Nationwide public spending on services has experienced many problems due to financial management malpractice. These include the violation of existing laws, market monopolization, and deals conducted in secrecy. Public bids for service provision are not widely accepted, with contracts more often awarded based on personal relationships and without contracts. Some of the organizations awarded service contracts have become virtual ATMs for officials, with both sides colluding in misreporting their finances. An industry insider said that this secrecy is due to the government awarding contracts to NGOs only when receiving kickbacks from them. Despite NGO’s objections to this situation, they are powerless to change it.
The more areas that receive public funding for services, the more easily corruption emerges. CASS legal scholar Lu Yanbin has said that fund management defects and secrecy are helping to spread rent-seeking and corruption. The three main reasons for this are that government spending has not yet been unified, there is a lack of a public competition mechanism, and projects and fund management are not coordinated with each other.
Experts have suggested that to improve the situation budget contracts should be strengthened, a new public finance mechanism should be created and the various actors should aim to create a stable financial environment. Ministry of Finance Deputy Director, Liu Shangxi said that without scientific and standardized methods, long-term pressure on government spending will be increased rather than reduced. Therefore, the public finance budget for services should be increased so that the system can be standardized and institutionalized. Rigorous project evaluation criteria should also be enacted to ensure fair assessment and comparison. Others have suggested the establishment of a long-term government service spending mechanism which will aim to standardise project launches, budget funding, news releases, bidding process, project management and performance analysis.
