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Call to increase welfare spending

By Wang Xu (China Daily)
Updated: 2008-04-22 09:33

The government should allocate more funds to improve China's social welfare system, given its soaring fiscal revenue in recent years, scholars said at a symposium held yesterday.

"Despite the government's growing financial sinews, its spending on social undertakings is highly insufficient," Wang Yijiang, an economics professor from Tsinghua University, said at the symposium host by Peking University.

The government has seen its fiscal revenue expanding at more than 20 percent annually over the past five years, thanks to the brisk economic growth. In 2007, its revenue surged 32.4 percent year-on-year to 5.13 trillion yuan ($732.39 billion).

But the growth of welfare spending has been relatively slow despite being already insufficient, said Wang. According to Wang's calculation, China's administrative cost expanded 10 times between 1995 and 2005, while social welfare investment only grew ninefold.

Between 2003 and 2007, government spending on education amounted to a mere 2.6 percent of its GDP, far below the 4 percent aim it set in 1993, earlier media reports revealed. Between 1996 and 2006, the government's education spending as a share of GDP had declined from 17.84 percent to 11.82 percent.

According to Wang, more than 40 percent of the fiscal revenue now goes to government-funded projects, which should be left to the private sector.

"When it comes to promotions, the performance of government officials is still mainly based on economic achievements," said Jia Kang, director of the Research Institute for Fiscal Science under the Ministry of Finance. "So they have much stronger incentives to invest in major projects rather than social welfare."

In the past two years, the central government has made more efforts to improve the livelihood of ordinary citizens. It has earmarked 156.1 billion yuan for public schools in 2008, up 45 percent year-on-year. Its spending on social security and employment is also expected to expand by over 20 percent.