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Budget Reform: Progress So Far

The Ministry of Finance's budget will be submitted shortly to the Third Session of the 10th National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC) for examination and approval.


The nuances of the budget are often hard for outsiders to understand, and even some insiders too, according to some.


The ministry asserts that the reforms of the budgeting process started 1999 have maintained momentum. The initial step forward was dividing each spending area into basic and project expenditure.


A ministry official explained that each department is allocated basic expenditure for its overheads and basic operations, e.g. water and electricity charges, and allowances for business trips and conferences.


Basic expenditure is allotted to each department as a fraction of the total available, promoting self-discipline and helping to avoid arbitrary allocation.


Project expenditure is budgeted according to the specific work of each department. Departments prioritize their work for the forthcoming year and estimate the funding required for each.


The Ministry of Finance then examines and verifies their assessments, and can veto projects that do not meet requirements or request explanations of departments' estimates for further discussion.


The ministry official said that, because departments cannot adjust projects unilaterally, corruption can be avoided. It prevents departments from having undue influence when grassroots units approach them to support an application for project funds.


According to the ministry, the reforms since 1999 have been important in detailing and standardizing budgetary calculations. It has also established an updated management system for the departmental budgetary projects database to strengthen examination and verification procedures.


These improvements mean budgets can more comprehensively reflect the actual revenue and expenditure situation of different funding areas.


The Ministry of Finance began another important reform in 1999: submitting the budget to the annual session of the NPC. Then, only four departments presented their budgets, but this has increased to 34 so far this year.


Submitted budget reports are divided into two parts: the main report and sub-report. The main report is read by the financial minister to an open session, whereas sub-reports are not made public.


"Each delegation has only few copies of departmental budget reports, and you have to borrow from others in order to read them all," complained one deputy from Shanghai.


Despite the Ministry of Finance's reforms to date, it is still criticized by many deputies who would like to see more changes.


(China.org.cn by Li Jingrong, March 4, 2005)


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