From cover, issue no. 348, December 31, 2007
Translated by Ren Jie
Original article: [Chinese]

A recently concluded accounting exercise on Chinese public institutions by the Ministry of Finance has revealed both a sharp increase the value of public assets and the disappearance of public goods "loaned" out by government servants for personal use.

The Ministry of Finance, after checking the accounts of public institutions, concluded that public assets stood at 3.9 trillion yuan at the end of 2006.

The updated value is a 24.6 percent jump (80 million yuan) over last year's figure-- a difference officials have attributed to a new accounting formula. Apparently, the 2005 accounting exercise had omitted assets procured through public funds but not  included in accounting records, assets which then flowed into the hands of public servants. As a result, that year's "China's Accounting Year Book" concluded that public assets were worth 3.13 trillion yuan by year-end 2005.

The Ministry of Finance has long suspected that the statistics contained there were incomplete and inaccurate, thus, it launched its own thorough accounting review this year using another formula.

For example, the recent accounting exercise discovered that Hubei province had spent huge funds to acquire cars for official use. However, only the cars belonging to provincial departments were logged into the balance sheet while cars allocated for local governments' bureaus were not booked. In some other cases, office laptops that were taken away by local governments' officials were also unaccounted for.

This time, however, the Ministry had insisted that all assets procured and without evidence of a transfer of possession rights should still be counted.

One spokesman of a real estate agency in Jiangsu says his firm was approached by the Ministry, which wanted to check through properties owned by public institutions in Nantong municipality. He admitted that it was a "tough job" to investigate, trace and determine the rightful owners of the properties.

Beijing Municipal Finance Bureau evaluation chief Ding Xia says that in the past, purchases of houses, land, computers and funds given out as donations were often excluded from book keeping. She adds that the latest checks were more thorough.

In other words, all along, the real value of public institutions' assets has been much higher than that what has been announced. The differences between the two values highlights the problems of mismanagement in distribution of resources, inefficiency, wastage and a process of draining of public properties.

Some public institutions have actively taken advantage of the ambiguous book keeping system for their own benefit.