Summary of Finance Minister's Report on Central, Local Budgets

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Last updated at: (Beijing Time) Thursday, March 07, 2002

Summary of Finance Minister's Report on Central, Local Budgets

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Finance Minister Xiang Huaicheng has delivered the Report on the Implementation of the Central and Local Budgets for 2001 and on the Draft Central and Local Budgets for 2002 to deputies to the on-going annual session of the National People's Congress (NPC).

The second plenary meeting of the Fifth Session of the Ninth National People's Congress, China's top legislature, convened at the Great Hall of the People Wednesday morning. Present are top Chinese leaders Jiang Zemin, Li Peng, Zhu Rongji, Li Ruihuan, Hu Jintao, Wei Jianxing and Li Lanqing. A total of 2,808 NPC deputies attended the meeting, presided over by Vice-chairman of the NPC Standing Committee, Tian Jiyun.

Earlier, Zeng Peiyan, minister in charge of the State Development Planning Commission, delivered the Report on the Implementation of the 2001 Plan for National Economic and Social Development and on the Draft 2002 Plan for National Economic and Social Development.

Finance Minister on Execution of 2001 Budgets

In 2001, China's fiscal revenue and expenditures both exceeded the budget targets, and the deficit of the central authorities was kept within the budgeted size.

According to the minister, total revenue for the whole country in 2001 amounted to 1.6371 trillion yuan (excluding revenue from generation of debt, both here and below), 161.1 billion yuan over the budgeted figure and an increase of 297.6 billion yuan or 22.2 percent over that of the previous year.

Expenditures for the whole country totaled 1.8844 trillion yuan, 148.6 billion yuan over the budgeted figure and an increase of 295. 7 billion yuan or 18.6 percent over that of the previous year. Total expenditures exceeded revenue, leaving a deficit of 247.3 billion yuan.

Total revenue in the central budget for 2001 was 917.1 billion yuan, 74.8 billion yuan over the budgeted figure and an increase of 158.3 billion yuan or 20.9 percent over that of the previous year. This figure includes 857.8 billion yuan in revenue collected by the central government, 74.8 billion yuan over the budgeted figure, and 59.3 billion yuan turned over to the central government by local authorities, the same as the budgeted figure.

Total expenditures in the central budget for 2001 amounted to 1. 1769 trillion yuan, 74.8 billion yuan over the budgeted figure. This figure includes 575.4 billion yuan of expenditures for the central government, 9.1 billion yuan less than the budgeted figure, and 601.5 billion yuan in the form of subsidies for local authorities, 83.9 billion yuan over the budgeted figure.

Expenditures in the central budget exceeded revenue, leaving a deficit of 259.8 billion yuan, the same as the figure approved at the Fourth Session of the Ninth National People's Congress.

Total revenue in the local budgets in 2001 came to 1.3808 trillion yuan, 170.2 billion yuan over the budgeted figure and an increase of 273.7 billion yuan or 24.7 percent over that of the previous year. This figure includes 779.3 billion yuan in revenue collected by local authorities, 86.3 billion yuan over the budgeted figure, and 601.5 billion yuan in subsidies granted to local authorities by the central government, 83.9 billion yuan over the budgeted figure.

Total expenditures in the local budgets amounted to 1.3683 trillion yuan, 157.7 billion yuan over the budgeted figure. This figure includes 1.309 trillion yuan of expenditures in the local budgets, 157.7 billion yuan over the budgeted figure, and 59.3 billion yuan turned over to the central government, the same as the budgeted figure.

Total local revenue exceeded expenditures, resulting in a surplus of 12.5 billion yuan. In addition, central revenue from generation of debt in 2001 totaled 460.4 billion yuan. Of this debt revenue, 199.9 billion yuan was used for servicing domestic and foreign debt, 259.8 billion yuan for covering the deficit for 2001, and 700 million yuan for supplementing the central budget debt repayment fund.

Total revenue from the funds controlled by the central government in 2001 came to 105.3 billion yuan and total expenditures by the central government taken from the above funds amounted to 105.3 billion yuan. (More Detail)

Results of Proactive Fiscal Policy

In 2001, China continued to implement a proactive fiscal policy, issued a total of 150 billion yuan of long-term treasury bonds for the construction of infrastructural facilities, and expanded and fostered domestic demand.

The minister said that the use of the funds from treasury bonds helped to ensure the timely construction of some major development projects in the western region, such as the Qinghai-Tibet railway line and projects to divert electricity from the west to the east. In addition, some of these funds were used to accelerate a number of major projects under construction.

As of the end of 2001, a total of 25,500 kilometers of highways had been opened to traffic, 4,000 kilometers of railway lines had been built, including 1,988 kilometers of double-track railway lines and 1,063 kilometers of electrified railway lines, and projects to upgrade rural power grids had been completed in 1,895 counties.

In addition, funds from treasury bonds were allocated to 781 technological transformation projects launched by key state-owned enterprises in the form of subsidies on the interest payments of bank loans.

The implementation of the proactive fiscal policy has played an important role in avoiding the impact of the Asian financial crisis, curbing the trend of deflation, protecting China against the influence exerted by the slowdown in the growth of the world economy and promoting sustained, rapid and sound development of the national economy for four consecutive years.

He said that deficit in the central budget and the national debt have increased to some extent, but the overall quality of the national economy has been raised and state revenue has increased rapidly.

Deficit in the central budget for 2001 totaled 259.8 billion yuan, accounting for 2.7 percent of GDP, and outstanding debts totaled 1.5608 trillion yuan, 16.3 percent of GDP, all of which are still within safe limits. (More Detail)

Gov't to Ensure Wage Payment for Employees

China's central government will make greater transfer payments to help local governments ensure that their employees are paid in time and in full, Finance Minister Xiang Huaicheng said.

The finance minister said that through the concerted efforts of governments at all levels, the problem of overdue wages was basically solved in some counties and townships in 2001.

China has been appropriately revising its policy on income distribution over the past few years, resulting in increases in the wages and salaries of employees in government departments and institutions year after year and in social security benefits.

The minister said that some county and township governments, however, failed to pay all the wages owed to their employees on time during implementation of the state policy on wage readjustment.

According to statistics submitted by local authorities, by the end of 2001 a total of 6.5 billion yuan, or 1.8 percent of the wages payable during the year as prescribed in accordance with the national unified wage policy, had not been paid to their employees.

Wages fall in arrears mainly in county and township governments in the central and western regions. The total revenue of local governments has been growing fairly rapidly in recent years. In 2001, it came to 779.3 billion yuan, an increase of 138.7 billion yuan over that of the previous year. (More Detail)

China Spends More on Social Security

China's central government spent 98.2 billion yuan in the central budget for social security programs in 2001, 5.18 times the figure for 1998, Finance Minister Xiang Huaicheng said Wednesday.

The figure includes 34.9 billion yuan to subsidize the old-age insurance fund, 13.6 billion yuan for subsidies to provide basic living allowances for laid-off workers from state-owned enterprises, 2.3 billion yuan for subsistence allowances for urban residents, 31 billion yuan to replenish the national social security fund and 8.4 billion yuan for benefits for some disabled servicemen and family members of revolutionary martyrs and for social welfare and relief funds.

In addition to providing more funding for social security programs, a special social security account has been set up in the budget to provide extra funding for special purposes. Liaoning and other provinces are prudently promoting experimentation with the reform to improve the social security system.

According to statistics, as of the end of 2001, over 47 million persons received social security subsidies from the central budget.

In addition, a fund of 13.5 billion yuan to subsidize the shutdown and bankruptcy of enterprises was earmarked in the central budget for 2001 to help phase out outmoded industrial production capacity and reduce surplus production capacity.

Input in Farming, Education, Science Raised: Minister

In 2001, China's central government increased investment in agriculture, science and education, according to Finance Minister Xiang Huaicheng.

The central government allocated 3.3 billion yuan in the form of transfer payments to support and improve experimentation with the reform of taxes and fees in Anhui Province and 106 counties in other regions to lighten the financial burden on farmers there.

A policy on agricultural tax reduction or exemption was implemented for areas affected by disasters or crop failure. The reduction and exemption amounted to 5 billion yuan in such areas, 4 billion yuan of which was in the form of subsidies from the central budget during the year.

More funding was allocated to fight poverty in rural areas. The central government allocated 10 billion yuan to fight poverty, resulting in further improvement in conditions for production and daily life among the poor population in rural areas.

A total of 4.2 billion yuan was used to help restore cultivated land to forests and plant barren hills and uncultivated land with trees to further improve the ecological environment and increase farmers' incomes in the western region.

Investment was increased in projects related to natural forest protection, comprehensive agricultural development, agricultural science and technology and industrial management of agricultural production. A total of 23.3 billion yuan was allocated for these items from the central budget.

Funds were allocated to implement the policy on grain risk funds, support efforts to deepen reform of the grain distribution system and increase incomes of major grain-producing areas and farming households.

The minister said that for these purposes, the central government increased total grain risk funds by 4.9 billion yuan for major grain-producing areas. Subsidies from the central government granted to local governments in the form of grain risk funds came to 17.3 billion yuan, accounting for 57 percent of all grain risk funds.(More Detail)

Revenue to Rise by 10 Percent in 2002

Finance Minister Xiang Huaicheng said Wednesday China's total revenue in the draft central and local budgets for 2002 is 1.8015 trillion yuan, 164.4 billion yuan, or 10 percent, more than the actual figure of last year.

(Note: in calculating the growth rate, the figures for 2001 have been adjusted for convenient comparison according to the reform plan for income tax sharing which began to be implemented in 2002, and the same below.)

Total expenditures in the draft central and local budgets amount to 2.1113 trillion yuan, an increase of 226.9 billion yuan, or 12 percent, over the actual figure of last year.

According to the minister, total revenue in the central budget for 2002 is 1.0646 trillion yuan, an increase of 76.5 billion yuan, or 7.7 percent, over that of last year.

This figure includes 1.0042 trillion yuan collected by the central government, which is 75.4 billion yuan, or 8.1 percent, over that of last year.

Expenditures in the central budget total 1.3744 trillion yuan, a rise of 126.5 billion yuan, or 10.1 percent, over that of last year. A total of 641.2 billion yuan of these expenditures will be incurred at the central level, which is 65.8 billion yuan, or 11.4 percent, over that of last year.

More Detail)

Proactive Fiscal Policy to Continue

China will continue to adhere to the principle for boosting domestic demand, follow a proactive fiscal policy, appropriately increase expenditures and strive to promote sustained, rapid and sound development of the national economy in 2002.

Xiang said that to step up construction of infrastructure facilities and boost fixed asset investment, the government plans to issue 150 billion yuan of long-term treasury bonds, 125 billion yuan of which will be listed in the central budget and 25 billion yuan of which will be issued by the central government in the name of local authorities.

The funds will be mainly used for treasury bond-backed projects under construction, development projects in the western region, technological transformation of key enterprises, projects to divert water from the south to the north, and protect the water resources of Beijing and Tianjin, rural infrastructure and infrastructure facilities needed by public security and procuratorial organs, people's courts and judicial departments and by institutions of higher learning which increase enrollment.

Governments at all levels and relevant government departments will strengthen management and supervision of funds from treasury bonds and conscientiously choose feasible projects, Xiang said. The public bidding system should be strictly implemented for projects financed by treasury bonds. (More Detail)

Wages Must Be Paid on Time for Stability

The Finance Minister said that accelerating the establishment of a social security system is of great significance to guaranteeing the basic living standards of urban residents with low incomes, promoting the reform of state-owned enterprises and maintaining social stability.

According to the minister, in 2002, a total of 86 billion yuan for social security programs will be earmarked in the central budget (an increase of 28 percent over the figure of 2001, calculated on comparable terms).

To solve the problem of basic living allowances for urban residents with low incomes, the State Council has decided to increase subsidies from the central budget to their subsistence allowances from 2.3 billion yuan in 2001 to 4.6 billion yuan in 2002.

In view of increased expenditures for the basic pensions of retirees of state-owned enterprises and the number of laid-off workers in 2001, a total of 51.2 billion yuan from the central budget will be allocated to subsidize pensions for retirees of state-owned enterprises and living allowances for their laid-off workers in 2002.

In addition, a total of 11 billion yuan of subsidies for shutdown and bankruptcy of enterprises will be earmarked in the central budget for 2002 to promote economic restructuring and support the shutdown and bankruptcy of some state-owned enterprises in accordance with the law.

A total of 9.6 billion yuan for benefits for some disabled servicemen and family members of revolutionary martyrs and for social welfare and relief funds will also be earmarked in the central budget.

The minister asked local financial departments at all levels to conscientiously implement the policies formulated by the central authorities and allocate more funds in their budgets for payment of social security benefits.(More Detail)

Farming, Science, Education to Get 180 Billion Yuan in 2002

China's finance minister said that the government will increase investment in agriculture, science and education in 2002, so as to promote the development of key undertakings.

Xiang stressed that agriculture is the foundation of the national economy. Promoting rural economic development and increasing farmers' incomes are an important effort and a long- term measure to expand and foster domestic demand, he said, adding that financial departments will further increase investment in agriculture.

To improve the ecological environment, in 2002 the government will continue to implement projects to protect natural forests, restore 2.27 million hectares of cultivated land to forests and plant 2.66 million hectares of barren hills and uncultivated land with trees and grass.

Expenditures for these projects in the central budget amount to 20.6 billion yuan (not including expenditures covered by additional treasury bonds), he said.

Investment from treasury bonds will include 13.7 billion yuan of expenditures for accelerating the upgrading of power grids in rural areas and 23.9 billion yuan of expenditures for stepping up construction of water conservancy facilities in the central budget to improve conditions for agricultural production. (More Detail)

China's Defense Budget to Rise by 17.6 Percent

China will increase its defense expenditures for national defense by 25.2 billion yuan this year, an increase of 17.6 percent from last year, Xiang said.

He said China will appropriately increase expenditures for national defense to utilize modern technology, especially high technology to raise the army's defense and combat capabilities, safeguard the national sovereignty and territorial integrity and adapt to changes in the international situation.

The government will also appropriately raise the salaries of officers, noncommissioned officers and office staff on the regular payroll, the subsidies for compulsory servicemen and the pensions for retired servicemen, he said.

China to Build Clean Gov't by Financial Reform

Deepening the reform of separating the management of revenues and expenditures is an important part of building a framework of public finance and a measure of major importance in straightening up and standardizing the financial order and building a clean government, said Finance Minister Xiang Huaicheng.

Reporting on the Implementation of the Central and Local Budgets for 2001 and on the Draft Central and Local Budgets for 2002 to the current session of the Ninth National People's Congress here Wednesday, the finance minister said that the reform is of great and far-reaching political, economic and social significance.

He listed the following measures for carrying the reform into depth according to the general requirements for 2002:

-- The extra-budgetary funds collected by five government departments, namely, the Ministry of Public Security, the Supreme People's Court, the General Administration of Customs, the State Administration for Industry and Commerce and the State Environmental Protection Administration, will be incorporated into their budgets and turned over to the central treasury in full.

Their expenditures will be fixed through consultation with these departments according to the actual needs for performing their duties.

-- The extra-budgetary funds of 28 other central government departments will be subject to management by delinking receipts and expenditure, with the extra-budgetary receipts entering into special accounts, and all the departments are required to make a unified arrangements for annual expenditure and compile their comprehensive financial budgets according to the prescribed comprehensive standards.

-- To reform the current system of collecting and turning over extra-budgetary funds, subjecting collection and turn-over to separate management. No department will be allowed to collect the money and spend it all by itself.

-- To change the practice of revenue collection and management departments to tie their overhead expenses to revenue collection and introduce the budget system.

-- To further standardize and promote the reform of separating the management of revenues and expenditures in localities.

The reform of budgetary management is of great importance in standardizing financial management, improving the efficiency of the use of fiscal funds, standardizing the government behavior, and in preventing and controlling corruption from the roots and institutionally, the finance minister said.

In 2002, he noted, the central finance will expand the scope of direct payments and increase the number of units for experimenting in the reform to about 40 from 6 in 2001.

In addition, the ministry will experiment with the reform of the receipts collection and turn-over system and standardize the methods of collecting and turning over such receipts, institute the government procurement system and expand the scope of goods subject to government procurement and tighten procurement management and supervision and standardize its procedures. All departments covered by the central budget are required to prepare their own budgets on government procurement. (More Detail)

By People's Daily Online

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