Full text: Report on China's central, local budgets(6)

3) Central government tax rebates and transfer payments to local governments

Central government tax rebates and transfer payments to local governments totaled 4.538347 trillion yuan, 100.6% of the budgeted figure and an increase of 13.7%. This figure includes 2.147118 trillion yuan in general transfer payments and 1.879152 trillion yuan in special transfer payments. General transfer payments accounted for 53.3% of total transfer payments, an increase of 0.8 percentage points over 2011.

2. Implementation of Budgets for Government-managed Funds

In 2012, revenue of government-managed funds nationwide came to 3.751701 trillion yuan, while expenditure amounted to 3.606904 trillion yuan. Below is a breakdown of these figures.

Receipts of central government-managed funds totaled 331.344 billion yuan, 110.8% of the budgeted figure and an increase of 5.8%. Receipts exceeded the budgeted figure mainly because funds from the surcharge on electricity generated from renewable energy sources were included in last year's budget for the first time in accordance with the law, so as to support the development of these energy sources. Adding the 82.221 billion yuan carried forward from 2011, revenue of central government-managed funds totaled 413.565 billion yuan in 2012. Expenditure of central government-managed funds totaled 335.463 billion yuan, 88.1% of the budgeted figure and an increase of 8.1%. This total consists of 217.517 billion yuan of central government spending and 117.946 billion yuan in transfer payments to local governments. A total of 78.102 billion yuan from central government-managed funds was carried forward to 2013. The expenditure of central government-managed funds was less than the budgeted figure mainly because some projects were not implemented in 2012 due to insufficient preparatory work, while others were granted less funding in accordance with the principle of determining spending based on revenue.

Revenue of funds managed by local governments reached 3.420357 trillion yuan, a decrease of 10.5% mainly due to fewer receipts from the sale of state-owned land use rights. Adding the 117.946 billion yuan in transfer payments from central government-managed funds, the total revenue of local government-managed funds came to 3.538303 trillion yuan. Expenditure of local government-managed funds totaled 3.389387 trillion yuan, down 10.3%. This total includes 2.841819 trillion yuan of spending from the proceeds of selling state-owned land use rights. Surplus revenue from local government-managed funds was carried forward to 2013.

3. Implementation of Budgets for State Capital Operations

In 2012, revenue from state capital operations nationwide reached 157.284 billion yuan, and total expenditure reached 147.966 billion yuan. The following is a breakdown of these figures.

Revenue from state capital operations of the central government totaled 97.083 billion yuan, 115% of the budgeted figure and an increase of 26.9%. Revenue exceeded the budgeted figure mainly because the proportion of profits from state capital operations of tobacco enterprises collected by the central government was raised five percentage points and the economic returns of enterprises in some industries exceeded expectations in 2011 (revenue from state capital operations of state-owned enterprises is collected as a certain proportion of their profits for the previous year). Adding the 3.107 billion yuan carried forward from 2011, revenue totaled 100.19 billion yuan. Expenditure on the central government's state capital operations came to 92.979 billion yuan, 106.3% of the budgeted figure and an increase of 20.8%. This figure includes 5 billion yuan, up 25%, spent on social security and other areas related to improving quality of life as planned in last year's public finance budgets. Surplus revenue from the central government's state capital operations was used to shore up the capital bases of the five largest power corporations (China Huaneng Group, China Datang Corporation, China Huadian Corporation, China Guodian Corporation, and China Power Investment Corporation), details of which the State Council reported to the Standing Committee of the Eleventh NPC.

Revenue from local governments' state capital operations totaled 60.201 billion yuan, and total expenditure amounted to 54.987 billion yuan.

4. Implementation of the NPC Budget Resolution

In accordance with the relevant resolution of the Fifth Session of the Eleventh NPC, as well as the guidelines of the NPC Financial and Economic Affairs Commission, we strived to do better in public finance work.

First, we faithfully followed a proactive fiscal policy. We increased structural tax reductions and extended the pilot project to replace business tax with VAT from Shanghai to nine provinces and municipalities directly under the central government, including Beijing, and three cities specially designated in the state plan, thereby effectively promoting the development of the service sector and the optimization of the industrial structure and reducing the burden on enterprises. We raised VAT and business tax thresholds, and halved the corporate income tax on small businesses with low profits and expanded the scope of the policy to cover more businesses. Efforts were made to increase government subsidies, raise the income of low-income groups, and boost consumer spending. We improved the structure of government spending to direct more funding toward maintaining and improving quality of life and promote the development of education, health, social security, and other social programs. We better leveraged the role of fiscal and tax policies and worked to adjust the economic structure and balance regional development.

Second, we better ensured funding for county-level governments to perform their functions. We improved the mechanism for ensuring basic funding for governments at the county level, expanded its coverage, and increased the amount of funds guaranteed. The central government allocated a total of 107.5 billion yuan in awards and subsidies for this purpose, 30 billion yuan more than 2011, and provincial-level governments also carried out their responsibility in this regard, which basically made up the shortfall in funds for county-level governments and achieved the policy aim of ensuring these governments have sufficient funding to pay salaries, carry out normal operations, and safeguard the wellbeing of their residents.

Third, we strengthened management of local government debts. We further improved the system for managing local government debts, put them under standardized supervision, clarified who is responsible for repaying them, and saw to it that all local government bonds due in 2012 were redeemed on time. We also made notable progress in clearing debts of county-level governments.

Fourth, we pushed ahead with the work on releasing government budgets and final accounts. Relevant central government departments released their budgets and final accounts in accordance with relevant regulations. In addition to appropriations for spending on official overseas travel, official vehicles, and official hospitality disclosed in their 2011 final accounts and 2012 budgets, specific details regarding such expenditures were also made public. The information these departments provided was more meticulous, covered similar time periods, and was presented in a standardized form.

Fifth, we improved performance-based budget management. We worked hard to stress the importance of achieving results in the full course and every link of our budget management, formulated and promulgated a work plan for performance-based budget management, and made steady progress in carrying out pilot projects in this area. We also redoubled efforts to manage the implementation of budgetary expenditure, and implemented budgets more quickly. We tightened oversight of public finances, observed strict financial and economic discipline, and ensured smooth implementation of major policy decisions and plans of the central leadership.

Sixth, we dealt with suggestions and proposals. We handled a total of 3,803 suggestions and proposals in 2012. We also improved communication with NPC deputies and CPPCC National Committee members and increased efforts to translate their suggestions and proposals into policies and measures as well as concrete action.