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Monday, 16 March 2009
Transparency is key to ensuring people’s confidence about economic stimulus package
Premier Wen Jiabao likes to talk up the word confidence these days wherever he goes. This is very necessary at a time of uncertainty and confusion over the mainland’s growth prospects.
Transparency is key to ensuring people’s confidence about economic stimulus package
Wang Xiangwei 16 March 2009
Premier Wen Jiabao likes to talk up the word confidence these days wherever he goes. This is very necessary at a time of uncertainty and confusion over the mainland’s growth prospects.
Mr. Wen said confidence was still what the mainland needed most to implement Beijing’s package of stimulus measures. “Confidence can produce courage and strength, only with which can we overcome difficulties,” he said.
But ever since Beijing announced the much-trumpeted 4 trillion yuan (HK$4.54 trillion) plan in November, there has been intense controversy and debates over lack of details of the plan and concerns at possible waste and corruption.
Indeed, the central government was vague about precisely how the funds would be invested until early March in the run-up to the annual sessions of the NPC, leaving many domestic and overseas investors confused and concerned about the effectiveness of the plan.
Obviously this was unlikely to help boost confidence in the mainland economy, as Mr. Wen intended. Indeed, he admitted last week that the stimulus plan was not fully understood by the world and spent a bit of time to explain it.
Here is a very important lesson for the leadership - if confidence is more important than gold and currency, transparency is even more so as it is the precondition to boost confidence. For years, mainland leaders were vague about policies, particularly the government’s annual spending in the budget, basically asking people to trust the authorities.
But in recent years, ordinary people and NPC deputies have mounted a persistent campaign to push for more transparency and details of government spending, mainly because of concerns over wasteful spending and corruption.
Sichuan businessmen Wu Junliang started a campaign to force the authorities to make detailed annual budgets public three years ago, although he has made very limited progress so far. But pressure is also coming from outside the country. As the mainland’s economy is the third largest in the world and its policies have more and more international implications, overseas economists and businessmen have clamoured for more details of its policies.
It took officials more than four months to give a rough explanation of where the stimulus funds came from and in which sectors they would be invested. The crucial question about how much of the money was new was only answered by Mr. Wen last week when he said 1.18 trillion yuan of the government investment was new. He admitted that many of the infrastructure projects were already budgeted in the original 2006 to 2010 five-year plan.
But despite explanations from Mr. Wen and other officials, many questions over the package remain unanswered, such as how much of the 1.18 trillion yuan will be invested each year, how the projects are identified, reviewed, and approved, and what is the mechanism to oversee the allocation of funds.
When those questions were put to the NPC deputies who last week approved Mr. Wen’s government work report and budget for this year, they were hard-pressed to give any intelligent answer. Ironically, the NPC deputies appear to have less time to discuss and review those reports, partly thanks to the diligence of Hong Kong reporters.
In any developed country, the government’s annual work report or budget is completed only after extensive consultation and horse-trading with legislators, and usually the salient points are deliberately leaked to prepare the public well ahead of the delivery time.
But on the mainland, such reports are still considered largely secret and even NPC deputies are given advance copies only two or three days before the delivery. But even that time was cut shorter after some helpful NPC deputies, mostly from the Hong Kong delegation, leaked some crucial but harmless figures, like the economic growth or inflation targets, to Hong Kong reporters.
Last year the authorities put one copy in a room for the NPC deputies to take a peek at one day ahead of the delivery, but that did not prevent some diligent NPC deputies from memorising the figures and reciting them to Hong Kong reporters.
This year, NPC deputies were told they would be given copies on the day of the delivery. This is totally unnecessary and provides a vivid illustration of the traditional official mindset of keeping government information secret. But as the lesson from the confusion over the stimulus package has shown, transparency is the key to boosting confidence.
1 comment:
Transparency is key to ensuring people’s confidence about economic stimulus package
Wang Xiangwei
16 March 2009
Premier Wen Jiabao likes to talk up the word confidence these days wherever he goes. This is very necessary at a time of uncertainty and confusion over the mainland’s growth prospects.
Mr. Wen said confidence was still what the mainland needed most to implement Beijing’s package of stimulus measures. “Confidence can produce courage and strength, only with which can we overcome difficulties,” he said.
But ever since Beijing announced the much-trumpeted 4 trillion yuan (HK$4.54 trillion) plan in November, there has been intense controversy and debates over lack of details of the plan and concerns at possible waste and corruption.
Indeed, the central government was vague about precisely how the funds would be invested until early March in the run-up to the annual sessions of the NPC, leaving many domestic and overseas investors confused and concerned about the effectiveness of the plan.
Obviously this was unlikely to help boost confidence in the mainland economy, as Mr. Wen intended. Indeed, he admitted last week that the stimulus plan was not fully understood by the world and spent a bit of time to explain it.
Here is a very important lesson for the leadership - if confidence is more important than gold and currency, transparency is even more so as it is the precondition to boost confidence. For years, mainland leaders were vague about policies, particularly the government’s annual spending in the budget, basically asking people to trust the authorities.
But in recent years, ordinary people and NPC deputies have mounted a persistent campaign to push for more transparency and details of government spending, mainly because of concerns over wasteful spending and corruption.
Sichuan businessmen Wu Junliang started a campaign to force the authorities to make detailed annual budgets public three years ago, although he has made very limited progress so far. But pressure is also coming from outside the country. As the mainland’s economy is the third largest in the world and its policies have more and more international implications, overseas economists and businessmen have clamoured for more details of its policies.
It took officials more than four months to give a rough explanation of where the stimulus funds came from and in which sectors they would be invested. The crucial question about how much of the money was new was only answered by Mr. Wen last week when he said 1.18 trillion yuan of the government investment was new. He admitted that many of the infrastructure projects were already budgeted in the original 2006 to 2010 five-year plan.
But despite explanations from Mr. Wen and other officials, many questions over the package remain unanswered, such as how much of the 1.18 trillion yuan will be invested each year, how the projects are identified, reviewed, and approved, and what is the mechanism to oversee the allocation of funds.
When those questions were put to the NPC deputies who last week approved Mr. Wen’s government work report and budget for this year, they were hard-pressed to give any intelligent answer. Ironically, the NPC deputies appear to have less time to discuss and review those reports, partly thanks to the diligence of Hong Kong reporters.
In any developed country, the government’s annual work report or budget is completed only after extensive consultation and horse-trading with legislators, and usually the salient points are deliberately leaked to prepare the public well ahead of the delivery time.
But on the mainland, such reports are still considered largely secret and even NPC deputies are given advance copies only two or three days before the delivery. But even that time was cut shorter after some helpful NPC deputies, mostly from the Hong Kong delegation, leaked some crucial but harmless figures, like the economic growth or inflation targets, to Hong Kong reporters.
Last year the authorities put one copy in a room for the NPC deputies to take a peek at one day ahead of the delivery, but that did not prevent some diligent NPC deputies from memorising the figures and reciting them to Hong Kong reporters.
This year, NPC deputies were told they would be given copies on the day of the delivery. This is totally unnecessary and provides a vivid illustration of the traditional official mindset of keeping government information secret. But as the lesson from the confusion over the stimulus package has shown, transparency is the key to boosting confidence.
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