-- Working to improve the performance of government funds

We promptly approved the appropriation of government funds in strict accordance with the budgets approved by the NPC. In strengthening budget performance administration, we applied performance target administration to all central department project expenditures, began for the first time to set performance targets and indicators for major projects at the same time as granting budgeted funds, and conducted performance evaluations in relation to expenditures for a portion of major policies on people's wellbeing and for key special projects. Information on the performance administration and performance evaluation results of some central department budgets were for the first time released to the public along with the final accounts of these departments.

Available government funds were put to work, in accordance with regulations, in pressing areas of economic and social development. We carried out trials to integrate and coordinate the use of government funds for rural development in poor counties, granting these counties the power to allocate and utilize the funds earmarked for such trials. We improved fund management for central government-funded research programs, expanding the authority of colleges and research institutions to manage research funds and expenses on related travel and meetings. We made a big push to expand the use of public-private partnership (PPP) models, and strengthened lifecycle financial regulation of PPP projects to ensure the quality of implementation. At year end 2016, 11,260 projects, with a total investment of 13.5 trillion yuan, were included on the national information platform for multiple PPP models; 1,351 of these projects, representing a total investment of 2.2 trillion yuan, have already been contracted and are in implementation.

We strengthened reform to encourage government procurement of services, and formulated guidelines on supporting the fostering and development of social organizations through government procurement of their services and on carrying out reform to introduce government procurement of services from public institutions. We worked to accelerate the operations of government-invested funds, and encouraged nongovernmental sources to invest.

-- Working to prevent risks posed by local government debt

We worked in strict accordance with the Budget Law, the Guarantee Law, and other relevant laws and regulations to take further steps to ensure standards were in place for the management of local government debt. At year end 2016, total outstanding local government debt stood at 15.32 trillion yuan, which was within the limit of 17.19 trillion yuan budgeted for the year. We improved the budgetary management system for general and special local government debt, and incorporated for the first time a full review of local government debt into the draft budgets, thereby proactively subjecting it to oversight.

We carried out risk assessments and provided early warnings on local-government debt risks and reported the results to the relevant authorities and local governments, urging high-risk regions to raise funds through multiple channels so as to defuse their debt risks. We introduced emergency response contingency plans for local government debt risks and guidelines on dealing with risks by type, building up our policy reserve for responding to risks and emergencies.

We issued the Provisional Measures for the Representative Offices of Supervisors from the Ministry of Finance in Localities to Conduct Oversight on Local Government Debt to make oversight regular. We also organized an investigation into illegal local government financing, and urged the regions and financial institutions concerned to rectify this problem in accordance with the law.

-- Ensuring budgets were managed in strict accordance with the Budget Law

We made the budgets more detailed, further scaled down the amount of tentative budgets prepared by the Ministry of Finance for other government offices or projects, and worked to ensure all projects were covered by central government department budgets. We cut the number of projects financed by government-managed funds to 23, and introduced a list and catalogue system to manage these projects. We expanded the scope of the central government's state capital operations budget, and formulated the provisional measures for the management of expenditures from this budget. We conducted a nationwide review of assets owned by administrative agencies and institutions.

We moved forward with the reform to establish a system for comprehensive government financial reporting based on accrual accounting, and issued four sets of regulations concerning government accounting principles including principles on fixed assets. We organized inspections on the implementation of subsidies for the use of new-energy vehicles, the disclosure of local budgets and final accounts, and the operations of government procurement agencies. During the inspections we investigated and exposed a number of cases of violations of the Budget Law and financial and economic discipline and held those responsible to account.

In 2016, the Ministry of Finance improved its services for the deputies to the NPC and members of the CPPCC National Committee. We dealt conscientiously with their suggestions and proposals, handling over the course of the year a total of 2,889 suggestions made by deputies and 1,323 proposals by members. We did more to improve communication with the deputies and members, soliciting and taking on board their opinions and suggestions in order to improve public finance work.

2. Adjustments to the 2016 budgets

To ensure VAT revenue was better shared between the central and local governments after trials to replace business tax with VAT came into effect across all industries on May 1, 2016, we began implementing a transitional plan at the same time to adjust the sharing of VAT revenue between the central and local governments. This adjustment did not affect the total budgetary revenue and expenditures in the 2016 general public budgets nationwide, but brought changes to the structure of the central and local government budgets. The revenue in the central government's general public budget was increased to 7.235 trillion yuan from 7.057 trillion yuan, and the 178 billion yuan increase was used in full for tax rebates to local governments. Accordingly expenditures in the central government's general public budget were increased to 8.7665 trillion yuan from 8.5885 trillion yuan. In accordance with the Budget Law, the plan for revising the central budget was submitted to the 24th Session of the Standing Committee of the 12th NPC for deliberation and approval.

3. Budgetary revenue and expenditures in 2016

1) General public budgets

Revenue in China's general public budgets reached 15.955208 trillion yuan, representing 101.5 percent of the budgeted figure and an increase of 4.5 percent over 2015, after allowing for, among other things, the inclusion into general public budgets of five government-managed funds. Adding in the 727.108 billion yuan of utilized carryover and surplus funds, plus funds from other sources, this revenue totaled 16.682316 trillion yuan.

Expenditures in China's general public budgets reached 18.784114 trillion yuan, representing 103.9 percent of the budgeted figure and an increase of 7.4 percent after deducting local governments' utilized carryover and surplus funds and funds from other sources. Including the 78.202 billion yuan used to replenish the Central Budget Stabilization Fund, these expenditures totaled 18.862316 trillion yuan. Expenditures therefore exceeded revenue, leaving a deficit of 2.18 trillion yuan, which is the same as the budgeted figure.

Revenue in the central government's general public budget reached 7.235731 trillion yuan, representing 100 percent of the adjusted budgeted figure and an increase of 1.2 percent over 2015. Adding in the 100 billion yuan contributed by the Central Budget Stabilization Fund and the 31.506 billion yuan from the budgets of central government-managed funds and central government state capital operations, this revenue totaled 7.367237 trillion yuan.