By Xi Si (席斯)
News, page 4
Issue No. 582
Aug 13, 2012
Translated by Zhu Na
Original article: [Chinese]

Late summer is a popular time for government offices to go on vacation. But over the past month, heads of various departments in the Ministry of Finance (MOF) have been unusually busy.

They’ve been traveling across the country to meet delegates of the National People’s Congress (NPC) and members of the Chinese People's Political Consultative Conference (CPPCC) in order to explain the details of the annual national budget proposal face-to-face and get feedback.

When the two bodies met for the annual “Two Sessions” this March, only 80.1 percent of the delegates voted to approve the 2012 budget. This was a fairly low margin for the NPC, which is sometimes referred to as China’s “rubber stamp congress.” Before 1988, every piece of legislation was unanimously approved. Though no legislation has ever failed to gain the votes needed to pass, “no” votes have become much more common; most notably when one-third of the NPC voted against building the Three Gorges Dam in 1992. According to The Economist, anything receiving less than 75 percent of the vote “is seen as a clear rebuke to the leadership.”

80.1 percent approval was a record low for the budget. This brought quiet, but unmistakable pressure to the MOF. The hope in sending officials to explain the budget is that there will be less “no” votes when the two bodies meet again next.

Building Support

On July 20, Huo Bugang (霍步刚), the vice director of the Education, Science and Culture Division of the MOF, went to Hangzhou, Zhejiang Province to explain several proposals regarding the education budget.

Wang Jianhua (王建华), party secretary of Zhejiang University of Science and Technology expressed doubts over the feasibility of making education funding reach four percent of the GDP. He asked about details including the funding sources, structure and spending plans.

The delegates thought the sources of funding for the goal would all be central government revenue, so they were skeptical about whether the goal was realistic. It was explained though that not all the education funding would come from the central government. For instance, 10 percent will come from local government land transfer revenue - which can’t be seen on the public budget.

Most delegates also thought education funds would mainly be invested in higher education, which isn’t true. Wang explained that compulsory education would account for 58 percent and higher education only about 20 percent of the education budget.

“This face-to-face communication is very good,” said Zhou Ping (周平), an NPC delegate and official from Chongqing Municipal Port and Shipping Authority. “It’s helpful for local representatives to understand more about government finance.”

Ye Qing (叶青), another NPC delegate, said that during the Two Sessions the delegates were given the budget report on March 5. Then it needed to go through the discussion process on March 7. There was no time to read it carefully. The reason some representatives voted against the report was that they didn’t understand it, Ye explained.

Liu Shangxi (刘尚希), vice director of the Science and Research Center of the MOF believed that the increase in negative votes is a reasonable trend. It shows that the public and NPC representatives are paying more attention to the budget report each year.

Opening the Books

The Hong Kong government spends a significant amount of money and effort every year when preparing the budget report. In order to let people understand and support it, a campaign is launched that includes animated handbooks and TV ads. 

“It’s an important duty of the government to enable the public to understand the budget report and give advice,” said Liao Zijun (廖子君), a Hong Kong official.

How the budget is made public and to what extent it’s clarified determines how much of it the delegates can understand. This has been a problem for the NPC for many years.

Government departments usually prepare two budgets classified as “function” and “economy.” The budget classified as function reflects what field the money is used in; such as education or agriculture. The budget classified as economy shows more specifically how the money is spent; like travel expenses, projects and wages. 

However, when the government budget appears in public, most departments only release a function budget, which leaves many feeling that the government is being purposely opaque. The things people are most concerned with - government employees’ wages, expenses, and travel – can’t be viewed.

After soliciting advice from NPC delegates on the first draft amendment to the Budget Law, some government departments proposed that the public budget be classified by both function and economy to fully reflect government revenue and expenditures. It was also suggested to add detailed provisions for economy classification.

In response, the second draft amendment to the Budget Law defined these classifications explicitly for the first time.

Some departments have already started to release their “economy” budget. The Ministry of Water Resources, for example, published that spending on employees’ wages was 2.3 billion yuan in 2009.

Many scholars think that with the Budget Law clearly defining and requiring both function and economy reports, there will be more transparency and public satisfaction. Perhaps that will be enough to convince more NPC delegates to support it.