Yet many cities including Guangzhou are devoting huge sums to infrastructure and construction of so-called "image projects" which heighten their national profile. But, when it comes to living standard improvement areas like education, health, social security and housing, budgets are coming up short. Part of the problem lies in local officials, who see commercial developments as revenue-generators.

Actually all the governments in the world are short of money. Taking many major developed countries into account, one will find that all governments struggle to meet the needs of their populations. The US federal government deficit is now over US$13 trillion. Half of the Japanese annual budget is devoted to the repayment of debts. Even in Northern Europe, where personal income tax accounts for half or even 70 percent of revenue, governments are struggling to make ends meet.

China must realize that budget shortfalls are a normal part of economic maturity. Despite relatively ample tax revenues, developed nations are often hindered by the proliferation of government spending on a wide range of projects. As public well-being starts to play a larger role in social stability, the government will have to cope with this increased pressure to spend on public welfare projects.

As provincial and city budgets are ultimately finite, they must set priorities for public spending. A balanced development plan that includes more attention to public well-being is needed. The government should spend money to build indemnificatory apartments when many people can not afford housing, even at the cost of slowing construction of the subway or impressive public squares. If the government is able to strike this balance, the country will enjoy long term peace and stability.

(This post was written in Chinese and translated by Li Huiru.)

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