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Financial Minister on China’s Financial Policy
Xiang Huaicheng, minister of finance, made a report on financial arrangement of the second half of this year, at the Sixteenth Plenary Session of the Standing Committee of the Ninth National People’s Congress.

Firstly, efforts must be made to sincerely carry out an active financial policy and bring the investment in the form of national bonds to further enhance the economy. Funds from issuing national bonds fund must be well arranged based on directions and key points decided by the State Council. Launching of new projects needs to be strictly controlled and projects for technological transformation should to be chosen carefully, with the purpose of avoiding any forms of repetition of existing projects. The appropriation of funds from national bonds should be further accelerated. Supervisions on use of funds should be strengthened to stop any abuse of the funds.

Secondly, management on income should be reinforced to guarantee steady growth of the revenues. All localities and departments concerned must sincerely abide by Notice of the State Council on Correcting Locally-made Policy of Collecting Taxes First and then Returning Them Later. No one has the right to return taxes at his own will after levying it. No one has the right to cut or postpone tax collection without authorization. No one is allowed to alter the tax law and tax policy, and to over-levy tax. The country must continue to upgrade and intensify means of collecting tax and deepening the reform of taxation. Efforts should be made to intensify punishments of all kinds of behaviors of tax-cheating and tax-evasion, especially to crack down on criminal gangs engaged in smuggling, evading tax and swindling export tax refund through internal and external collusion. Taxation of individual income should be strictly carried out in order to regulate distribution and increase revenue.

Thirdly, reform of the budget system should be carried out steadily. Regulations of the Standing Committee of the National People’s Congress on Strengthening the Supervision of the Budget of the Central Government should be strictly observed. All units, when applying for financial fund, must abide by budget procedures, which means budget must be made before any spending occurs. Reform of the budget system should be deepened, budget items should be in greater detail and budget of each department should be mapped out. The governmental purchasing system should be tried out and gradually expanded to cover all office utensils, equipment, public facilities and relevant services. Close attention should be paid to the study and implementation of the centralized collecting of revenues and expending by the national treasury.

Fourthly, work must be continued to readjust and streamline the structure of financial expenditure. The country must gradually standardize the scope to be covered by government finance so as to solve the problems of overlarge staff and overextending of financial coverage. Taking advantage of the reform of local institutions, efforts should be made to streamline organizations and well control the number of positions of the staff. Reform of governmental institutions should be accelerated. The expenditure for government institutions, so long as they can obtain revenues from the marketplace, should be gradually reduced. Direct investment in competition-based fields should be gradually reduced to create a fair environment for competition among the enterprises. Support for the national government should be strengthened so as to ensure its funding. And from July 1st of this year, salaries of government employees shall be issued by the national treasury in a unified way, rather than by individual branches of the national administration.

Fifthly, reform of the taxation system should be actively and steadily pushed forward. Presently, preparations for implementation of gas tax and vehicle-purchasing tax have been basically completed, and shall be put into practice at a right moment. Based on experiences from trials currently being made in Anhui Province and some counties in other provinces, municipalities and autonomous regions, rural tax and fee collection reform shall be gradually extended later on.

The minister also expressed the opinion that supervision on financial departments and straightening of the financial order should be strengthened. Efforts should be made to further implement the central government regulations on administrative charges and fines, intensify financial management, completely carry out the method of “billed by institutions and collected by banks under the unified management of financial departments.” As a result, the separation between levying and collecting and between bills and funds shall be realized. Work must also continue so as to implement The Accounting Law to improve accounting, raise the level of information quality of accounting. The system of entrusting and appointing accountants should be tried out so as to intensify accounting supervision to crack down on false vouchers, false accounts, and cheating in auditing of financial activities.

(China Economic Times, July 7, 2000)

Chinese Lawmakers Call for Tighter Budget Supervision
Ministry of Finance
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