Perhaps the most unpleasant alert that Chinese Premier Wen Jiabao heard from the country's political advisors at their annual full session this year was a popular witty doggerel:

 

"Hoodwinking starts from villages, then the lies are copied by township officials without changes, which roll all the way from county officials to the State Council, whose orders are heralded word for word in an inverted pyramid of rank, but only end in receptions that make messengers drunk."

 

Though the tricksy jingle exaggerates a little, it partly reflects the truth that the central authorities' policies are at least covertly discounted, if not openly opposed, by some local officials in implementation, said Yang Zhifu, who quoted the satire to Premier Wen on March 4 at a panel discussion of the Chinese People's Political Consultative Conference (CPPCC) National Committee's annual session.

 

In a pledge to improve administration efficiency, Premier Wen vowed when delivering the government work report to nearly 3,000 lawmakers last Monday that the central government will intensify its efforts to strengthen the "policy implementation power" of the country's administrative mechanism.

 

"The vow of Premier Wen signals that the central government has begun to address the problems that impair government efficiency and authority," said Zhao Zhiquan, a deputy to the National People's Congress (NPC), on the sidelines of the top legislature's annual full session.     

 

Local interests confront central authority

 

The country's failure to meet the goals in reducing energy consumption and pollutant discharge last year was cited by lawmakers and advisors to illustrate how local officials' discount in implementing central policies has weakened government efficiency.

 

Premier Wen announced the goals to reduce energy consumption and pollutant discharge against per unit gross domestic production(GDP) by four percent and two percent respectively last March at NPC's annual session, underscoring that the government should not seek economic growth at the cost of environment and ecology.

 

Disappointingly, however, the energy consumption in 2006 went down only 1.2 percent, while oxygen chemical demand (OCD) and sulfur dioxide emission rose 1.2 percent and 1.8 percent.

 

Lawmakers said local officials' enthusiasm in economic growth, rather than environmental protection, is to blame for the failure.

 

Before the reform and opening-up drive started in the late 1970s, political faith was the sole motive that secured local officials' adherence to central authorities' decisions, but now they put local economic interests above all, said Wang Xiaoguang, head of the economic operation and development section of the Research Institute of Economy under the National Development and Reform Commission (NDRC).

 

Driven by local economic interests or even for self good, local officials may turn a blind eye to those projects which cannot meet the requirements on environment protection, said NPC deputy Zhao Zhiquan.

 

An inspection campaign in seven provinces launched by the State Environmental Protection Administration (SEPA) last October found that only 30 percent of the investigated projects were checked on pollution control design before they were granted construction licenses.

 

The SEPA has recently unveiled a blacklist of 82 projects that seriously violated environmental protection assessment rules. Involving combined investment of 1.12 trillion yuan (US$145.8 billion), the big budget projects were protected by local governments as they were cash cows.

 

Land expropriation is another area that local officials may brave the central government's displeasure. As land sales are the primary source of income for many local governments, officials are very likely to ignore the central government's orders on arable land protection and compensation for land expropriation.

 

National Auditor-General Li Jinhua said last June that 21 out of 34 highway projects reviewed in 2005 had violated government regulations by not paying farmers proper compensation.

 

He said local governments had siphoned off 1.6 billion yuan (US$200 million) in land compensation funds and used the money to make up their own budget shortfalls or pay bonuses to staff.     

 

Unshared local fiscal burden

 

Economist Justin Yifu Lin attributed local officials' excessive enthusiasm in economic growth partly to the country's tax system, which has laid more pressure for revenue on local governments than before the reform.

 

Under the current Tax Sharing System, which was launched in 1994 to reverse central fiscal decline, the central government takes the bulk of the tax revenue of provincial governments, but local governments find difficulties to pay for local fiscal expenditure, and in some areas, even wage payments are delayed, according to Lin.

 

The nationwide agricultural tax exemption starting last year, though applauded by farmers, left revenue-starved local governments with more pressure as the exemption meant a loss of more than half of their revenues, which unavoidably would lead to over-investment in revenue-generating industrial enterprises and regional protectionism, observed Lin, a CPPCC National Committee member.

 

"Local governments' attention is diverted away from long-term development projects, and they are no longer interested in investment for public goods," said Lin, director of the China Center for Economic Research at Peking University.    

 

Seek remedy

 

Noting the tax sharing mechanism cannot excuse local governments' slack response to the central government's policies, however, NPC deputy Cheng Faguang called for a reform of the fiscal system.

 

The fiscal system should be decentralized to ease the economic burden of local governments as well as to encourage inter-governmental transfer for sound interaction between local and central authorities, said Cheng, a member of the Financial and Economic Committee under the NPC Standing Committee.

 

In a move to underline local officials' role in environmental protection, the Organization Department of the Communist Party of China Central Committee, which is in charge of cadre candidates selection and evaluation, has announced that local officials' achievements in environmental protection will play as an important indicator for assessing their performance starting from 2007.

 

Applauding this new move, NPC deputy Tan Hui told Xinhua that a key to help rebuild the authority of the central government's policies is to make a feasible, scientific evaluation system to assess officials' performance for promotion and punishment, adding sever punishment is very necessary.

 

Other lawmakers said effective implementation of government policies also needs the guarantee from laws. Officials must be held accountable by laws if their dereliction of duty causes great loss to the country and people, they said.

 

(Xinhua News Agency March 15, 2007)