China's system beyond the system
By Stephanie Wang
CHANGSHA, China - News that Hong Kong chief executive Donald Tsang and his
ministers would take a pay cut of 5.38% as a gesture to share the hardship with
the public during the current economic downturn was widely circulated on
Chinese websites recently. And last year, the Public Service Division in
Singapore made an even more aggressive move in this regard.
In sharp contrast, civil servants in some mainland Chinese regions have been
given pay raises instead of cuts since last year, when the economy began to
take a downturn.
Take central Henan province, for example, where the average pay increment is
300 yuan per month. Policymakers proclaimed that increased incomes could boost
domestic demand. As the payroll for civil servants is funded by tax revenue, in
the context of
financial constraint the raise appears unfair to the public.
Worse still is the ever-expanding consumption of public funds by officials
(called "san gong xiaofei" in Putonghua, meaning three types of
public-fund spending: buying cars, making overseas trips and wining and
dining).
It is no secret that Chinese officials spend public funds on personal
entertainment. However, when they go too far, they infuriate the public,
particularly when people are suffering from the economic downturn. That is
exactly what the Guangzhou Maritime court did recently.
At the beginning of the year, the court arranged a 12-day "inspection" tour for
six officials (including the president) to South Africa, Turkey and Egypt at a
cost of 80,000 yuan (US$11,700) per person. The details of the trip were
publicized and spread quickly on the Internet, causing public outrage.
Under enormous pressure the court responded to the press, claiming that "the
trip is to study and research; it has gone through strict scrutiny and approval
procedures, conforming to relevant regulations; the expenses are within the
budget".
However, as for the accusation that the study written by the officials
following their "inspection tour" was nothing but a plagiarized report, the
court chose to beat around the bush. The outcry on the Internet finally led to
an investigation by the Foreign Affairs Office of Guangdong province. The
results of their investigation have not yet been released.
In recent years, officials making overseas sightseeing trips with taxpayers'
money have received added exposure and ongoing condemnation from the public,
partly due to the amplifying influence of the Internet, but also the public's
increased awareness of how public funds are being spent.
Last year, a person found a bag on a subway train in Shanghai, along with
travel itineraries and receipts from trips to North America made by officials
in Xinyu, Jiangxi province and Wenzhou, Zhejiang province.
The itineraries showed that the proclaimed "inspection" trips took place mostly
in tourist resorts. The angry person who found the evidence uploaded the
photocopied documents on the web, which showed that the government of Xinyu
paid at least 335,880 yuan for 11 officials while Wenzhou paid 649,495 yuan for
23 officials to travel. Among the documents were so-called invitation letters
bought for 2,280 yuan, telling a typical story of faked business trips.
In the Air France crash of early June, the original sympathy and condolences
expressed for the Chinese deceased turned sour when it was found out that the
six Chinese citizens on that ill-fated Airbus might have been returning from a
sightseeing trip funded by the government-owned Benxi Iron and Steel Company in
northern Liaoning province. One of them was the wife of a vice governor of
Liaoning.
There was a similar case in 2004. A woman named Zhaoyan was allegedly beat by
US policemen for no reason while visiting Niagara Falls. At first, the case
generated great public outrage in China. Later, when someone dug deeper and
found out that Zhao's trip was paid for by public funds at a cost of 340,000
yuan for seven persons, the target of public outrage shifted.
The outraged also included some top officials. Vice Premier Wang Qishan, while
serving as the mayor of Beijing a couple of years ago, said that officials
don't have to go abroad to learn advanced foreign experiences. He said,
"Yugoslavian officials told me that 'you Chinese are so keen on study trips,
even our milk cows now are familiar with Chinese faces'."
On national TV program News 1+1, Wang Xixin, a special researcher from
the General Office of the National People's Congress Standing Committee,
revealed a shocking figure: the above-mentioned "three types of public-funded
consumption" amounted to 900 billion yuan a year. Even the host of the show
couldn't believe her ears and asked Wang to repeat the figure.
Nevertheless, it would be unfair to say that the central government has made no
effort to stop this malpractice. As early as 1993, the General Office of the
Chinese Communist Party's Central Committee and the General Office of the State
Council issued a circular stating that overseas trips on public funds were
being restricted.
In April 2008, 10 ministries worked out a joint mechanism to restrict trips of
this nature. In February of this year, the two general offices issued another
circular "firmly restraining overseas travel for sightseeing on public funds".
Last year, 550 overseas-trip applications involving approximately 4,000
officials were rejected. This year, the budget for overseas trips was cut by
20%. Officials involved in exposed scandals have been sacked.
However, as public administration expert Shen Ronghua pointed out: "The current
punishment is too light for the misbehaving officials." Take the
above-mentioned Xinyu case. Although the chief and the deputy of the local
Office for Foreign and Overseas Chinese Affairs were sacked for fabricating
documents and taking kickbacks from air ticket purchases, the members of the
traveling group remained basically untouched except for a low-ranking official.
Tougher punishments might pay off, but it is a simplistic solution at best.
Moral condemnation is necessary but cannot replace supervision. As professor
Wang Shaoguang from the Department of Politics and Public Administration of the
Chinese University of Hong Kong noted, the key is to reform the financial
system. According to the professor, theoretically speaking, the reform focus is
crystal clear: concentrated finances and supervised budgets. However, in
practice, these ideas are more than difficult to put into place.
For starters, finance systems in China are too complicated to manage. There is
a "within-the-budget" system, an extra-budget system and still another system
"beyond the system" that deals with revenues from arbitrary charges and fees -
especially from land sales.
As the name suggests, the revenues beyond the system are not on the radar of
either the local People's Congress or the central government. According to the
Economic Observer, Gan Zangchun, director general of the Department of Policies
and Regulations of the Ministry of Land Resources, remarked at a conference,
"Land revenues must not turn into the pocket money of mayors."
That comment implies that in reality, government officials using land revenues
for personal use is the general practice. Some data suggests that land revenues
account for 30-60% of local revenues. That is quite some allowance. It is even
more obvious, based on the above, that without a concentrated finance system,
supervision cannot be effective.
Currently, it is the job of the congresses at different levels to oversee their
government's budgets. Yet, even for the areas that fall "within the budget",
the institution more than often serves as little more than a rubber stamp. For
some congress representatives who are serious about their job, they find the
budget reports are beyond their comprehension.
Difficult as it may sound, the governments at all levels in China will have to
take serious steps to make all expenditures transparent and accountable. After
all, aversion and outrage toward corruption can lead to reform, and reform in
the financial system would be the least expensive and most effective way to set
things right in China.
Stephanie Wang is a freelance contributor based in Changsha, China.
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