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The Ministry of Finance and the central bank have required that government departments and institutions subject to central budgetary management use credit cards instead of cash when spending public funds.

The two authorities have co-released interim rules on the management of credit cards used by central departments and institutions. The rules stipulate that expenses for travel, conferences, entertainment and miscellaneous expenditures of less than 50,000 yuan ($6,600) should be settled with credit cards designed for those departments.

Apart from making transactions more convenient, the move will lead to a more transparent use of public funds, according to a statement on the website of the finance ministry.

The new arrangement is already in use on a trial basis this month in the Central Commission for Discipline Inspection of the Communist Party of China, the Chinese Academy of Sciences and China Soong Ching Ling Foundation, the statement said.

The new system will spread to all the departments and organizations covered by the central budget by next year and further to both central and local levels across the country by 2010, the finance ministry said.

Many organizations have been using cash for public procurements, which has not only brought inconvenience, but made it hard to supervise public spending, the statement said.

"It is likely to lead to the irregular use of public funds or even corruption," it said.

The central government is not the only entity to have experimented with such a system. Cities such as as Wuhan in Central China's Hubei Province and Shenzhen in South China's Guangdong Province have also set up similar systems. Many provinces are preparing implementation details, according to the finance ministry.

In 2005, the Shenzhen-based China Merchants Bank and IT company ZTE China co-issued the first such credit cards for government organizations.

(China Daily 07/27/2007 page3)