The details lie behind closed doors, concealed to the people

A sharp reminder of how far China has to go in achieving the transparency associated with a genuine market economy. The workings and outcome of its official Budget are shrouded in secrecy. Says Qin Liwen, senior reporter with the Economic Observer newspaper, “In our country, how the Budget is allocated is a state-secret. When the Ministry of Finance presents the yearly Budget, all the journalists in the meeting room are cleared out.”

Arthur Kroeber, the managing editor of the China Economic Quarterly, explains that the finance minister presents an outline of the past year’s fiscal policies and some general guidelines for the following year’s financial and economic priorities at the NPC every March. “The Budget here is a much more bare bones document than the one you are used to seeing in India. The detailed document is not released to the public and there are a lot of question marks for outside observers,” says Kroeber.

The part of the Budget that is made public gives broad indications about breakdown of revenue and expenditure, and comments on a few major issues such as the direction of subsidy payments. But it generally does not, for example, make specific comments about proposed changes in taxation policy. Broader policy goals are set at the government’s Central Economic Conference, held every year in December, and the closed-door Financial Work Conference, that usually takes place in January.

Another reason the Budget in China is not very significant is that government agencies across levels collect and disburse funds independent of the finance ministry. According to Kroeber, the finance ministry is trying to address this by instituting a centralised treasury system whereby all payments are routed through the ministry’s accounts. Currently only about half of all central ministries and a quarter of provincial governments participate in this system.

Even though the Budget in China is not as weighty a policy document as its counterpart in India, details of the exact process by which it is arrived at are difficult to obtain. Broadly speaking, the finance ministry , creates it with inputs from all other relevant ministries, most particularly the National Development and Reform Commission, which is the state planning body. The State Council, China’s Executive, also gets involved in terms of setting broad spending priorities. The Budget, when it is finally presented at the NPC, is useful for gauging the general pulse of the government’s policy priorities. Thus , the 2004 Budget revealed a sharp increase in military expenditure that most analysts saw as a response to the island of Taiwan’s growing sense of independence.

It indicated that spending in rural areas and less economically developed regions of the mainland would be increased, pointing to Beijing’s mounting concern over the dramatic rural-urban and coastal-interior economic divide that has emerged in China over the last two decades. For the general public however, the Budget remains far removed from their concerns. Xiao Jin Zha, the financial reporter for the Caijing (Finance) says, “Maybe some very specialised media pay attention to things like the Budget but it’s not really important to us.”