Most city governments hiding their budgets, survey says

(Ecns.cn)--Over 90 percent of China's city governments lack fiscal transparency, according to a report by Tsinghua University.

The university's research team surveyed 81 governments in 22 provinces, five autonomous regions and four municipalities, finding that only seven met the basic requirements of fiscal transparency. Less than half reached the average standard.

Eight criteria were used to assess the transparency of local spending in 2010, including whether city governments had released information on their exact structures and functions, published 2011 budget reports and publicized final accounts for 2010.

Beijing topped the transparency ranking, followed by Shanghai, Nanyang and Chengdu. Baotou, Qingyang and Shihezi were among the lowest.

"City governments are not as transparent as people expected," Yu Qiao, professor of economics at the School of Public Policy and Management at Tsinghua University, told Xinhua News Agency.

Per capita GDP, foreign trade dependence and the capacity of leaders were found to be three key factors influencing fiscal transparency, China Economic Weekly cited the report.

"The higher the per capita GDP and the larger the foreign trade dependency a city has, the more transparent its finances will be," Yu said to Xinhua. "Top city officials with formal college degrees are more inclined to support information disclosure."

Statistics show that leaders in 47 of the total 81 cities hold undergraduate degrees, and that their levels of fiscal transparency are above average.

Zhou Shaojie, a senior researcher from the School of Public Policy and Management at Tsinghua, explained to China Radio International that it is common for cities with export-oriented economies and high GDP growth to have better budget management.

"Governments, especially those in underdeveloped areas, are unwilling to tell the public how the budget is spent, because GDP growth is the only way to evaluate a local government's capacity," Zhou analyzed.

He suggested that budgets should be planned not only to boost GDP growth, but also to improve people's livelihoods.

"The situation in general is still far from satisfying. Most city government accounting figures remain semi-transparent or non-transparent," pointed out Yu Qiao in an interview with China Economic Weekly.

According to the report, information on government functions, officials' resumes and yearly budgets can be easily found on most official websites, but the execution of budgets is harder to find. It is also noteworthy that none of the 81 surveyed governments had published expenditures beyond their budgets, reported CRI.

Zhou Shaojie told CRI that poor planning has led to the mismanagement of fiscal budgets and local governments are reluctant to reveal this to the public.

"In the United States, it normally takes 18 months to prepare a budget plan. It takes less than six months in China. Because of this, we can see that the process lacks thorough consultation and investigation. Plans are not completely based on the demands of the grassroots majority," Zhou said.

"The 81 city governments are like 81 listed companies that should be open to their stakeholders. However, the current Regulation of the People's Republic of China on the Disclosure of Government Information is not legally binding enough, so it needs to be further tightened. The local People's Congress should also respond actively to push ahead with more new laws," Yu Qiao stressed.

Zhou said he hopes the Tsinghua report will prompt urban governments to win more public trust and promote social equality. The public has the right to know the source of government revenue and how their money has been spent, he said.

The country has taken some steps toward greater transparency in public spending. Last month, the general office of the State Council, or China's Cabinet, issued a document requiring governments at all levels to disclose information concerning fiscal budgets, affordable housing, food safety, environmental protection, land requisitions and housing demolition in a more transparent manner, reported Xinhua.

Since May 2011, the State Council has repeatedly called on its ministries to disclose by the end of June their spending on the "three public consumptions"— overseas travel, official receptions and government cars.

The agency also quoted Premier Wen Jiabao as saying that the government should create conditions that allow people to criticize and supervise the government.

"Only when governments' fiscal revenues and expenditures become transparent can people really supervise the government," Yu Qiao noted.