Jul. 18, 2013 (TSR) – In stark contrast to the arrogant crumbling empire, China, under President Xi Jinping, practices prudence amid global economic slowdown and works towards responsible financial reform while fighting corruption and promoting peace.
The Chinese government spent less money, down by 20%, on official expenses last year, according to final account reports issued by central government departments on Thursday, state news agency Xinhua reports.
China’s top legislature examined, reviewed and approved the State Council’s reports on the central government’s final accounts for 2012 during the Standing Committee of the National People’s Congress (NPC) session, which ran from June 26 to 29.
The central government spent 7.43 billion yuan ($1.19 billion) on receptions, vehicles and overseas trips last year, down 20 percent from previous year, which was 559 million yuan less than the budgeted figure according to the report.
In 2011, central government spending on receptions, vehicles and overseas trips totaled 9.36 billion yuan.
Money on officials’ overseas trips totaled 1.95 billion yuan in 2012, 200 million yuan less than the budgeted figure, while 4.07 billion yuan was spent on vehicles and 1.41 billion yuan on receptions, down by 281 million yuan and 78 million yuan, respectively, the report said.
The China Meteorological Administration (CMA), which took the lead in publicizing its final report among central government departments, spent 207.7 million yuan on overseas trips, vehicles and receptions, accounting for 98.3 percent of its budget.
The CMA attributed the cuts to the government’s frugality and anti-corruption campaigns, as well as the impact of changes in international relations.
China’s “Don’t spend what you don’t have”: Fighting Corruption and Cut down more spending by 5% in 2013
China’s central government saw its fiscal revenue growth slow down in 2012 and may struggle to meet this year’s target, according to a government report released on June 27.
Last year, the central government had a fiscal revenue of 5.62 trillion yuan (910 billion U.S. dollars), a year-on-year increase of 9.4 percent, according to a State Council report on the central government’s final accounts for 2012.
In 2011, central fiscal revenue increased by 20.8 percent from the previous year.
The slowdown was caused by low growth and the reduction of tax revenue that went to the central treasury, according to a report submitted to the bi-monthly session of the Standing Committee of the National People’s Congress (NPC), China’s top legislature.
For instance, revenue from value-added tax in the domestic market only met 97.2 percent of the budgeted target because industrial performance was poor.
This year, the central government will strictly control spending, especially the government’s operational expenses, Lou said.
The State Council, or China’s cabinet, issued a timetable for disclosing spending on the “three official expenses” on July 10, ordering provincial governments to disclose such information starting 2013 and municipal and county governments to disclose such information by 2015.
The Ministry of Finance (MOF) issued a circular on July 7 ordering central government agencies to cut their general expenditures in 2013 by 5 percent.
Flagging sales for high-end liquor enterprises and restaurants in the first half of 2013 have underscored the government’s push to fight extravagance and corruption.
“The disclosure of spending on the ‘three expenses’ will promote progress related to the disclosure of budgets and final reports, as well as government transparency in general,” Liu said.
Finance Minister Lou Jiwei elaborated on the report and said that the central government may be under great pressure to achieve the full-year target of 7-percent growth this year.
In the first four months of the year, central fiscal revenue dropped by 0.8 percent from the same period last year, largely due to a slowdown in economic growth and structural tax reductions, according to the report.
In the next few months, industrial output growth may continue to slow down and enterprises may report less profits, which will set back fiscal revenue growth, Lou said.
A pilot program to replace the business tax with a value-added tax (VAT) in some service sectors will be expanded to the whole country in August, which will likely reduce central government revenue, he further noted.
Since the beginning of last year, China has adopted a raft of tax-cutting measures to help alleviate burdens for businesses and individuals and serve the country’s economic restructuring.
China’s Prioritized Spending on Education, Public Housing and Health Services in 2012
Last year, the central government’s financial deficit stood at 550 billion yuan, roughly the same as the budgeted figure, according to the report.
The central government’s spending totaled 6.41 billion yuan in 2012, a year-on-year increase of 13.6 percent.
Although central fiscal revenue saw slower growth, the central government continued to expand spending on sectors directly linked to people’s livelihoods, such as public housing, education and health services.
Spending in these sectors was 22.9 percent higher than last year, the report said.
About 378.16 million yuan was spent on education and 204.82 million yuan went to health services, according to the report.
Spending on affordable public housing programs totaled 260.16 billion yuan, 22.9 percent more than the budgeted figure, the report said.
Thanks to increasing government investment, more than 30 million primary and middle school students have enjoyed food subsidies and the government allowance for medical insurance programs has increased to 240 yuan per person a year.
About 6 million affordable apartments were built last year and 5.6 million rural families had their old houses renewed or rebuilt, according to the report.
This year, the central government will strictly control spending, especially the operational expenses of the government, Lou said.
However, the government will make sure to meet needs related to education, health, social security and scientific development, he added.
Financial Reform: Transparency and Prudent Fiscal Responsibility Under Xi Administration
Since 2011, the Chinese central government departments have been required to reveal the amount they spend on the “three official expenses,” as they are often called, amid rising public calls for greater government transparency.
In 2011, the central government published actual spending on receptions, vehicles and overseas trips in its final accounts report for 2010 for the first time. Government spending in these areas has long been a matter of public concern.
The 2012 final reports are more detailed than those of previous years, reflecting President Xi Jinping and his new administration’s promise that China will be more open when he took office this year.
The reduction of expenses is attributes to his administration’s efforts to practice prudence and cut costs in addition to enable the public to better understand the Chinese government expenses by giving more detailed and informative reports. However, there is more work to be done to streamline the administrative system.
Despite the drop in spending, problems were found regarding central government departments’ holding of sessions and organization of overseas trips, according to a 2012 audit report submitted to the legislative session by the country’s top auditor last month.
China’s National Audit Office (NAO) audited 45 central government departments last year.
Liu Jiayi, NAO auditor general, reported that some governmental departments did not strictly follow the annual plan for overseas trips that they set in the beginning of the year and some did not follow spending protocols.
According to the report, 884 overseas trips made by officials from 33 departments were not listed in their annual plans.
Of the 399 million yuan spent on overseas trips by departments audited by the agency, about 39 million yuan was either not listed in their budgets or was misused, the report said.
The total expenses of the central government increased by 14.3 percent from 2011 to 102.85 billion yuan in 2012, according to the report on the central government’s final accounts for 2012.
The increase resulted from attempts to streamline the administrative system, said Finance Minister Lou Jiwei when elaborating on report to China’s lawmakers.
The central treasury began to cover the expenses of the local branches of several national agencies last year. The branches used to depend on local budgets, as well as trailway law enforcement agencies, which used to be partly sponsored by state-owned railway companies, Lou said.
In addition, the State Post Bureau expanded its branches from the provincial level to lower levels, which also increased expenses, he said.
The Financial and Economic Committee of the NPC also found that the central government had been too flexible about some expense items, especially those related to government funds and state-owned enterprises, said Liao Xiaojun, deputy director of the committee, when explaining the report to lawmakers.
More efforts are needed to improve the efficiency of government spending and the management of funds that the central government allocates to local governments, Liao said.
“We are fully aware of problems in the implementation of the central budget,” Lou said, adding that the central government will work to solve the problems by reforming the financial system and improving management.
China’s government plans to carry out more tax reforms to ease burdens for small businesses, as well as regulate tax-cutting and exemption policies and crack down on tax evasion.