By Nathan Wakelin-King and Song Chunling
Based on an article that appeared in the Dec 5, 2011 issue of the EO
Original Article: [Chinese]

Towards the end of the year, while many are busy earning, others are busy spending.

The end of the year sees groups of officials – so called government tour groups (政府团) - solving the "problem" of "excess funds" in their respective treasuries. At the same time each year, they flock en masse to luxurious restaurants, hotels and shopping strips in locations around the globe.  

Liu Yan (刘言), the newly-promoted deputy director of the investment promotion bureau in a northeastern province of China, is trying hard to spend the ten million yuan left on the books. If he fails to spend it, then his budget for next year will be lower. To avoid this turn of events, he's organized a tour group.

Liu never imagined he could earn money by simply helping the bureau spend money. Apparently, he is not the only one who benefits from this sort of budget "problem."

When Liu asked a friend about how he could spend the cash, they suggested that in order to spend the money, he should arrange a "research tour."

This would necessarily involve enjoying the perks that comes with Chinese officialdom; this would necessarily involve spending lots and lots of money.

Liu was told that this is what a Dalian-based bureau did over the October national day holiday this year. Following his advice, Liu chose an eight-day trip to Taiwan, involving 20 people all staying in four-star hotels. When Liu suggested that 6,000 Yuan per person was too expensive, the salesman from the travel agency misunderstood him and said directly that they could provide "kickbacks". If he was not satisfied with bonuses of more than 100 yuan per person, the salesman said, then more could also be given in a scheme involving refunds after the purchase of a cheap flight.

Although Liu was still nervous about the price of his tour, the tourism proposal was not only accepted by the head of his office, but the approval came with the suggestion of adding a round of shopping to the trip.

For many travel agencies, government tour groups like that of Liu have been the most lucrative source of income at the end of the year season. "Many travel agencies have VIP departments specifically for managers of state-owned enterprises and government officials. These groups only want the best and the most expensive and they don't care about anything else," says Zhang Yixuan (张义轩), a deputy director of a travel agency experienced with government tour groups.

Zhang recalls that when overseas tour groups first started, the only applicants were directors of state-owned enterprises and government officials. He also reveals that some bureaus even plan the year-end trip at the beginning of the year in order to release the pressure of spending the money later.

The competition between travel agencies is fierce, and thus all the VIP departments pay special attention to the requests of their high-profile clients. They also send them all manner of corporate gifts. "After all, these VIP groups make for great profits, they're beneficial to both the government and the travel agent," says Zhang.

Liu's group ended up spending more than 100,000 yuan over eight days. This does not include tickets for the tour sites, catering, nor even what the20 people in the party spent on shopping. It also doesn't include the several thousand yuan worth of baksheesh that Liu received. However, compared with the ten million yuan surplus budget, the expenditure of the trip was just a drop in the ocean.

Despite an official ban of "intensive expenditure towards the end of the year," Liu's prefecture still spends large amounts of money every year on outbound travel, private purchases, and official gifts, all with the aim of reaching the goal of a regular ten percent annual increase in public service expenditure.

"Outings to four-star and five-star restaurants and clothing purchases of thousands of yuan, are all paid with the public service funds," says Liu.

Besides individual expenditure, the bureau also purchased piles of shopping cards and gas cards (gas vouchers) of more than one thousand yuan each.

It's also a "tradition" to send gifts to leaders of the same level and above.

"It's a way to add more funds to the local investment project, the auditing department won't notice, and meanwhile it's a favor to the project contractor. However, the only shortcoming is that the procedures for approval are complicated." says Liu.