the Anti-Corruption and Governance Research Center of Tsinghua University.

In response to the problem, the State Council's Legislative Affairs Office and Government Offices Administration released on November 21 a draft proposal on regulating the three public consumptions by publishing expenditure figures and inviting public responses.

The draft requested that all authorities above the county level include the expenditure on the three items in their annual budget and regularly make these expenditures public. According to the draft regulation, governments should abide by the principle of austerity when laying down their annual budgets and strictly control their expenditure on the three items.

The draft also stipulates that relevant government agencies should neither misappropriate other budgetary funds nor receive donations from enterprises and affiliated organizations for these expenditures, both of which have led to malpractices in the past. Punishments will be meted out to those involved in excessive spending.

Despite some tangible progress, experts claim that the disclosure of spending on the three public consumptions is just the first step toward cutting the unnecessary waste of taxpayers' money and realizing clean and honest governance.

An Tifu, a professor of fiscal finance at Renmin University of China, suggested that government departments should disclose details on all their other expenditure, not only spending on the three consumptions, in a manner that conforms to international standards.

"Only a detailed list of all expenditures will actually enable our people to participate in effective supervision," An said.

"China has been striving to build a service-oriented government which needs public supervision," said Wang with the Law School of Peking University.

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