Allowing more people to enjoy the sunshine of public finance is crucial to narrowing both the income disparity between China's urban and rural areas and the development gap between its coastal and inland regions.

With a national coffer that has doubled in size over the past five years, the Chinese Government is certainly better prepared than ever to tackle those growing gaps.

However, to make the best use of the country's increased fiscal strength, policy-makers should not only keep tilting the fiscal policy in favor of social causes like public education, health care and social safety nets: they should also let in as much sunlight as possible in public finance.

In recent years, the central government's enlarged transfer payment for local governments in less developed regions has testified a steady shift in the focus of the country's fiscal policy.

Between 1994 and 2005, the central government has made transfer payments totaling 2.6 trillion yuan (US$329 billion) to local governments, of which as much as 44 percent and 46 percent went to the country's central and western areas respectively.

Though such an increase in transfer payments is still far from enough to reduce the regional gap in terms of personal incomes, it does contribute to accelerating the central and western regions' pace in catching up with their coastal cousins.

Meanwhile, by pumping more financial funds into public services, especially those basic ones most wanted by underprivileged groups, the Chinese authorities have made remarkable progress in advancing equity through fiscal incentives.

Statistics indicate that in the first eight months of this year, the country's spending on education and health care increased by 46.3 billion yuan (US$5.8 billion), up 13.8 percent over the same period last year. Government expenditure on unemployment and social security also soared from 59.6 billion yuan (US$7.5 billion) in 1998 to 369.9 billion yuan (US$46.7 billion) in 2005.

Such a significant change in the distribution of public finance represents a stark departure from the growth-centered fiscal policy the government had once adopted to facilitate growth of the gross domestic product.

More than two decades of robust economic growth have greatly added to the country's overall financial strength. Yet, the consequent income and development disparity between regions and groups also left the basic needs of many unfulfilled.

The fact that not all people have evenly shared the benefits of fast economic growth must not be allowed to stand in the way of establishing an overall well-off society.

Hence, it is necessary to adjust the priority of the country's fiscal policy. After all, the primary goal of development is not to accumulate wealth for its own sake. All the efforts to boost economic growth should ultimately aim for the improvement of people's lives.

Compared with public spending on productive projects, fiscal support for social facilities may not yield many immediate, direct results for local economic growth. But the latter's long-term effect, by improving those enabling conditions of good health and basic education, will far exceed the former.

Admittedly, a supportive fiscal policy is not the only answer to the existing inequity in the country. But it is a very valued means to ensure more equal opportunities for the development of disadvantaged individuals and regions as well.

The central government has already made a commendable stride towards people-centered public finance. More transparency should be introduced into local public finance to boost local governments' endeavors to serve the people equally.

(China Daily September 29, 2006)