Full text: Report on China's central, local budgets (2)

Fiscal and budgetary management was made more standardized.

We reviewed and standardized preferential policies in taxation and other areas. The implementation of any preferential policy that was in breach of laws or regulations was, as of December 1, 2014, terminated without exception, while those that were retained after the review, along with any new preferential policies are all to be brought under permanent mechanisms and standardized management. We further standardized the management of budgets for government-managed funds, and established a mechanism for moving funds for which use should come under overall planning from the budgets of government-managed funds to the general public budgets. We improved management of state capital operations budgets and further raised the share of profits from the operations of central government enterprises turned over to the central government. Funds transferred from the budgets for central state capital operations to general public budgets were increased to 18.4 billion yuan from 6.5 billion yuan in 2013. The budgeting for national social security funds was included in the draft budget for the first time.

Further improvements were made to the system for managing government debt.

We introduced the guidelines on strengthening management of local government debt; established a standardized mechanism for local governments to secure financing through bond issuance; put into practice controls on the scale of local government debt, budgetary management, and early warning against risk; and established a local government debt management mechanism under which the borrowing, use, and repayment of funds are integrated. We worked to develop a clear picture of the outstanding debts of local governments. We formulated methods for assessing and giving early warnings on risks relating to local government debt. A total of 400 billion yuan worth of local government bonds were issued in 2014, and trials were successfully launched in ten regions for local governments to issue their own bonds and repay their own debts. We improved the system for managing the outstanding balance of government bonds, increased the types of bonds included within the trials of when-issued trading of government bonds, improved the mechanism for the periodic issuance and reissuance of government bonds of key terms, and for the first time, released the yield curves of key-term government bonds. We developed a reform plan to introduce a system for comprehensive government financial reporting based on accrual accounting, and clearly delineated the basic thinking on, major tasks for, concrete substance of, and steps for establishing such a system. We encouraged innovations in investment and financing mechanisms, and promoted the use of the public-private partnership (PPP) model, formulating guidelines on such partnerships and initiating projects that demonstrate how the model works in practice.

Financial discipline was strengthened.

We intensified efforts nationwide to tighten up financial discipline and deal with unauthorized departmental coffers, and investigated and prosecuted all types of financial behavior in violation of the law or discipline. Irregularities to the sum of 140.6 billion yuan were discovered in areas including budgetary revenue and expenditure as well as government procurement, and 1,538 individuals were held to account. We strictly enforced the requirement that increases are not to be tolerated in spending on official overseas visits, official vehicles, and official hospitality, and that such spending should be cut. We reduced expenditures on meetings; put a stop to the use of official vehicles and office space by officials in excess of standards; and kept under strict control the construction of new government buildings, increases in the total number of government employees, and the use of government funds to host gala parties or other events. We basically completed the reform of the system for the use of official vehicles by agencies of the CPC Central Committee and the central government. We improved financial and accounting systems underpinning the Regulations on Practicing Thrift and Opposing Waste in Party and Government Bodies. Having basically achieved complete coverage of all budget-preparing departments at and above the county level with the centralized treasury payment system, we moved forward with the reform of town and township institutions according to their types. We pushed for the implementation of digital centralized treasury payment by all provincial-level finance departments. We actively promoted the system of listing items requiring procurement through government credit cards. We strengthened the development of mechanisms for dynamic monitoring of the implementation of budgets, with a focus on intensifying monitoring over spending on meetings, training, hospitality, and major programs. We redoubled efforts to ensure that budgets and final accounts are released to the public, increasing the number of central government departments that release their budgets and final accounts to 99 and adding into budgets and final accounts a table specifically showing government spending on official overseas visits, official vehicles, and official hospitality. The budgets and final accounts released by the central government and its departments were detailed down to the subsection level - the lowest level in the classification of functions of expenditure, and the budgets of special transfer payments released were detailed down to the specific project. Thirty-one provinces, autonomous regions, and municipalities directly under the central government released their general public budgets and the budgets of their departments. (Mo