Why is China’s budget so incomprehensible?
Annual budget at the Two Sessions will signal Beijing’s general economic direction, but don’t hold out hope for the specifics
When Hong Kong released its annual budget in February, the comments and criticism from the public came pouring in immediately. You can be sure the same won’t happen for China’s national budget when it’s released during the “Two Sessions” annual parliamentary meetings on Sunday.
Why? That’s because the documents are beyond comprehension – if a survey of deputies from the top legislative body expected to approve the budget is anything to go by.
The poll conducted by the China Youth Daily, which interviewed the National People’s Congress members in 2014, found that 43 per cent of them took over three hours to peruse the budget documents.
The same proportion believed supplementary materials would help them better understand the budget. More than half of those polled preferred to have a financial official explain it to them.
A separate survey of the public, conducted by the same newspaper that year, found that 65 per cent of respondents were dissatisfied with the budget for its lack of detail, transparency and channels to express their opinions about it.
Typically, the budget presented to the NPC and the public each year features only the government’s big projects and spending priorities, without listing individual programmes and other specifics.
There would be several broad categories featured, each with huge amounts of money tagged to them without elaboration.
These categories comprise national defence, social security and employment, agriculture, forestry and water, transport, education, health care, science and technology and culture, sports and the media.
The national defence budget traditionally attracts the most attention from international media, especially this year after US President Donald Trump suggested increasing America’s military budget by 10 per cent this week.
The figures tagged to those broad categories are not broken down into sufficient detail to facilitate rigorous debate and meaningful discussion.
Want to find out how much China plans to spend on a specific programme or the exact state of the country’s fiscal health? Good luck with that.
Even so, the budget documents do provide some key indicators that signal the government’s general economic direction.
This year, it is worth watching to see if Beijing will raise its budgeted fiscal deficit again to accommodate more investment-driven growth, or how much it will allocate to ease the pressure of unemployment caused by its cutting of excess capacities in some industries.
Last year, China budgeted a fiscal deficit of 3 per cent of its gross domestic product to ensure a “reasonable range” of growth amid the economically challenging year.
In January, sources said Beijing would keep the budget deficit at 3 per cent of GDP this year to underscore a focus on debt reduction and reform. Preliminary finance ministry data that month suggested an actual fiscal deficit of 3.8 per cent of GDP in 2016.