Refers to the reform of policies relating to rural financial management. The system was reformed in four key areas: supervision, funds allocation, revenue sharing, and budgetary quotas. Where previously county-level finance departments had to report to city-level authorities, or where funds were allocated to them subject to city-level allocations taking priority, they now come under the direct supervision of provincial authorities. Likewise, funds to be allocated to them are calculated independently of allocations to the cities. The same applies to village-level finances. They come under the direct supervision of county-level authorities, bypassing township authorities.

Zhejiang Province was the first to implement the change in 2002, followed by Hubei, Henan, Shandong, Jiangsu and Jiangxi provinces.

(China.org.cn March 10, 2006)