Reform government special fund system

The life sentence given to a division head of the Finance Ministry recently for receiving more than 20 million yuan ($3.29 million) in kickbacks for helping enterprises secure government special funds sheds light on the necessity to strengthen regulation of the funds, says an article of the China Business News. Excerpts:

There are many kinds of government special funds for fixed purposes, which become larger in scale as the government tries its best to promote economic growth.

But a number of problems have arisen in the application, approval and usage of the funds in recent years, given the lack of transparency, supervision, assessment and accountability systems in the field.

The Shanxi provincial government recently canceled a special fund promoting technological innovation by enterprises, because some enterprises were only relying on the government, rather than the market, to fund their innovations and thus had limited results.

Market economics were therefore bypassed, meaning the fund, to the contrary of its initial purpose, damaged healthy market competition.

Punishing individual officials for taking bribes in such posts cannot solve the root cause of the problem. The government should reflect on its role in promoting innovation as well as its relations with the market and enterprises and redesign the special funds system.