The latest issue of 21st Century Business Report quoted a finance ministry official as saying that they are planning further budgetary reforms.

Current reporting of budgets and finances have been criticized as being too general for National People's Congress (NPC) deputies to be able to effectively scrutinize government expenditure.

The first item up for change is budget categorization. At the moment, areas of expenditure are defined according to the product or service being purchased. This often means little to laypeople, and even to many insiders, since whether an amount of money has been spent on buildings or paperclips can be less meaningful than whether it has been used to educate schoolchildren or provide healthcare.

The proposed change would result in spending being categorized by function instead, the hope being that people evaluating the reports will have a clearer understanding of how money has been spent, and for what purpose.

According to the official, a scheme piloting the new form of budget categorization was underway in five ministries and five provinces and municipalities. Hainan Province, Tianjin Municipality, the Ministry of Science and Technology and the Ministry of Water Resources are among those participating, and will be using old and new systems in parallel to compare their effectiveness.

Another two important documents – the Provisional Regulations on Management of Surplus Appropriated Funds from Central Government and the Regulations on Efficiency Appraisal of the Use of Budgeted Funds from Central Government – will also come out this year, according to the newspaper.

It reported that both are being put forward on the request of the NPC and the National Audit Office (CNAO).

“The overall trend is to toward increased openness and transparency,” the official said.

(China.org.cn by Tang Fuchun March 4, 2005)