China, often portrayed principally as a massive importer of natural resources, is also a major producer of oil and gas as well as a wide variety of minerals.  Development of China’s domestic extractive resources is dominated by a number of state-owned enterprises (SOEs), including China’s three national oil companies (NOCs).  China is not, in general, characterized by a high degree of transparency, and this certainly extends to the extractive sector—both in its domestic and international activities.  While the government has recently made more noises about increasing transparency at home, particularly with respect to environmental management matters, information about mineral extraction is difficult to come by.  Revenue transparency in overseas extractive projects is further clouded by the fact that many are linked up with infrastructure development and loan agreements through "package" deals.  Information about the flow of money in these package deals is generally spotty and not well understood.¹

Budget Transparency
China's budget process—one of the least transparent among mid-income countries according to the 2008 Open Budget Index—is exceedingly opaque, with China providing "scant or no information" on the national budget that would allow citizens to hold leaders to account.  Only five countries with a higher GDP per capita rank below China in terms of budget transparency.  Whereas most countries at least publish annual budgets after passage by the legislature—even those countries that withhold information during the budget drafting executing and auditing process—China does not, though it has announced plans to do so by 2012, and some local governments already do so.² In this, it is joined only by Sudan, Equatorial Guinea, and Saudi Arabia among the countries surveyed in the Open Budget Index.

Even after the budget year is over, it is difficult to assess budget performance in China. While the Ministry of Information publishes monthly reports on both absolute values and percentage changes in major government revenue and expenditure categories, these figures lack adequate explanation to be useful.  Access to the budget information of sufficient detail to allow monitoring of government progress on specific projects is quite limited, even though China recently implemented a freedom of information act, in 2008.  Implementation has reportedly been improving, so it remains to be seen whether this will lead to improved budget transparency in the near term.

Anti-Corruption Institutions
Corruption, while difficult to measure, is generally thought to be a serious problem in China and ranks highly in surveys of perceived challenges.  China ranks just outside the top third of countries in Transparency International’s Corruption Perceptions Index, though this represents an improvement (relative to other countries) over the past decade. The severity for punishment in China that often attracts the attentions of the international press to Chinese corruption cases can be misleading: while China has "more than 1,200 laws, rules, and directives against corruption, implementation is spotty and ineffective" (Pei, 2007).  With respect to the energy and minerals sectors, the former chairman of Sinopec was sentenced to death in 2009 for accepting up to $800,000 in bribes³ and the former general manager of the China National Nuclear Corporation is currently under investigation.

Freedom of Information

In 2008, China codified a freedom of information law, "Regulation on the Disclosure of Government Information", for the purpose of "safeguarding the legal access to government information by citizens … improving the transparency of government work, promoting the administration according to law and giving full play to the role of government information of serving the people's production, living and social and economic activities." The regulation was eight years in the making and followed on regional pilot programs put in place in Shanghai, Guangzhou and Wuhan in 2004.⁴

Initial assessments indicate that the regulation is off to a good start, at least in some ways.  The regulation includes an affirmative obligation to disseminate certain information and also requires agencies at all levels of government to disclose information following citizen requests. An exemption, however, is allowed for information the release of which is determined by the agency to jeopardize state or economic security.  By some reports, China is ahead of international norms with respect to the aspect of the law providing for an affirmative dissemination obligation, but progress is slower on the aspect of the law that allows citizens to request information.  The FOI law has been used in recent cases of  environmental pollution—in at least one case related to extractive industry smelting activity—by citizens seeking information on observed pollution and environmental impacts.⁵

1. It is worth noting that all three Chinese NOCs have in recent years begun to produce annual Corporate Social Responsibility Reports. These reports generally offer very little in terms of revenue transparency,, but the fact that they are being produced is a sign of the companies' burgeoning interest in portraying themselves as responsible corporate citizens to the international community. See, for instance: CNOOC's "2008-2009 Social Responsibility Report," which lists aggregate taxes paid within China and aggregate taxes paid in all overseas operations; Sinopec's "2008 Sustainable Development Report," which discloses total taxes and fees paid to the Chinese central government; and CNPC's "2009 Corporate Social Responsibility Report," which lists aggregated global tax payments. (all links pdfs),
2. In December 2009, the State Council of China announced a goal of publishing the country's annual budgets within three years. In March 2010, 38 central bureaucracies published their annual budgets for the first time. Meanwhile, several local governments in China have started to publish annual budgets in the last couple of years. For example, detailed information about the annual budget of Guangzhou City of Guangdong Province and Wenling City of Zhejiang Province is available on their respective web sites: www.gzfinance.gov.cn, and www.wl.gov.cn.
3. His sentence has since been suspended and may be reduced to a life sentence.
4. See www.chinalawblog.com/2008/05/chinas_freedom_of_information.html and www.freedominfo.org/features/20070509.htm.
5. Report sources included: Open Budget Index, 2008; Transparency International's CPI survey, 2009; and Minxin Pei, Carnegie Endowment for World Peace, "Corruption Threatens China's Future," Oct., 2007.