Opinion | China's budget law revision a step in the right direction, albeit a small one

Draft amendments to the budget law were finally submitted this month to the 12th National People's Congress Standing Committee for a third reading, 22 months after their second reading.

The revision this time has a good number of laudable proposals, particularly the two related goals to enhance budget oversight by the people's congresses, and to allow local governments to issue bonds for revenue. Nevertheless, the draft law remains hobbled by China's restrictive administrative system and conflicts of interest.

Getting this far has not been easy, to be sure. The current law took effect in 1995, and quickly became obsolete with the market reforms enacted since. Efforts to amend the law in fact began a decade ago. Sadly, the draft submitted for the second reading not only carried few improvements but actually regressed in some areas.

It was roundly criticised by academics and the public, and not a few of the provisions were hotly debated within government circles. In the subsequent public consultation exercise, the government received a whopping 330,000 suggestions from 19,000 people.

So contentious were the provisions that a third reading was repeatedly postponed. Then came the third plenum's reform road map, which finally pushed things along.

Among the 100 or more measures proposed in the reform blueprint, tax and financial reform made up the biggest number. The task of realising the leadership's pledge to regulate the budget system and make it more transparent has now fallen on the drafters of the budget law.

For effective regulation, all government revenue and spending must come under one budget. The draft law requires all items to be accounted for, to be categorised under public spending, the government project fund, operation fund for state-owned enterprises, or the social security fund.