Seeing through: Like the clear windows of some of the buildings in Beijing’s Central Business District, China needs to be more transparent as it deals with nations and global peers. (Photo : Getty Images)
If, as the proverb goes, the road to hell is paved with good intentions, then in running a country and engaging in international relations, it could be plainly said that the road to development is paved with good transparency.
That is, at least, what China has been hearing a lot for a long time now from the global community.
As transparency issues hound the country with the second largest economy in the world, people opine that China work on becoming more transparent and improving communication lines as it opens its doors for global opportunities.
Alex Matturri, CEO of S&P Dow Jones Indices, said that for China to attract more investments, two things must happen: “. . . that China’s market becomes more transparent generally, that its rules meet global standards,” reported South China Morning Post.
If China will provide potential investors with more access to information, then their fears will decrease.
“The best markets, the most liquid markets, are the ones that have free flow of information,” said Matturri.
An article by The Washington Post said that China nurtures “a culture of secrecy.” It describes Chinese officials as “media-shy,” even adding that China “doesn’t do media.”
“You [Chinese leaders] have to communicate clearly publicly or it will be interpreted for you,” said Jack Lew, U.S. Secretary of the Treasury, quoted the site.
Christine Lagarde, French lawyer and head of the International Monetary Fund, seems to agree that there’s a problem with engagement.
At the World Economic Forum Annual Meeting 2016 in Davos, Switzerland, in January, Lagarde said, “There is a communication issue, which markets do not like.”
Chinese companies, according to one SCMP editorial, have a difficult time kicking off “their old habit of being financially opaque.” For them to expand and compete globally, they need to practice “a high degree” of financial transparency.
Concerns over transparency likewise assault China’s political system and the military, even hitting the educational sector.
Policy analyst Doug Bandow, writing for Huffington Post, said that though “China is a great nation with extraordinary potential,” challenges loom on the horizon as it journeys towards its goals.
What is China supposed to do to brave the challenges?
“It will fare better in the future with a more transparent political system,” wrote Bandow.
When he visited the North Sea Fleet in Qingdao, Shandong Province, in August, Admiral Scott Swift, commander of the U.S. Pacific Fleet, stressed the importance of military transparency, reported USNI [United States Naval Institute] News.
Swift said that lack of transparency “increases the angst and uncertainty” and is “generally destabilizing.”
The admiral’s comment was made in relation to the presence of aircraft hangars in the contested Spratly Islands--the Nansha Islands for China--in the South China Sea. China built them without providing a reason.
Some UK delegates echoed similar lack of transparency at the British Council’s Workshop on Quality Assurance for UK-China Transnational Education in Beijing in March, reported TimesHigherEducation.com.
They said that the transnational education (TNE) rules introduced by China’s Ministry of Education in 2014 were “not very transparent,” according to Nigel Healey, Pro-Vice-Chancellor (International) at Nottingham Trent University in England.
“The ministry doesn’t really want the rules to be transparent,” said Healey, as suggested by some Chinese delegates.
Transparency within Territories
The government makes the same call for transparency among local companies and organizations, reported Xinhua.
The Financial and Economic Affairs Committee of the National People’s Congress released a statement on Oct. 31 pushing for the revision of a 2003 law concerning small and medium-sized businesses that would lead to a better procedural transparency.
In August, the Ministry of Civil Affairs released a draft amendment requiring nonprofit social organizations--for example, those groups or associations dealing with mental health and the environment--to make public certain important data, such as annual reports, names of officials and members and information regarding donations.
On January 2014, the State Administration of Foreign Exchange started to make the balance of payments statistics more transparent by releasing service trade data. SAFE has since issued a monthly report.
At the China International Organ Donation Conference held on Oct. 17-19 in Beijing, Dr. Huang Jiefu, director of China’s Organ Donation and Transplantation Committee, said that they are working hard to increase transparency as they deal with illegal organ trade, according to Channel News Asia.
Heeding the Call for Transparency
At a meeting at the Great Hall of the People in Beijing on Oct. 31 headed by Premier Li Keqiang, the State Council said that it will improve transparency as the government woos investors, according to Reuters.
The volatility of the Shenzhen market, reported The Washington Post, was reduced this year, owing to some regulatory measures imposed, including those that touch on transparency.
Transparency stood out as one of the priority issues at the eight U.S.-China Strategic and Economic Dialogue in Beijing in June, reported China Business Review.
American negotiators brought to light the lack of clear information concerning some Chinese policies that affect the buying decision process of the locals when choosing between domestic and foreign products.
Kenneth Kim, Chief Financial Strategist for asset management platform EQIS Capital, said in his Forbes article that stock markets can achieve more efficiency if China will increase its accounting transparency.
Kim equated accounting transparency with investor confidence. The more China becomes transparent, the higher the confidence level of the investors.
“Unfortunately,” Kim wrote, “within China there is some reluctance to become fully transparent.”
According to American think tank Brookings Institution, China could benefit more from observing “data transparency and transparency about the rules of the game.”
Generally speaking, China needs to give “believable numbers” and become “clear about rules and policies that affect participants in commerce, the markets, etc.” to attain its “potential as a global financial and economic leader.”
