Report Ranks Cities by Fiscal Transparency

A new research report from Tsinghua University’s School of Public Policy ranks China’s local governments by their financial transparency, or rather the lack thereof, according to Tea Leaf Nation’s Yueran Zhang:

According to the Tsinghua report’s evaluation criteria, China’s municipalities and prefecture-level cities all have highly opaque fiscal institutions. Not a single city obtained more than half the points that could be earned; the most fiscally transparent city was graded 178.78 out of 400. The average fiscal transparency of the 285 cities examined was only 17%. Three cities even received a score of zero, for releasing no fiscal information at all.

Municipalities fared better than prefecture-level cities in general, with Shanghai, Beijing, Tianjin and Chongqing ranked No.1, 2, 28 and 73 in the report. In terms of prefecture-level cities, those in Guangdong and Anhui provinces were deemed the most transparent fiscally. Other economically advanced provinces along China’s coast, such as Jiangsu, Zhejiang and Fujian, were not as fiscally transparent, contrary to what most people expected, demonstrating that economic development is not necessarily correlated with governments’ fiscal transparency. The major determinant of fiscal transparency was political pressure.

In an interview with the China Economic Weekly, the chief of finance in Hangzhou City, Zhejiang province explained the rationale behind limited fiscal transparency. “When we decide how to publicize fiscal information, we have to observe our neighbors, such as Nanjing and Ningbo. We can neither stay behind when they move a step forward nor outrun them too much when they stand still. Also, we have to look for guidance from the provincial government. It’s unrealistic to expect us to reveal the kind of information that the provincial government still keeps secret.” In short, political pressure comes both vertically and horizontally. [Source]

The China Daily called the low level of fiscal transparency “unsatisfactory” on Tuesday.


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