Published: 2007-11-01

From Cover, issue no. 339, October 29th 2007
Translated by Zuo Maohong
Original article: [Chinese]

What do we do with this year's state revenue surplus?  This is the key question a deputy minister of Ministry of Finance posed while briefing the Standing Committee of the National People's Congress on a mid-October day.

As He Keng, a member of the tenth standing committee of the NPC recalls, this is the first time the Ministry voluntarily consulted the committee on the issue before taking action.
For several years, state revenues have exceeded budgets, and what to do with the surpluses remains a great concern of the government. In the past, the NPC has been informed of how the funds were spent only afterwards. It has been long been the NPC's wish that the Ministry report its plan for the expenditures beforehand. 

By the Ministry's count, this year's state revenues surplus will reach 700 billion yuan.
 
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The ultimate use of the surpluses weren't publicized until 2005, when the Ministry of Finance discussed the matter in its final budget and accounting report to the NPC. "Since that point, reporting on the surplus has become protocol." says Sun Gang, a researcher at the Institute for Fiscal Science under the Ministry of Finance.

But reporting on the expenditures after the fact doesn't guarantee appropriate and effective allocation to taxpayers and the NPC. But this is backed by China's Budget Law, which prescribes the government's right to independent decision on the arrangement of the surplus, and its freedom to choose whether or not to report its plans to the NPC beforehand.  
 
During the revision of the Budget Law last year, the NPC insisted that the law include a provision requiring government bodies to report ahead of time on how surpluses would be liquidated, but the proposal was bogged down as policy makers failed to reach a consensus.
"The surplus is so massive, the NPC has to know how its money is spent." says He, adding that the Congress will resurrect the proposal in the next congress.

As the Institute for Fiscal Science forecasted, state revenues this year will amount to over 5 trillion yuan. A surplus of 700 billion stands at 14 percent of this figure.

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