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January 18, 2013

Chinese Social Media Support Fiscal Transparency

Posted by Qi Zhang and James L Chan[i]

In the past four years, the Chinese government has made unprecedented efforts to implement public access to government financial information. This new policy of fiscal transparency is part of a larger project of public disclosure of government information. The policy basically revoked the long-standing state secret status of government financial information contained in annual government budgets and year-end financial reports.

Under the direction of the Chinese Communist Party (CCP) and with the encouragement of the National People’s Congress (NPC, the Chinese parliament), the State Council (the cabinet) took a major step in 2007 to lift the veil of secrecy over a wide range of government information. The release of financial information is the center-piece of this new policy initiative. Under the leadership of outgoing Premier Wen Jiabao, the pace of implementation has accelerated in the past two to three years through a series of administrative directives. It is noteworthy that in addition to releasing official government finance statistics, the spotlight is on the so-called san gong jingfei (literally ‘three public expenditures’), expenditures for official cars, receptions and travel.

These hotbeds of waste and abuse, as well as outright fraud, have been the targets for public outcries against official corruption. They are also the usual subjects of investigations by the National Audit Office, whose reports over the past dozen years have kicked up annual ‘audit storms’. Since virtually all of this information is usually communicated in the Chinese language only, these ‘dirty linens’ are effectively shielded from the outside world. Similarly, the new fiscal transparency policy has also drawn little international attention.

However, the new policy initiative on fiscal transparency has had a major impact on government in China, as well as on the Chinese public. The new transparency initiative is taking place within the established framework of accountability in the Chinese government. The CCP, as the governing party, effectively controls the executive departments and the NPC. The Chinese People’s Political Consultative Conference (CPPCC), consisting of a broad range of political parties and groups, accepts the dominant role of the CCP and provides advice on policy matters. This structure is replicated at the provincial and municipal levels of government.

In the fiscal policy and management area, until just over a decade ago, the government provided only brief information about the budget and final accounts to the NPC for pro forma approval and to the CPPCC for expected endorsement during meeting sessions, and collected the documents afterwards. With the implementation of departmental budgeting, government budgets are now more informative, and the NPC and CPPCC are playing a more active, but still limited, role in holding the government accountable. In contrast to weak legislative oversight over the executive, the State Council has direct control over central government departments, and the central government effectively has control over provincial and local governments. Consequently, the State Council’s new fiscal transparency requirements were duly implemented in those departments and by government units throughout the country. This has resulted in a remarkable increase in the amount of financial information that is publicly available.

Moreover, in the past few years, privately-owned internet-based social media have begun to play an active role in rapidly spreading government financial information. The government has sought to capitalize on this development. For example, in his report on government performance to the NPC in March 2010, Premier Wen appealed for the creation of ‘conditions for people to criticize and oversee the government, giving full play to the oversight role of social media, and to let power be exercised in the sunshine’. The People’s Daily, the CCP’s party newspaper, published an article in January 2011 stating that ‘if the media find and disclose government’s improper behavior, the government should be held accountable’.

Once financial information is published by the government, the media effectively take over by disseminating and commenting on it. According to the China Internet Network Information Centre, there were 513 million internet users in China at the end of 2011. The popularity of the internet in China has spurred the rapid expansion of portals, forums, microblogs/micro-posts, blogs and other means of interactive communication.

Faced with this competition, newspapers and other traditional media also try to take advantage of the internet by promoting their services and products online. The old and new media reproduce and quote each other, contributing to an exponential growth in the social influence of unofficial media. The general public now has rapid internet access to information put out by the government and can express their views on current affairs freely on microblogs, blogs or forums, and even criticize government actions. In short, the growth of the internet in China has greatly expanded the feedback of public opinion to the government.

In addition to improving access to government financial information, the internet-based social media have also sought to make the information easier for the public to understand. They invite government officials and independent experts to simplify and explain government finances to the hundreds of millions of ‘netizens’—internet citizens. Since the profitability of websites depends on their popularity as evidenced by their number of ‘hits’, internet providers have an incentive to make their view of government financial information as entertaining and provocative as possible.

Consequently, the social media end up promoting government fiscal transparency and exposing fiscal policy and performance to widespread public scrutiny. They provide a forum for political participation and a safety valve for releasing social tensions that result from inequality despite China’s general economic prosperity after 30 years of reform.

Apparently pursuing a strategy of ‘if you cannot beat them, join them’, CCP leaders and senior government officials have embraced the new form of public relations in the internet age. Some of them, including Premier Wen and provincial party chiefs, have conducted well-publicized and well-attended online dialogues with netizens. According to Xinhuanet, by the end of 2011,32,358 microblogs by the CCP and government departments, including 18,203 party leaders’ and government officials’ microblogs, were registered with four major microblog websites (Sina, Tencent, People’s Network and Xinhua). The year 2011 was dubbed ‘the first year of government affairs microblogging’ in China.

Reversing a decades-long practice of secrecy over government financial information, the Chinese government has opened its books to the public. In addition to continuing to provide information through official channels to government bodies and political institutions, Chinese government departments have taken to the internet to disseminate financial information to the public. Hundreds of millions of Chinese netizens now have access to this information, and many use it to complain about official corruption. What effect this public feedback will have on government policy and official conduct remains to be seen. However, we predict that once the books of the government are opened, it will be impossible to close them again.

Tags: China | Chinese budget institutions | fiscal transparency | government accountability | social media



[i] Qi Zhang is associate professor of accounting at Zhongnan University of Economics and Law, China. James L Chan is professor emeritus of accounting at the University of Illinois, Chicago, and is a distinguished overseas professor at Peking University and at Shandong University of Finance and Economics. This blog is based on an article published in CIPFA’s Public Money & Management (Vol 33, No 1, January 2013).

Note: The posts on the IMF PFM Blog should not be reported as representing the views of the IMF. The views expressed are those of the authors and do not necessarily represent those of the IMF or IMF policy.  

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