Full Text: Report on China's central, local budgets

6. Implementation of the NPC budget resolution

In accordance with the relevant resolution of the Third Session of the Eleventh NPC, as well as the guidelines of its Financial and Economic Affairs Commission, we strengthened and improved macro-control through the management of public finance, worked hard to ensure funding for key areas, improved the compilation of budgets, strictly implemented budgets, carried forward the reform of the fiscal and taxation systems, and strengthened government debt management. We made fiscal management more scientific and meticulous. We made important progress in revising the Budget Law and the Law on Certified Public Accountants as well as enacting the Law on Vehicle and Vessel Tax. We made budgets more detailed, reduced the number of budgets compiled by the central government for local governments, and made sure funds were available for more budgetary items at the beginning of the year. We actively evaluated budgets of major projects, and made budgetary expenditure items more accurate and scientific. We notified local governments in advance of the amount of budgeted transfer payments from the central government, with the result that local government budgets were significantly more complete. We made budget implementation more balanced and efficient. The percentage of budget expenditures for the whole year that were made in December nationwide dropped from 26.3% in 2009 to 20.1% in 2010. We formulated specific measures and improved policies for strengthening the management of corporations run by local government financing platforms, and saw to it the debts of these corporations were cleared up and verified. We constantly improved the mechanisms for budget compilation, implementation, final settlement and oversight to be coordinated with and stimulate each other. Our efforts to bring unauthorized departmental coffers under control constantly deepened. We organized a review and inspection of the funds for aiding agriculture and benefiting farmers, and promoted innovation in and improvement of management mechanisms. We comprehensively increased the openness of budgets, with the number of central government budget tables made public increasing from 4 in 2009 to 12 in 2010, and detailed expenditure tables now have several section-level headings. A total of 74 central budgetary departments have opened their budgets to the public. Further achievements were made in making local budgets more open. We strengthened basic fiscal management work such as developing a system of standards for expenditures. We constantly standardized township and town fiscal management and gradually strengthened oversight. We successfully finished the work of responding to the NPC Standing Committee' s inquiries on the central government final budget for 2009. We reported to the Standing Committee on budget implementation in the middle of the year, and implemented measures to improve implementation on the basis of the Standing Committee' s response to our report. The State Council has reported relevant developments to the Standing Committee of the Eleventh NPC.

The year 2010 was the last year of the Eleventh Five-Year Plan period. A review of the past five years shows that the development and reform of public finance have taken on new appearances.

The scale of revenue and expenditures expanded constantly, and the structure of expenditures further improved. During the Eleventh Five-Year Plan period, public finance revenue totaled 30.3 trillion yuan, with an average annual increase of 21.3%, and public finance expenditures totaled 31.9 trillion yuan, with an average annual increase of 21.4%. The government substantially increased funding for improving the people' s wellbeing, made compulsory education free to all urban and rural students throughout the country, significantly improved basic medical insurance for urban and rural residents, put in place the basic framework for a social security system covering both urban and rural areas, and greatly accelerated the development of the system of public cultural services. During the Eleventh Five-Year Plan period, public finance spending on education totaled 4.45 trillion yuan, an increase of 160% over the Tenth Five-Year Plan period; expenditures on medical and health care totaled 1.49 trillion yuan, an increase of 260%; spending on social security and employment totaled 3.33 trillion yuan, an increase of 130%; spending on culture totaled 560 billion yuan, an increase of 140%; and central government spending on agriculture, rural areas, and farmers came to nearly 3 trillion yuan.

Fiscal and taxation policies constantly improved, and macro-control through management of public finance was further strengthened. In light of developments and changes in the international and domestic economic situations, we first followed a prudent fiscal policy and then a proactive fiscal policy, coordinated our fiscal policy with monetary and industrial policies, and improved the macro-control system under conditions of the socialist market economy. As a result, we effectively dealt with the impact of the global financial crisis and laid a foundation for our long-term sustainable development.

Fiscal and taxation reforms were constantly deepened, and the public finance system further improved. The system of transfer payments was progressively improved, a rudimentary mechanism to ensure funding for county-level governments was established, and the general framework for a government budget system was basically formed. The agricultural tax was rescinded nationwide; VAT reform was fully implemented; tax policies were comprehensively unified for domestic and overseas-funded enterprises; the sales tax system continued to improve; the reform of taxes and fees on refined petroleum products progressed smoothly; trials of the reform of resource taxes were initiated; and the reform of the local taxation system made steady progress.

Fiscal management was constantly strengthened, and the level of management was raised further. We intensively exercised management over public finance in accordance with the law, constantly improved the system for classifying government revenue and expenditure items, strengthened management over the compilation and implementation of budgets, accelerated efforts to make budgets more open, constantly improved the fiscal oversight mechanism, further improved the fiscal accounting system, and ensured that public finance performed its functions.

The above-stated achievements are attributable to the overall planning and correct leadership of the CPC Central Committee and the State Council; the close cooperation and diligent work of all localities and departments; and the joint efforts of all our ethnic groups. At the same time, we are also fully aware that some prominent problems concerning fiscal operations and management still exist, the main ones being: Some county and township governments remain in rather difficult financial circumstances, and assurances of adequate basic funding for them have to be strengthened. The system for ensuring that financial resources are correlated with responsibilities still has yet to improve, and the task of making basic public services uniform between regions and between urban and rural areas is quite arduous. The fiscal and taxation policies for promoting the transformation of the pattern of economic development need further improvement, and public finance must play a larger role in adjusting income distribution. Local governments face debt risks that cannot be overlooked. Management of revenue and expenditures from the sale of land-use rights urgently needs to be strengthened. Fiscal management remains weak, and the pace at which expenditures are made throughout a fiscal year is not sufficiently uniform. The performance of government funds needs to be raised. We will give these problems our full attention and continue to adopt effective measures to solve them.