Budget Law and local needs
Updated: 2014-03-07 07:22
(China Daily)
|
|||||||||
Huang Jianchu, a senior member of the Budgetary Affairs Commission of the Standing Committee of the National People's Congress, recently shared with reporters his idea of strengthening local People's Congresses' supervision of local government debts to avoid risks.
That is a good way to regulate local government debts and prevent them from growing out of control, but it requires systemic reform that includes revision of the Budget Law, says a 21st Century Business Herald commentary.
A dilemma exists for China's local governments as the current Budget Law does not allow them to raise debts, yet they still need funds to meet their responsibilities. Because of this, it is common practice for local governments to raise funds through the enterprises under their control. That is the key reason why many local People's Congresses cannot implement effective supervision over the debts.
Therefore, to strengthen the supervision over local governments' debts, it is necessary to first revise the Budget Law to bring the debts of local governments into the sunshine. Only when local government debts are under their true borrowers' names will the legislative body be able to effectively supervise them. That in turn requires deepening reform and redefining the role of local governments in the market.
Unlike rational enterprises that consider their repayment capabilities when borrowing, local governments are generally insensitive to their repayment capabilities. Before giving a green light to local governments being legally allowed to have debts, China needs to separate local governments from the burden as well as the power of economic construction, which consumes enormous amounts of money.
There are other prerequisites to realizing effective supervision by the legislature, such as establishing a modern government accounting system and drafting an independent government balance sheet. Both are indispensable for legislators to gain a clear knowledge of the property owned and debt raised by a government, so they can make a sound judgment whether to permit more.
Of course, to curb the indefinite growth of local government debts, a clear line should also be drawn between central and local government finances. All these problems must be solved so that the legislators can truly exert control over local governments' debts.
(China Daily 03/07/2014 page10)
- Music at her fingers
- Across America Over the Week (Jan 16 - Jan 22)
- Spend Chinese New Year in style
- Ili river valley becomes a popular destination for swans
- Philip Ma: from scientist to businessman
- Birmingham's Spotlight on China dinner
- How to distinguish doucai, wucai, Famille-rose and enamel porcelain
- Xinjiang lake in bumper fishing season
Most Viewed
Editor's Picks
Premier Li attends Davos Forum |
Li Na expecting first baby |
Star's marriage is 'bittersweet' news for fans |
Infographic:Chinese IPOs in the US in 2014 |
Tale of two cities |
China's 2014 diplomacy |
Today's Top News
Houston's SW Chinatown
China to focus on reforms, opening of capital market
Slowdown brings new risks to banks
Trade group calls for BIT
Market status for China is 'political' issue
Birmingham's Spotlight on China dinner
Bank takes renminbi-clearing seriously
Traditional Garb
US Weekly
Geared to go |
The place to be |