City gov't spending becomes transparent
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China Daily, December 26, 2011
Unlike many other mayors in the country whose salaries are carefully concealed from the public, the pay of Lu Guoxian, mayor of Jiaozuo, a city in Central China's Henan province, is published online.
Along with the salaries of government employees, the website of the Jiaozuo finance bureau also regularly publishes information such as the city's annual budget, the progress of government projects, notices of upcoming hearings and the cell phone numbers of finance officers.
A city with a medium-sized economy in Henan, Jiaozuo tops a nationwide government financial transparency ranking with 78 points, according to a study by the Shanghai University of Finance and Economics in 2010.
In a country where the disclosure of government information is still not a common practice, Jiaozuo's efforts to disclose its accounts are remarkable, and, to some extent, astonishing.
It's important to take a close look at the reform that a small city has taken on, especially at a moment when a long-awaited amendment on the country's Budget Law is finally before lawmakers this week, after long delays.
It is of equal significance, if not more, to make Jiaozuo's experience relevant to other places.
The financial reform in Jiaozuo dates back to 2000, stemming from a simple but pragmatic reason: saving money.
As its name indicates in Chinese, "coking", the city thrives on mining. Over the past century after coal was discovered, rail lines were laid, thermal power plants were built and money was drawn to the city, leaving behind a gloomy sky with a sun always blocked by haze.
During the 1990s, when the country decided to close highly polluting coal plants over environmental concerns, the mining machines in Jiaozuo ground to a stop and the economy plunged.
Recalling the days of recession, Li Xinlong, an officer from the local finance bureau, said there were times when the government couldn't even pay its employees' wages.
The government once borrowed 300 yuan (US$47) "from each government employee, including me, and used the money to repair a road", Li said.
Shen Xiangchen, director of the finance bureau who has masterminded the city's decade-long reform, said his initial motive in opening up the books, which in some places are still deemed confidential, was a "showdown" to let the public know that the government was short of money.
"You can only make full use of the money after you really know how much you have," he said.
Wei Jigang, deputy director of the bureau's accounting center, describes the initial reform as "rainstorming".
After six months of preparation, the city government published a notice on a Friday in March 2000. Over the weekend, it froze the bank accounts of government agencies and took control of the accounting process through the finance bureau.
A thorough investigation into off-books accounting and arbitrary spending found about 200 million yuan in off-the-record income, accounting for one-third of the city's revenues of that year.
The retrieved money was used to pay government employees' delayed wages, subsidize free toilets and gardens and compensate older, unemployed residents.
Following the investigation, the finance bureau established an accounting center to handle all the financial affairs of city government bodies.
The government didn't punish any officials or accountants found to have appropriated public funds to their off-books accounts, said Shen. The decision suggests the move was aimed at securing stability and winning their support of the reform.
He said the campaign laid the basis of valid financial information. Without accurate data, subsequent reforms in budgeting and procurement would all be based on inaccurate figures.
Following the accounting reshuffle, Shen's next modification was aimed at the finance bureau itself.
The linear administrative structure that is widely applied in all levels of Chinese government was reorganized into a checks-and-balances system. Four sections - budget planning, execution, supervision and evaluation - were established to restrict one another.
In addition, internal supervision of the development and use of the budget was accompanied by social monitoring, such as public hearings.
Wang Tushan is an expert frequently invited to take part in public hearings by the finance bureau.
During a hearing about whether to install a global positioning system on buses this January, Wang's opposing opinion was adopted.
"I suggested slashing the budget for the system to 1 million yuan, instead of the proposed 5 million, and using the rest of the money to refurnish the buses," the former accountant said.
But progress can be hard.
Recalling the first public hearing in Jiaozuo, Shen said the event ended up a total embarrassment.
"The only person who applied to take part didn't show up on that day."
However, Shen said he retained confidence in the reform.
"It is true that some Western countries do a much better job than we do on this issue," he said. "But they have been fostering civic mindedness for more than 200 years, while we are just getting started," he said.
Legislation in process
In a city with 3 million residents, and an economy still struggling to emerge from a post-mining downturn, reform that could have been impossible even in coastal cities was carried out against all odds.
The man who dominated the finance reform in Jiaozuo, Shen Xiangchen, is an early bird. He goes to the office at 6:30 am, and his holidays are almost indistinguishable from work.
Speaking of the future, Shen said he doesn't think the reform will stop after his retirement.
The most urgent support at the moment, he said, is legal protection.
Since he started to draw up a government debt schedule in 2004, Jiaozuo's effort to get "a full picture of the government accounts" has taken place outside a legal framework.
Local governments' debt in China officially topped 10.7 trillion yuan in June, according to the country's top auditing body, even though the Budget Law forbids local governments to raise loans.
"Since local government loans have become a public secret, we have to do our best to make (the situation) as transparent as possible, so as to control the risks," Shen said.
Shen's expectations are likely to be met during the next bimonthly session of the country's top lawmakers, which begins on Monday.
A previous announcement from the National People's Congress Standing Committee said a draft amendment to the Budget Law is to be reviewed at the meeting.
The long-awaited revision may usher in an opportunity to ensure that the isolated reform program in Jiaozuo becomes a model for others.
Transparency could be one of the best anti-corruption medicines, but a reform powered by an official's vision and determination can hardly last forever, said Ren Lihong, director of the budget-making department of the Jiaozuo finance bureau.
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