Will Declaring Chinese Officials’ Assets Cause ‘Chaos’? And Will That Delay The Introduction Of A Property Tax?

According to China Daily, Jiang Zongfu, deputy mayor of Linxiang, Hunan, told a Changsha newspaper that requiring officials to disclose their assets “will cause social chaos”. His logic cuts to the heart of the one of the Communist Party’s main challenges to “stability”:

“My point is that the public does not trust the government now,” Jiang told China Daily on Thursday by phone.

If they find an official very rich, they will definitely think he is corruptible and thus increase their resentment. However, if they find he is not rich, they will just think he is lying, which makes the government less credible, he added.

The People’s Daily article further quotes Zhu Lijia, a professor at the Chinese Academy of Governance. Zhu said:

Zhang’s stance towards assets declaration is typical among officials.

“There is a widespread reluctance among officials to accept mandatory assets declaration. That’s why, even after such a long discussion, we haven’t seen legislation yet,” he said.

“I can tell you the objection comes from many leading officials with decision-making authority,” he added.

Zhu also said the reason provided by Jiang is “absurd”.

“Why do the people distrust officials? It’s because the public doesn’t know how officials use their power and how much they get when on the job,” he said.

“If officials, from the highest level to the grassroots, can declare their property and can explain the source of their income no matter how big or small, they will gradually win back people’s trust,” Zhu said.

Winning back trust probably also depends on what happens if the assets are disclosed, as most people assume that not an insignificant number of officials have far more assets than they should be able to afford on their government salaries.

This asset disclosure issue is one of the main reasons I am skeptical that China will soon introduce a property tax, as I have written here. Officials who have more property than is affordable without “extra income” will have issues if a property tax is enacted. One, how will an official with multiple properties afford the tax? Two, the new tax system, if coupled with the new rule that plans to link to properties to household units instead of individuals, might expose a lot of assets that people prefer to keep hidden.

There are conflicting reports about the introduction of a property tax. Bloomberg quotes the Economic Observer as saying a trial property tax program will soon be enacted in four cities. Market News International quotes a Shanghai Securities News story that says “the government is not ready to introduce a new property tax, but could levy higher levels of existing taxes”. Those “existing taxes” refer to transaction taxes; expect much higher taxes on sales, especially sales of larger apartments and ones that have only been held for a few years or less.

Then again, it is China. Who really knows until the government officially announces something?

UPDATE2: The Wall Street Journal wrote a decent article on the possibility of a new property tax in China-China Ponders Imposing New Property Taxes. The article however does not mention either the asset disclosure issue or the fact that the US has had property taxes for years and they did nothing to prevent one of the greatest housing bubbles in history.

UPDATE1: In a remarkably fast reminder of the dangers of speculation about the Chinese government, Xinhua late this afternoon issued the following story: CPC officials ordered to report change of spouses, personal income, investment. Specifically, the Party has ordered:

its leading officials at all levels to report change of spouses, whereabouts of their spouses and children if they have moved abroad, personal income, housing and investment of their family in line with a new regulation.

The Political Bureau of the CPC Central Committee discussed the regulation at a meeting held here Friday and ordered party organizations at all levels to strengthen management and supervision of leading officials in line with the regulation.

This new order is quite significant, if it is enforced, and may help remove one of the possible barriers to a property tax.

The idea of asset disclosure is not new. As the China Daily article points out, the “first motion of the assets declaration legislation was made in 1988 to the National People’s Congress.” 22 years is a long time, even in China.

Please tell me what you think in the comments.

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8 thoughts on “Will Declaring Chinese Officials’ Assets Cause ‘Chaos’? And Will That Delay The Introduction Of A Property Tax?

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  2. What A Chinese Property Tax Might Look Like | Sinocism

  3. This is a VERY significant move because it’s announced by the party, which is the real decision-making body. Makes it sound like there is strong determination to push this enforcement through regardless of the consequences on all party levels. Very interesting.

  4. This is a VERY significant move because it's announced by the party, which is the real decision-making body. Makes it sound like there is strong determination to push this enforcement through regardless of the consequences on all party levels. Very interesting.

  5. [ChinaScope] ChinaScope 50: A New Rule on Reporting of Personal Information of Leading Cadres in the Party | China Elections and Governance

  6. How about we wait until they actually begin disclosing all their assets etc.? I just don’t see real, willful transparency on that. Look at what happened in the UK with Minister’s expenses; the institutional restrains in China are far, far less. It’s so optimistic to think this is anything other than brouhaha.

  7. How about we wait until they actually begin disclosing all their assets etc.? I just don’t see real, willful transparency on that. Look at what happened in the UK with Minister’s expenses; the institutional restrains in China are far, far less. It’s so optimistic to think this is anything other than brouhaha.

  8. Like most significant legislation in China, or here for that matter, this issue has been masticated for years as, perhaps, it should be. Officials have baulked at having their personal finances disclosed to the oft-unsympathetic gaze of the unwashed public. Who among us wouldn’t?

    But let us not forget the context of this discussion: the national government is trusted by 85% – 95% of the people (Pew, Edelman, Saich), and even the poor, put-upon provincial governments average a 61% approval. Both of these scores should cause our own officials to cringe with shame. The current Chinese government, with or without the Bo affair, may well be the best government that any country has had anywhere, anytime.

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