More central government departments, which are under an order to “tighten their belts” and slash administrative expenditures by around 5 percent, started to publish their annual budgets on April 2, according to the Ministry of Finance.
This year, as pressure rises to maintain fiscal balance, 102 central government departments were ordered to disclose plans for income and revenue.
That number is an increase from 89 in 2018 as the government tightens budget management and improves data transparency, according to a senior official at the ministry’s budget department.
Government departments need to explain how and where they will spend money, especially as moves to encourage public supervision have increased in recent years.
“It is a way to crack down on corruption and have the authority operate in the sunlight,” according to a statement on the ministry’s website.
The financing of some significant projects, such as the budget for dredging of a 12.5-meter-deep shipping channel in the Yangtze River, has been released with departmental budgets.
In March, Premier Li Keqiang ordered government officials to “tighten their belts” and limit spending for the government’s daily operations by 5 percent or more this year, according to the annual Government Work Report.
Several days later, Finance Minister Liu Kun said the “actual cuts” to the central government’s operational costs may exceed 10 percent, leaving only “necessary spending”. The Ministry of Finance said “expenditures for providing general public services” will get a close look but did not share clearly defined areas or specific items to trim.
Given the wide variety of functions and tasks that departments perform, they could choose which specific areas would see a reduction, said Wang Dehua, a researcher at the National Academy of Economic Strategy, under the Chinese Academy of Social Sciences.
The most likely targets for cuts would be official overseas trips, vehicle usage and hospitality, areas known as the “three public expenses”, which are often in the budgetary crosshairs, according to Wang.
The Ministry of Finance was the first, publishing its 2019 budget on its website on April 2. It cut 2.47 million yuan ($367,500), or 4.34 percent compared with 2018, under “three public expenses” categories, which will be reduced to 54.5 million yuan this year, the report said.
The Ministry of Transport reduced expenses for those three items by 5.05 million yuan in 2019 compared with last year, its report showed.
China’s goal to reduce about 2 trillion yuan in tax and fee income in 2019 has been labeled by observers as the central government’s most aggressive reduction plan ever. It also is a primary reason that the government has reduced projections for income growth. Taxes usually account for more than 80 percent of government revenue.
Conflicts between the large drop in revenue and stronger fiscal support for infrastructure investment will become more noticeable in coming months, said Zhang Wenming, an analyst with Everbright Securities.
Liu Yi, a professor of fiscal policy at Peking University, said that the squeeze on government expenditures may fuel public angst about the quality of public services, given that some government officials may be dissatisfied with a lower level of benefits.
“When budgeting income and expenditures following reasonable methods, it becomes more important to improve the government’s public services while achieving fiscal spending goals,” she said.
