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Worldcrunch

Does China Have The Stomach To End The Public Feast Of Corruption?

Article illustrative image Partner logo Each year Chinese officials spend 300 billion RMB ($48 billion) of public money just for eating

Excessive feasting by public officials has a long and wide history in China.

The fundamental source of its prevalence is actually not even the hearty appetites of the officials in question. These people are sacrificing a lot themselves in this banquet culture. On the lighter side, people may just lose a previously slim figure. In more serious cases, one can even lose a life. This is clearly a battlefield rather than a source for entertainment. For these extravagant meals are necessary for the networking of highly informal discussions with personal contacts that allow for an exchange of interests.

It's estimated that each year Chinese officials spend around 300 billion RMB ($48 billion) of public money just for eating. The harm this brings to society goes far beyond this upfront economic investment. Indeed, spending public funds on fancy meals can also boost GDP growth: when one abalone ends up in an official stomach it brings profit and employment to the entrepreneurs and workers who are involved in this industrial chain.

Compared with blind government investment that leads to trillions of built-in overcapacity, this is much more cost-efficient and low risk. Further proof is that since China's new leaders introduced the “eight new provisions” administrative circular to advocate frugality in the public sector, the first two months of the year have seen the catering industry face its first decline in revenues in the 35 years since China's economic liberalization.

No, the real damage of using people's hard-earned money to eat and drink is that it's used to feed a system of corruption. When officials get closer in unofficial settings, their relations are bound to be distorted. Corruption requires a network. Banquets weave the network. The network contributes to collusion in maneuvering around policies and laws.

The other more profound harm of using public expenditure for entertaining is the huge waste of time and energy for officials who could be working instead toward the public good. In 1980, when Hu Yaobang, the then General Secretary of the Chinese Communist Party, learned that the Chinese authorities spent 20 billion RMB ($3.2 billion) annually on entertaining, he was on one hand distressed by the waste and on the other hand saddened by how little thought and energy the officials had left over for the task of developing China's economy and for institutional innovation. Worse still, the waste wasn't just official time and energy at the table, but even more the implementation cost of the collusions which were concluded at these meals.

How to remedy this particular ill has been a thorny issue. Thus the "eight provisions" that aim to reduce official pomp and extravagancy is no less important a policy than any economic measure. This is the way China's new leaders have set out to rectify officialdom's style, to win the people's hearts, and establish their credibility.

The effect has been obvious. Throughout every corner of China, the high-end hotels have become desolate. Officials are keeping a lower profile. When they do show up occasionally at a banquet they are very discreet.

Three Public Expenses

The Chinese government's battle against extravagant meals recently created a wonderfully comic event. Zhang Aihua, director of the Riverside Industrial Park in Taizhou City in Jiangsu province, was caught by the local public indulging in an excessively expensive banquet. He was so panicked that he knelt on the table to "beg for mercy." Though the official journal later explained that Zhang had knelt to persuade the public to disperse and was in no way begging for pardon, the symbolic scene and the official's contrite expression spread quickly across the Chinese Internet.

The reality is that though officials are more circumspect in throwing banquets, the custom still continues. They have moved from public hotel restaurants to discreet clubs. The online uproars may be worrisome, but they pass. 

As China aims at its chronic problem of the “Three Public Expenses” – foreign trips, official vehicles and hospitality expenses - it is not via a microblogged outcry that they will be controlled, but through vigorous financial information disclosure and the establishment of laws.

Because of the current pressure coming from the central authority, the ministries, public enterprises and all levels of local government are gradually publicizing their Three Public Expenses. However the various tips and tricks as how to release this information to the public has quickly become the bold new frontier of accounting innovation. Certain government departments simply register catering items as conference expenses, foreign travel expenses can be recast as “international exchanges.” The list goes on.

A government’s civility and credibility are embodied in the degree of transparency of its financial actions. China still remains very backward on this front. The technical aspects of the systems are not difficult. The key lies in the determination of the political leaders. The new government shouldn’t let go of the issue of the Three Public Expenses, and should take it as an opportunity to establish a solid foundation for further political reforms.

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About this article source Website: http://www.caixin.com/

Caixin is a hub for financial and economic news in China. Serving high-quality and original content, Caixin.cn focuses on key financial and economic information.

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