The draft revision to China’s Budget Law, tabled for its fourth reading on Aug 25, requires funds raised through local government bonds to be used only for public service.
The bill was submitted to the bi-monthly session of the Standing Committee of the National People’s Congress (NPC).
The deliberation of the bill has taken an unusual long time since its first reading in December, 2011. One of the most controversial issues is local government bonds.
The third version of the bill, tabled in April, greenlighted bond sales by provincial-level governments, but it placed them under strict conditions.
This fourth version states that the money raised can only be used for public service and that the central government will assess risk in local debt. If the risk is out of control, there will be warnings, a fast response and punishment for those responsible.
The bill also gives the public access to information about local government debts, purchases, budgets and audits.
Lawmakers must exercise their duty to examine budget reports, especially major expense items and big investments as well as inspect the development and efficiency of such projects.