The Chinese government targets a 7-percent increase in the
central budget revenue in 2004, Minister of Finance Jin Renqing
said Saturday at the annual session of the country's top
legislature.
Total revenue in the central budget is 1.3819 trillion yuan, an
increase of 90.7 billion yuan or 7 percent over 2003, and
expenditures in the central budget total 1.7017 trillion yuan, a
rise of 90.7 billion yuan or 5.6 percent, leaving a deficit of
319.8 billion yuan, Jin said in a budget report to lawmakers.
Although the 2004 budget deficit is the same as for 2003, it
drops to 2.5 percent of the gross domestic product (GDP), or 0.4
percentage points less than the 2.9 percent for 2003.
The central budget funds for bond-financed projects in 2004
total 110 billion yuan, 30 billion yuan less than last year. This
total includes 95 billion yuan listed in the central budget and 15
billion yuan to be issued by the central government for local
governments.
The value of treasury bonds to be issued in 2004 totals 702.2
billion yuan, the minister said when talking about the draft
central and local budgets for this year.
Jin said total revenue in the draft central and local budgets is
2.357 trillion yuan, 187.9 billion yuan or 8.7 percent more than in
2003, and total expenditures amount to 2.6768 trillion yuan, an
increase of 216.1 billion yuan or 8.8 percent.
The deficit in the central budget for 2004 remains the same as
in 2003, said Jin.
Top priorities for 2004 budget expenditures
The Chinese government will give top priority to agriculture,
rural areas and farmers in terms of expenditures in the central
budget for this year, the minister said.
Total expenditures will increase by more than 30 billion yuan,
or 20 percent over last year, to address the problems facing
agriculture, rural areas and farmers, Jin said in his budget
report.
Except for tobacco, the tax on special agricultural products
will be rescinded in 2004 and the overall agricultural tax rate
will be reduced by over 1 percentage point, with a greater
reduction for major grain producing areas and grain producers,
reducing the burden on farmers by as much as 11.8 billion yuan.
Agricultural taxes will be rescinded in five years, he said.
Funds totaling 39.6 billion yuan in the form of transfer
payments from the 2004 central budget will be set aside for the
reform of taxes and administrative charges in rural areas, a
year-on-year increase of 9.1 billion yuan.
At the same time, 10 billion yuan from the grain risk fund will
be given directly to grain producers in 13 major grain producing
provinces this year as subsidies, and more budgetary funds will be
used to develop agricultural infrastructure, development forests
for ecological conservation, make advanced in agricultural science
and technology, train farmers, provide relief for agricultural
disasters and fight poverty.
"Investment will be increased for employment work and social
security," the minister said.
This year, the government plans to increase reemployment
assistance funds by 3.6 billion yuan, 76.6 percent more than last
year, to promote employment and reemployment.
The government will also allocate 77.9 billion yuan from the
2004 central budget to guarantee that living allowances for workers
laid off from state-owned enterprises and basic old-age pensions
for retirees from these enterprises are paid on time and in full
and ensure that low-income urban residents receive their
subsistence allowances.
A total of 17 billion yuan will be allocated in subsidies for
enterprises that close down or go bankrupt in order to promote
economic restructuring, the minister said.
As a move to boost development in the fields of education,
health, science and technology, culture and sports, the government
plans to allocate 95.5 billion yuan from the 2004 central budget, a
year-on-year increase of 10 billion yuan, with priority mainly
given to rural areas.
Defense spending to increase by 11.6% in 2004
China's expenditures for national defense will rise by 21.83
billion yuan (about US$2.6 billion) this year, 11.6 percent more
than last year, Jin said.
The increase is aimed to improve the defensive combat readiness
of the armed forces under hi-tech conditions and to raise the
salaries of army personnel and the pensions for ex-servicemen, the
minister said.
China's budgetary military spending for 2003 was 185.3 billion
yuan (about US$22.3 billion). The actual defense spending of the
year was not available.
Defense analysts say that this year's double-digit increase of
defense expenditures, along with an on-going disarmament endeavor
aimed at trimming the 2.5-million-man People's Liberation Army by
200,000 by the year 2005, is in line with the country’s army
building principle of keeping "fewer but better" troops.
China to tighten expenditure management?
The Chinese government will tighten management of expenditures
and hold down expenditures this year, while strengthening revenue
collection and management for steady revenue growth, the Finance
Minister said.
The government will strictly tighten control over the
construction of office buildings and training centers built for
Party and government departments, and intensify efforts to solve
the root causes of the problems of overdue construction funding on
government-funded projects and unpaid wages for migrant rural
workers, Jin said.
Meanwhile, the work style of "hard work, plain living and
building the country through diligence" will be promoted and the
policy of zero-growth for all general expenditures budgeted for
2004 be followed.
"No budgetary funds should be allocated for the wide variety of
inconsequential festivals, ceremonies and forums," said Jin at the
annual session of the national legislature.
To ensure revenue growth, the government will resolutely
safeguard the uniformity, authority and sanctity of tax laws,
severely crack down on smuggling, tax evasion and fraud and all
other tax-related crime, and standardize non-tax revenue
management.
The government will work out a scientific system for classifying
government revenue and expenditures as soon as possible and
continue standardizing administrative charges, he said.
The minister also urged financial authorities at all levels to
be realistic and pragmatic, work to effectively improve their style
of work, addressing the concerns of the people and the pressing
needs of development.
Transfer payments to local governments to be
increased
The Chinese government will increase transfer payments to local
governments in 2004, especially those in the central and western
regions, for balanced development, Jin said.
In addition to 427.7 billion yuan in tax rebates and structural
subsidies, the central government plans to grant local governments
513.3 billion yuan in transfer payments, an increase of 64.4
billion yuan over last year in comparable terms.
Of this amount, 223.8 billion yuan will come in the form of
general transfer payments, a rise of 32.6 billion yuan from last
year.
A special task force will be organized to thoroughly investigate
and study the causes of financial difficulties at the lower levels
of government, and propose specific measures to eliminate them as
soon as possible on a "type-by-type" and "step-by-step" basis.
According to Jin, the target for export tax rebates set in the
2004 central budget is 210.8 billion yuan, and revenue from the
increase in the value added tax and the consumption tax on imported
goods will be used first to pay export tax rebates.
"Local governments also need to set adequate targets for export
tax rebates," he said.
The minister also pledged to accelerate the formulation of
policies and plans to make the corporate income tax the same for
both Chinese and foreign enterprises and to reform other tax
systems this year.
In order to strengthen government authority and ensure that
government employees are paid on time and in full, an extra 11.8
billion yuan will be allocated from this year's central budget to
cover pay raises for employees of government organs and
institutions.
An extra 3 billion yuan will be allocated to increase benefits
for retired army officers who are taken care of by governments at
all levels and to cover the additional expenses resulting from
policy changes involving those entitled to special government care
and preferential treatment.
China moves to handle unpaid export tax rebates?
The government departments concerned began in 2003 to adopt five
clear-cut policies to handle the problem of unpaid export tax
rebates.
Under the policies, the government will restructure export
rebate rates, retaining some of them while lowering others, with an
average reduction of around 3 percentage points, Jin said.
Meanwhile, total export tax rebates verified for 2003 will be
taken as the base figure, and payment for the portion of export tax
rebates that exceed the base figure, if any, will be shared by the
central and local governments at a ratio of 75:25 beginning in
2004.
Any increase in the value added tax (VAT) and consumption tax on
imports collected by the central government will be used first to
pay export tax rebates. The central government will pay the full
sum of the aggregate arrears in export tax rebates due to
enterprises before the end of 2003.
The portion of the VAT and consumption tax on imports collected
by the central government in 2003 that exceeded the pre-set
targets, totaling 82.9 billion yuan, has all been used to pay
export tax rebates, said Jin.
National revenue up 14.7% in 2003
China's national revenue exceeded 2 trillion yuan for the first
time to reach 2.1691 trillion yuan in 2003, said Jin.
The central and local budgets were implemented fairly well last
year despite a complex and volatile international situation, the
unexpected outbreak of the severe acute respiratory syndrome (SARS)
and frequent natural disasters, Jin told the national
legislature.
National revenue, excluding revenue from generation of debt, was
278.7 billion yuan or 14.7 percent more than the previous year and
105.8 percent of the budgeted figure, the minister said.
National expenditures totaled 2.4607 trillion yuan, an increase
of 255.4 billion yuan or 11.6 percent year-on-year and 103.8
percent of the budgeted figure. Expenditures exceeded revenue by
291.6 billion yuan.
Total revenue in the central budget amounted to 1.2465 trillion
Yuan after allowing for the additional 82.9 billion yuan used in
export tax rebates, up 109.3 billion yuan or 9.6 percent over the
previous year and 104.4 percent of the budgeted figure.
Total expenditures in the central budget came to 1.5663 trillion
yuan, including 824 billion yuan in tax rebates and subsidies for
local authorities, 119.5 billion yuan or 8.3 percent more than the
previous year and 103.5 percent of the budgeted figure. The deficit
in the central budget was held to 319.8 billion yuan as approved at
the First Session of the Tenth NPC, the minister said.
Farmers' burden reduced by 30% in 2003
The trial reform of rural taxes and administrative charges
reduced the burden on farmers by over 30 percent on average in
2003, Jin said in his report.
The central government earmarked a total of 30.5 billion yuan in
2003 to support the above reform.
Thanks to the government effort to accelerate the pace of
repealing the tax on special agricultural products on a trial
basis, the tax was by and large rescinded in a dozen provinces and
municipalities directly under the central government, including
Beijing, Fujian, Guangdong, Jiangsu, Zhejiang, Anhui, Sichuan,
Henan, Shanghai and Tianjin.
The trial of providing subsidies directly to grain producers was
implemented in the provinces of Anhui, Jilin, Hunan, Hubei, Henan,
Liaoning, Hebei and Jiangxi and in the Inner Mongolia Autonomous
Region. The trial promoted the reform of grain enterprises, and
also won the heartfelt support of farmers in trial areas and
boosted their enthusiasm for grain production, said the
minister.
The government also allocated 10.8 billion yuan in 2003 to help
various localities combat natural disasters, provide disaster
relief and fund reconstruction after disasters, and 167 million
people in disaster-afflicted areas received timely government
relief, he said.
In 2003, the central government allocated 44 billion yuan, a
year-on-year increase of 13.9 percent, to support progress in
agricultural science and technology, develop the quality and safety
system for agricultural products, fund comprehensive agricultural
development and promote development-oriented programs for
alleviating rural poverty.
Expenditures on education, health and culture were also raised
by 6.7 billion yuan, mainly going to rural areas to promote the
development of social undertakings there, said Jin.
Fiscal policy important in safeguarding economy in
2003
China's proactive fiscal policy played important role in
safeguarding the national economy in 2003, Jin said.
Last year, the Chinese government continued to promote sustained
and rapid economic growth and issued treasury bonds totaling 140
billion yuan to finance projects, the minister said.
While exercising strict management over these funds, the
government improved the orientation and structure of use of these
bonds by giving preference to rural areas, economic restructuring,
the central and western regions, science and technology, education,
improvement of the ecological environment and public health
services, said Jin.
Transfer payments were increased to promote balanced development
among different regions. General transfer payments from the central
budget to local governments in 2003 totaled 191.2 billion yuan,
17.9 percent more than the previous year.
Special transfer payments earmarked for social security,
agriculture, science and technology, education, health and poverty
alleviation amounted to 257.7 billion yuan, up 7.3 percent
year-on-year.
In 2003, 2 billion yuan was appropriated from the central budget
to set up the Anti-SARS Fund, and a policy was clearly stipulated
to provide free SARS treatment for rural and impoverished urban
patients.
Financial authorities at all levels allocated a total of 13.6
billion yuan for SARS prevention and treatment, including 2.8
billion yuan from the central budget. The central government
appropriated an additional 1 billion yuan to improve the public
health system in the second half of the year.
In addition, the minister said, the government introduced a
range of preferential fiscal and tax policies to aid industries
hard hit by the SARS outbreak, such as tourism, food and beverage
service, civil aviation, railways, hotels and taxis, so that they
could tide over difficulties to resume normal operations as soon as
possible.
Reform of budget management system
continues
The Chinese government continued to deepen the reform to
separate the management of revenue from that of expenditures in
2003 and brought 118 administrative charges collected by 30
government departments and institutions under budgetary control,
Jin said.
These government establishments included the former Ministry of
Foreign Trade and Economic Cooperation and the Ministry of
Personnel.
The reform was further deepened to introduce departmental
budgets by requiring more departments to submit increasingly
standardized budgets to the NPC. Trial reforms to set the level of
basic expenditures and fix the allowed number of employees and
funding were extended to 118 more secondary institutions under the
central government.
The government also intensified the reform to introduce the
system of centralized treasury revenue and payments, expanding the
trial implementation of the system of centralized treasury payments
from the 42 central departments in 2002 to 82 in 2003.
According to Jin, the scope of government procurement continued
to expand, with total government procurement exceeding 150 billion
Yuan in 2003, 50 billion yuan more than the previous year.
With the efforts to tighten the supervision and auditing of
budgetary funds, an amount of 61.2 billion yuan was verified as
being obtained through acts that violated financial regulations and
discipline last year, said Jin.
Local Revenue Exceeds Expenditures in 2003
Total revenue in local budgets in China amounted to 1.8082
trillion yuan last year, including tax rebates and subsidies
granted by the central government, an increase of 221.5 billion
yuan or 14 percent year-on-year and 105.7 percent of the budgeted
figure, Finance Minster said Saturday.
Total expenditures in local budgets came to 1.78 trillion Yuan,
including 61.5 billion yuan turned over to the central
government,188 billion yuan or 11.8 percent more than the previous
year and 104.1 percent of the budgeted figure.
Local revenue exceeded expenditures by 28.2 billion yuan which
was to be used in the following year, the minister said in a report
on the implementation of the central and local budgets for 2003 and
on the draft central and local budgets for 2004.
Total central government revenue in 2003 exceeded the projected
figure by 52.4 billion yuan, after allowing for an additional
82.9billion yuan used in export tax rebates during the
implementation of the budget.
This surplus included 7.8 billion yuan from increased vehicle
purchase tax, which was incorporated into the calculation of
revenue and expenditures in the central budget and was funded for
special purposes according to the relevant regulations.
Another 7.8 billion yuan was used to increase tax rebates and
general transfer payments to local governments in accordance with
the relevant institutional rules.?
The final 36.8 billion yuan was used during the year mainly for
combating disasters and providing disaster relief, developing
education, health, and science and technology, supporting
enterprise reforms, improving social security, and upgrading the
ecological environment, said Jin.
More funds for employment, social security, social
undertakings in 2003?
More government funds were allocated to solve problems related
to employment, social security and social undertakings in 2003, Jin
said.
Last year, a special fund of 4.7 billion yuan was established in
the central budget for transfer payments to support reemployment
programs, and efforts were stepped up to ensure that living
allowances for workers laid off from state-owned enterprises and
basic old-age pensions for retirees from the same enterprises were
both paid on time and in full, and low-income urban residents
received their subsistence allowances.
The central government allotted 60.8 billion yuan to guarantee
the payment of living allowances and basic old-age pensions, 13.1
percent more than the previous year, and 9.2 billion yuan to help
pay subsistence allowances, double the sum for 2002.
According to the minister, the central government began making
annual allocation of 1.5 billion yuan in 2003 for a special fund to
help local authorities solve problems in people's lives, especially
ex-serviceman working in some enterprises.
To solve the long-standing problem of obligating relevant
authorities to provide old-age insurance for employees of land
reclamation enterprises, the central government allocated 730
million yuan in subsidies to the central and western regions and
the land reclamation zones under its jurisdiction.
The year 2003 saw significant increase in investment in social
undertakings, when a total of 85.5 billion yuan was spent from the
central budget on education, health, science and technology,
culture and sports, 9.4 billion yuan or 12.4 percent more than the
previous year.
A special investment of 2 billion yuan was made to continue the
renovation of dangerous primary and secondary school buildings in
rural areas. Two billion yuan was allocated for the State Natural
Sciences Fund, 800 million yuan for key state basic research
programs, 4.5 billion yuan for the state's March 1986 Hi-tech
Program, and 3.3 billion yuan for the knowledge innovation pilot
program of the Chinese Academy of Sciences, said Jin.
Problems in implementing budget?
Better results than expected were obtained in implementing
China's 2003 central and local budgets, but there are still
problems that cannot be ignored, Jin said.
In his budget report, Jin listed the problems as follows:
-- Revenue is seriously stretched to meet expenditures and the
problem is so severe that the government lacks the financial
resources to do many things that need to be done;
-- Potential risks arising in the course of economic development
constantly impinge on budget implementation, hence it is very
difficult to prevent and defuse financial risks;
--- The pattern of expenditures still needs to be adjusted and
the government does not yet give more financial support to the
development of social undertakings, with people still not having
adequate access to schools, doctors, potable water and
transportation in some regions, especially in rural areas;
-- Primary-level authorities in some areas still have financial
difficulties, as is manifested in delayed wage payments there;
and
-- Falsification of accounts, tax evasion and fraud, and
extravagance and waste remain serious problems, with the financial
and economic order yet to be further standardized and budgetary
funds to be used more efficiently.
"We must deal with these problems conscientiously and solve them
step by step by increasing our sense of urgency and mission,
enhancing our sense of responsibility when handling financial
affairs in the interest of our people, accelerating the development
of the public finance system and working energetically to improve
the socialist market economy," the minister said.
(Xinhua News Agency March 6, 2004)