The 30 NPC Members of Shanghai Delegation Submit Proposal on Enactment of the Financial Law

Liu Xiaobing, the NPC member anddean of The School of Public Economics& Administration of Shanghai University of Finance Economics told The Paperon March 5 that the 30 members of Shanghai delegation in which he was involved atthe 1st plenary session of the thirteenth NPC submitted their proposals onEnacting Financial Law of the People’s Republicof China.

Liu saidthat the decision of the Third Plenary Session of the 18th Central Committee ofthe Communist Party of China pointed out finance is the foundation andimportant support of national governance. But as China’s legislation on government’sfinancial activity is not so complete, some problems tend to occur when financeplays its basic and supporting role in national governance, including: Thefinancial scale is expanded excessively and the scope of the government’sundertakings is so large that the economy languishes; as the legislation is aprocess requiring agreement and intercoordination of different classes insociety, the financial efficiency and equity will be influenced greatly becauseof the lack of legislation; if no legal restraint is imposed on power, thepossibility of corruption will increase significantly.

Liu believed that financiallegislation is an important component of ruling the country by law. Our countryhad enacted some financial laws according to constitution, but the financiallegislation were on the whole not so complete and systematic. So they suggestedthat:

Firstly, considering thefundamental and dominant role of the Financial Law in the whole system of financial law, theysuggested NPC and its standing committee to put the legislation of Financial Law on the agenda as quicklyas possible and make its due contributions to basic establishment of law-basedgovernment in 2020.

Secondly, the FinancialLaw shall cover all government funds. The public capital shall be sub-dividedinto different fund by it’s using nature and all public capital shall beincluded without any extra-legal capital.

Thirdly, the Financial Law shall stipulate that the income, expenditure, assetsand liabilities of all funds shall be incorporated into a legal financialreporting system and reported regularly to NPC, so as to achieve publicity and transparency.

Fourthly, the Financial Law shall define the limit of authority for financialincome and besides legalization of the taxation, the approval of NPC isrequired for setting and standardizing the items of receipt as follows:administrative charges and penalties; monopolistic charges on non-profit-makingservice with no competition constraint imposed on its standard; each mandatorycharges on governmental fund; mandatory payment of social insurance fund;monopolistic government pricing of products or service provided by SOE.

Fifthly, the Financial Law shall define the limit of authority for financialexpenditure and the approval of NPC is required for expenditures or spendingstandards as follows: general public expenditure; Expenditure from governmentalfund; expenditures from each social insurance fund; Centralized budgetaryoutlays for state capital operations. The operating expenses of SOE shall bedecided by itself, but the approval of NPC is required for expenditures ofsubordinate SOE of level I governmentas a whole, such as expenditures from major investment projects, salarystandard of business managers and the scale of the company’s general managementexpenditures.

Sixthly, the FinancialLaw shall define the limit of authority for assets and liabilities disposaland the approval of NPC is required for matters such as all debts and financingfor non-operating activities; major financing matters of the operatingactivities; any changes of the use of major assets; major assetsreorganization; major assets swap and transfer; major assets loss and donation.The definition standard of “major” may vary regarding to governments atdifferent levels and with different financial positions and public funds withdifferent natures, so much deliberation shall be paid to legislation in thisregard as the case may be.