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Report on China's Central, Local Budgets

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1. We will strengthen and improve macro-control through management of public finance. We will work hard to improve our ability to carry out all the specific measures required of the proactive fiscal policy. We will step up efforts to monitor and analyze operation of the economy, carefully monitor implementation of the proactive fiscal policy, improve related policies and measures as needed and strengthen coordination between fiscal and monetary policies to make macro-control through management of public finance more proactive, specific and effective.

2. We will deepen reform of fiscal and taxation systems. We will work out a state budget system that organically links the public finance budget, the budget for state capital operations, budgets for government-controlled funds and the social safety net budget. We will expand the reform of departmental budgets to encompass lower-level departments that prepare their own budgets and improve the modern treasury management system to gradually incorporate all paid-up capital accounts of every unit that prepares a budget into a single treasury account system. We will deepen the reform to set up a centralized treasury payment system and a government procurement system. We will expand the trials of a budget for state capital operations to include all state capital operations. While keeping the revenue-sharing system basically stable, we will improve the system whereby the financial resources of the central and local governments are commensurate with their respective responsibilities, with the focus on making basic public services more uniform and developing development priority zones. We will gradually form a mechanism for guaranteeing adequate basic financial resources for county governments and improve the ability of local governments to provide pubic services. We will improve the transfer payment system and standardize the supporting policy for special transfer payments. We will further straighten out resource distribution among governments at and below the provincial level to better match their major responsibilities to major expenditures. We will continue to carry out the reform to put county finances directly under the management of provincial governments. We will fully implement VAT reform and the reform of taxes and fees for refined petroleum products. The system of natural resource taxes will undergo reform. Adjustments and improvements will be made in the system of sales taxes. The urban construction and maintenance tax and education surcharge will be extended from Chinese to foreign enterprises and citizens. Overall rural reform will be promoted. Reforms related to state-owned enterprises, the financial system and prices of resource products will be strongly supported.

3. We will strengthen management and oversight of pubic finance. The focus of this effort will be on revising the Budget Law, assisting in the revision of the Law on Certified Public Accountants and enacting the Regulations on Implementing the Government Procurement Law. Enactment of the Regulations on Managing Transfer Payments will be expedited. We will standardize administrative law enforcement by financial authorities and improve their procedures for administrative examination and approval. All authorized administrative fees whether collected nationally or by central government departments and institutions will come under budgetary control. We will create a sound mechanism for linking staffing levels with budgetary funding and improve the standards for setting the allowed number of employees and the level of administrative expenses. We will create a mechanism for evaluating key expenditure items before including them in the budget. A strict timetable must be followed in preparing and submitting budgets and strict procedures must be implemented in approving them so that more budgets are approved on time at the beginning of the year. Management of budget implementation will be tightened, and measures such as making advance appropriations and tightening oversight will be adopted to ensure that budget implementation is more uniform and effective. We will improve management modes for the surplus from budgetary appropriations and promote the organic combination of surplus management with budget preparation. We will improve the system for dynamic monitoring of budget implementation by financial departments at all levels. Pilot performance evaluations will expand. We will work to be more aware of risks, improve related systems, tighten debt management and fend off financial risks. We will create a financial oversight system that covers all government funds and all areas of public finance, with the focus on strengthening oversight, inspection and evaluation of government investment funds, to prevent redundant development and diversion of funds and ensure that they are used more effectively. We will vigorously promote transparent government in handling financial affairs. We will voluntarily accept oversight by the people's congresses, the CPPCC and the general public.

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