Xie Xuren, born in 1947, only holds an associate degree. In today's diplomas for sale era, his senior position could have easily enabled him to gain access to various kinds of education qualifications – but he hasn't. This behavior epitomizes his style: a practical official coming from the grassroots. He has been praised for his incorruptibility, his down-to-earth attitude and his ability to take everything into consideration.
Xie is not an academic official and he does not like publicity. It is said that he only attends the yearly China Public Finance ＆ Taxation Forum (CPFTF). His public speeches are few and unimpressive. His record indicates that he is a genuine tax expert. He underwent the transformation from a planned economy to a market one as the decades passed; he also experienced China's major tax reforms during this decade, involved in both the 1994 tax distribution reform and the 2003 tax system reform. But Xie is probably the last of such senior officials. China's new generation of officials have markedly different lives and educational backgrounds.
Biggest achievement: generating more tax revenue
People knew little about his previous work experience inside the Ministry of Finance, China's Agricultural Development Bank (CBDA), and the State Economic and Trade Commission before he became the Director of the State Administration of Taxation (SAT), but after, he became the focus of public attention. At that time China was at a critical moment for tax reforms that would affect everyone's welfare. His greatest accomplishment to date has been the rapid increase of revenue after he took office.
China's total tax revenues now account for more than 95 percent of fiscal revenues. The fiscal revenues in 2003 exceeded 2 trillion yuan, totaled 3.1 trillion yuan in 2005, and further up to 3.9343 trillion yuan in 2006. And during the first seven months of 2007, fiscal revenues increased by 30.3 percent, or 728 billion yuan.
But in 1992, the fiscal revenues totaled 350 billion yuan: 100 billion yuan in central revenue and 250 billion yuan in local revenue, with the central financial expenditure at 200 billion yuan and the deficit at 100 billion yuan.
Xie consequently became the most effective SAT chief who has made the greatest contribution to the central finance over the past five decades. In an interview with the Southern People Weekly, Xie said, "The faster one drives a car, the more difficult it is to drive it; the higher one climbs a mountain, the more difficult it is to climb it. Currently it is more difficult to realize 1 percent growth in revenue than four years ago. But on the other hand, 1 percent growth in revenue now represents a greater achievement than before."
What the former SAT Director clearly outlined was that the expansion of tax base and the adjustments of industry structure would affect the revenue positively. The state should realize revenue growth via scientific and delicate technical means instead of by means of unplanned collecting.
Truly, Xie is a practical technical official. He often tours grassroots areas. This June, just before he left his office as the SAT Director, he visited Wuhan. Each time he toured grassroots regions, he adhered to a principle of simplicity, taking few people with him and living austerely. He has even approached tax-collecting windows to experience front line services for himself.
One of Xie's tax reforms that will surely mark him in history is his order to abolish the agricultural tax, something that has existed for thousands of years. This order indicates that China no longer depends primarily on agriculture and farmers for the nation's tax base that supports the government in providing public services. Another of his successful tax reforms has unified income taxes for both Chinese and foreign enterprises in accordance with the requirement for tax equality. This reform eliminated unfair discrimination against Chinese enterprises.
Missions as finance minister
On August 30, 2007, the 29th meeting of the Standing Committee of the 10th National People's Congress decided to replace Jin Renqing with Xie Xuren as the Finance Minister. Xie is now facing greater responsibilities and more difficult challenges. His primary challenge is how to put into practice a proposal to establish a public finance system initiated in 1998.
Currently China's budget and fiscal accounts are not transparent. Due to a lack of effective supervision, the administrative expenses are far too high.
Important factors in establishing a public finance system include the following: the National People's Congress shall set up a public budget committee so as to exercise a real-time examination; the Ministry of Finance shall see to it that unnecessary spending be reduced, and in the meantime pay close attention to the fiscal efficiency.
When combating an overheated economy, the Ministry of Finance's responsibilities include adopting tax and tightening monetary policies and/or issuing treasury bonds without causing damage to the economy. This will indeed test the courage of the new Finance Minister, his grasp of the economic situations and his technical skills.
Equally important is the question of how to purge the ranks of the Ministry of Finance. The audit storms initiated by the National Audit Office each year revealed many problems inside the Ministry of Finance. Since the public finance system has not yet been in place, the ministry holds vast financial distribution power. With such great power, how shall the new Finance Minister control and restrain his subordinates?
(China.org.cn by Zhang Ming'ai, September 30, 2007)
