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China to Set Up New Fiscal System
China plans to set up a new public fiscal system within 3 to 5 years, Finance Minister Xiang Huaicheng said Tuesday.
He told a national work meeting on finance that in the next few years governments at all levels will stop allocating budget funds to projects in trades that should be ruled by market competition.
They will also stop funding operations, development and research projects of enterprises.
He said that the government will gradually reduce subsidies for loss-making state-owned enterprises (SOEs), reimburse taxes paid by enterprises, reduce funds allocated directly to SOEs and provide tax incentives for enterprises in trouble.
Xiang said the government will try its best to make breakthroughs in fiscal reform across China in the next three years.
He noted that poor fiscal expenditure management has created mounting pressure on the national budget in recent years.
The Chinese government will put all fiscal revenue in the accounts of the treasury and allocate funds for fiscal expenditure directly from these accounts. It will prohibit other governmental departments and local authorities to hold fiscal revenue accounts, according to Xiang.
Xiang said that the country will require various government departments to draft their own separate budgets. China will allow more government departments to do this on an experimental basis in the second half of the year.
From the beginning of next year, all departments that draft their own budgets will be required to make detailed budget procurement plans for the year.
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