China to Cap Public Sector Spending for 2009

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Nov. 7 – China’s budget for government agency spending will be capped at the same levels in 2009, reports the Ministry of Finance on its website.

In the past five years, agency budgets increased by average of 5 percent annually. China’s central government is now working towards cultivating a thrift society.

“The budgets for next year should be capped at the same amount as this year’s and every project would be looked at,” said the ministry’s website.

Wang Chaocai, vice-president of the ministry’s research institute for fiscal science, told China Daily that the budget freeze could be carried out by decreasing attendance to meetings and conferences, reception activities and business trips, and by lowering transport costs. Government agency budget is mostly spent on staff salaries and official business.

The new cap on budget spending will also require expenses to be more transparent and subject to pre-auditing in addition to further inspection from within the agency and the public.

“Although facing the pressure of a jumping inflation rate, such a government requirement (not raising spending) indicates that there is still room for the agencies to save operating expenses,” Wang was quoted as saying by the Beijing News.

In March 2009, the expense budgets of 107 central government agencies will be inspected during the annual session of the National People’s Congress (NPC).The congress’ budget committee will be tasked with looking at each agency’s expenses and asking them to trim their budgets.

“Having almost all of them reviewed by the NPC next year will make future budgets more efficient,” Wang added.