Full Text: Report on China's central, local budgets

3. Public finance budgets for 2011

On the basis of the targets for economic development in 2011, economic and social policies, and the general requirements for compiling budgets decided upon at the Central Economic Work Conference, we have set the following major targets for 2011 public finance budgets: total revenue in the central budget should reach 4.586 trillion yuan, an increase of 8% over the actual figure for 2010 (here and below), and 150 billion yuan will be added from the central budget stabilization fund, bringing total revenue for 2011 to 4.736 trillion yuan. Expenditures in the central budget should total 5.436 trillion yuan, an increase of 12.5%. This consists of 1.705 trillion yuan incurred at the central level, an increase of 6.7%, and 3.731 trillion yuan paid out as tax rebates and transfer payments to local governments, an increase of 15.3%. Expenditures exceed revenue in the central budget, resulting in a deficit of 700 billion yuan, 150 billion yuan less than the actual figure for 2010. The limit for the outstanding balance of government bonds in the central budget stands at 7.770835 trillion yuan.

(Figure 5 Budgetary Balance of the Central Government for 2011)

Based on preliminary provisions for the local budgets as complied by the central government, revenue collected by local governments will amount to 4.386 trillion yuan, up 8%. Adding the 3.731 trillion yuan in tax rebates and transfer payments from the central government, local government revenue will total 8.117 trillion yuan. Local government spending will amount to 8.317 trillion yuan. Expenditures will exceed revenue by 200 billion yuan, and to compensate for this, the State Council has agreed for the Ministry of Finance to issue 200 billion yuan of local government bonds on behalf of local governments, and these will be incorporated into provincial-level government budgets. Arrangements for revenue and expenditures of local governments should be based on the budgets approved by the people' s congresses at their respective levels.

Combining central and local budgets, national revenue will be 8.972 trillion yuan, an increase of 8%. Including the 150 billion yuan from the central budget stabilization fund, total available national revenue is projected to be 9.122 trillion yuan. Total national expenditures are budgeted at 10.022 trillion yuan, up 11.9%. Total expenditures will exceed total revenue by 900 billion yuan. The national budget deficit will be around 2% of GDP in 2011, down from 2.5% in 2010. These arrangements take into account the need to consolidate and develop the results in responding to the impact of the global financial crisis and to maintain steady and rapid economic development, and reflect the requirement to promote the sustainable development of public finance.

Overview of the central budget stabilization fund

The outstanding balance of the fund stood at 236.813 billion yuan at the end of 2010. After 150 billion yuan is transferred to the 2011 budget, 86.813 billion yuan will remain.

1) Main revenue items provided for in the central budget

Revenue from domestic VAT will amount to 1.757 trillion yuan, an increase of 10.5%. Revenue from domestic sales tax will amount to 650 billion yuan, an increase of 7.1%. Revenue from VAT and sales tax on imports will amount to 1.122 trillion yuan, up 7%. Revenue from customs duties will amount to 217 billion yuan, up 7%. Revenue from corporate income tax will amount to 838 billion yuan, up 7.5%. Revenue from personal income tax will amount to 312 billion yuan, an increase of 7.5%. Revenue from stamp tax on securities trading will amount to 55 billion yuan, up 4.2%. Export tax rebates will amount to 800.5 billion yuan, an increase of 9.2%, which will result in a decrease in revenue by the same amount. Revenue from vehicle purchase tax will amount to 192.7 billion yuan, an increase of 7.5%. Non-tax revenue will amount to 208 billion yuan, up 5.7%.

(Figure 6 Central Government Revenue in 2011)

2) Main expenditure items provided for in the central budget

The plans for expenditures call for further optimizing the spending structure and giving top priority to ensuring funding for work related to agriculture, rural areas, and farmers; improving the people' s wellbeing; developing social undertakings; advancing economic restructuring; and deepening reform. The main expenditure items, consisting of central government spending and transfer payments to local governments, are arranged as follows.

(1) The appropriation for education spending is 296.357 billion yuan, an increase of 16.3%. This figure consists of 78.645 billion yuan of central government spending and 217.712 billion yuan in transfer payments to local governments. Three billion yuan in subsidies has been appropriated primarily to support the development of rural preschool education in the central and western regions and ethnic minority areas. We have appropriated 92.124 billion yuan to improve the mechanism to guarantee funding for rural compulsory education, raise the benchmark of public funding per student in rural primary and secondary schools, continue to implement the policy of exempting urban students in compulsory education from paying tuition and miscellaneous fees, and ensure that children of rural migrant workers have equal access to compulsory education in cities. We have appropriated 16.514 billion yuan to continue to carry out the plan to improve weak rural schools providing compulsory education. We have appropriated 13.4 billion yuan to strengthen the basic conditions for vocational education and implement the policy of exempting students in secondary vocational schools whose families have financial difficulties and students in such schools who are studying agriculture-related majors from paying tuition. We have appropriated 27.1 billion yuan in subsidies to improve the policy framework for providing financial aid to students from families with financial difficulties attending regular senior secondary schools, regular undergraduate institutions, and higher and secondary vocational schools. We have appropriated 71.725 billion yuan to implement Project 985 and Project 211, accelerate the building of top-class universities and academic disciplines, and develop innovation platforms in strong disciplines. We have appropriated 20 billion yuan to support efforts to raise per student appropriations for local universities and advance their development and reform. We will promote the development of special education and education in ethnic minority areas.

(2) The appropriation for science and technology spending is 194.413 billion yuan, an increase of 12.5%. This figure consists of 190.159 billion yuan of central government spending and 4.254 billion yuan in transfer payments to local governments. We have appropriated 43.5 billion yuan, up 44%, to speed up the implementation of major national science and technology projects. We have appropriated 25.719 billion yuan for basic research funds to increase investment in the State Natural Sciences Fund and improve the capabilities of key national laboratories and basic research institutes. We have appropriated 99.063 billion yuan for applied research funds primarily to support research on cutting-edge technologies, research for the public interest and research on major, generic and key technologies. We will expand pilot programs for independent R&D on major scientific equipment. We will give more guidance and support to strengthen regional innovation capabilities and give impetus to the transformation of scientific and technological results into actual productive forces.

(3) The appropriation for spending on culture, sports, and media is 37.443 billion yuan, up 18.5%. This figure consists of 18.84 billion yuan of central government spending and 18.603 billion yuan in transfer payments to local governments. Priority will be given to supporting cultural development projects that affect the vital interests of people in rural areas and at the primary level. We will guarantee free admission to non-profit cultural facilities such as museums and memorial halls. We will strengthen protection of key national artifacts and major cultural and historical sites. We will actively promote cultural restructuring and the development of cultural programs and the culture industry. We will strengthen the international broadcasting capability of the news media.

(4) The appropriation for medical and health care spending is 172.758 billion yuan, an increase of 16.3%. This figure consists of 6.356 billion yuan of central government spending and 166.402 billion yuan in transfer payments to local governments. Together with the 127.321 billion yuan appropriation in 2009 and the 148.535 billion yuan appropriation in 2010, this completes the three-year plan for new spending from the central budget to support the deepening of pharmaceutical and health care reform. The central government has appropriated 76 billion yuan, up 35.7%, to raise the participation of eligible individuals in basic medical insurance for urban workers, basic medical insurance for urban residents and the new rural cooperative medical insurance to over 90%, and to raise the subsidy for the new rural cooperative medical insurance and basic medical insurance for urban residents from 120 yuan to 200 yuan per person. We will support the full implementation of the national system of basic drugs at government-run community-based medical and health care institutions and carry out comprehensive reform of community-based medical and health care institutions. We have appropriated 34.6 billion yuan to raise per capita spending on basic public health services for urban and rural residents from 15 yuan to 25 yuan, and continue to support the implementation of major public health service projects. We will carry out trial reforms of public hospitals. We have appropriated 8 billion yuan to increase medical assistance in both urban and rural areas.

(5) The appropriation for social security and employment spending is 441.434 billion yuan, an increase of 16.6%. This figure consists of 48.479 billion yuan of central government spending and 392.955 billion yuan in transfer payments to local governments. We have appropriated 13.1 billion yuan in subsidies to support the expansion of trials of the new rural pension insurance from around 24% of counties to 40% and extend pension insurance coverage to zero-income urban residents. We have appropriated 10.4 billion yuan to provide living allowances in one lump sum to more than 86 million urban and rural recipients of subsistence allowances and childless and infirm rural residents receiving guarantees of food, clothing, medical care, housing and burial expenses. We have appropriated 179.6 billion yuan in subsidies to basic pension insurance funds of enterprises, up 15.1%, to increase the per person monthly pension of enterprise retirees by about 140 yuan, improve the overall planning system for basic pension insurance funds of enterprise employees at the provincial level, and properly solve the problem of basic pension insurance for retirees of collectively owned enterprises that do not participate in the pension insurance scheme. The central government has appropriated 74.9 billion yuan, up 18.3%, to raise urban and rural subsistence allowances. We have appropriated 25.77 billion yuan in subsidies, up 19.5%, to raise benefits for entitled groups. We have appropriated 3.6 billion yuan to raise subsistence allowances for orphans by an appropriate amount. We have appropriated 10.65 billion yuan to help people affected by natural disasters to restore their lives. We have appropriated 6 billion yuan in subsidies to continue to deal well with the aftermath of policy-based closures and bankruptcies of SOEs. We will expand the policy of giving encouragement and support to people who start their own businesses, and we will do a good job in employment assistance and providing training in vocational and start-up skills.

(6) The appropriation for guaranteeing adequate housing is 129.266 billion yuan, up 14.8%. This figure consists of 29.163 billion yuan of central government spending and 100.103 billion yuan in transfer payments to local governments. By means of increasing government investment at all levels and actively guiding the participation of nongovernmental capital, we will accelerate the construction of public rental housing and low-rent housing; carry out renovations of run-down areas in cities, industrial and mining areas, forest regions, land reclamation zones and coalmines, and dilapidated rural homes; and build permanent housing for nomads. The central government has appropriated 103 billion yuan for low-income housing projects, up 34.7%. We have appropriated 26.266 billion yuan for the housing accumulation fund for employees in administrative agencies and institutions.

(7) The appropriation for spending on agriculture, forestry, and water conservancy is 458.883 billion yuan, an increase of 18.3%. This figure consists of 42.419 billion yuan of central government spending and 416.464 billion yuan in transfer payments to local governments. We have appropriated 157.54 billion yuan to strengthen agricultural and rural infrastructure with a focus on water conservancy; vigorously support harnessing small and medium-sized rivers, reinforcing dangerously defective small reservoirs, and preventing and controlling geological disasters such as mountain torrents; increase the number of designated counties where small irrigation and water conservancy facilities will be built and expand the scope of key national water and soil conservation projects; and advance the upgrading of water-saving equipment in large and medium-sized irrigated areas and of rural power grids. We have appropriated 86 billion yuan in general subsidies for purchasing agricultural supplies, up 20.1%. We have appropriated 22 billion yuan to improve the system of subsidies for purchasing superior crop varieties and to increase such subsidies. We have appropriated 17.5 billion yuan to scale up the subsidies for purchasing agricultural machinery. We have appropriated 9 billion yuan to promote the development of modern agriculture and agricultural sectors with particular strengths or unique features. We have appropriated 23 billion yuan, up 19.8%, for overall agricultural development to quickly increase the national grain output by 50 million tons, improve average- and poor-yield farmland, develop high-yield farmland, promote industrialized agricultural operations, and raise overall agricultural production capacity, with the focus on main grain-producing areas. We have appropriated 13.66 billion yuan to put in place a subsidy and award mechanism for the protection of grassland ecology. We have appropriated 30.6 billion yuan, up 17.7%, to support poverty-alleviation work in contiguous poverty-stricken areas with special features and develop industries with unique features or particular strengths in poverty-stricken areas. We have appropriated 9.406 billion yuan to improve the policy of subsidies to help pay agricultural insurance policy premiums. We have appropriated 16 billion yuan, up 55.8%, to comprehensively implement government awards and subsidies for village-level public works projects, the launching of which is determined by villagers themselves. We will comprehensively sort out and pay off debts incurred from providing compulsory education in rural areas and continue to carry out trials of sorting out and paying off other public welfare debts in rural areas.

(8) The appropriation for spending on land, resources, and meteorology is 45.489 billion yuan, an increase of 22.9%. This rather large increase is due to the large anticipated increase in revenue from use fees for mineral prospecting and mining rights and from mineral resource compensation fees, which are required by relevant regulations to be used exclusively for exploiting and utilizing mineral resources. This figure consists of 16.748 billion yuan of central government spending and 28.741 billion yuan in transfer payments to local governments. We will intensify exploration for mineral resources, restoration of the geological environment around mines, and conservation and comprehensive use of mineral resources, and support oversight and protection of the use of territorial waters.

(9) The appropriation for spending on energy conservation and environmental protection is 159.185 billion yuan, an increase of 10.3%. This figure consists of 7.437 billion yuan of central government spending and 151.748 billion yuan in transfer payments to local governments. We have appropriated 94.5 billion yuan for energy conservation and emissions reductions to strengthen the development of key energy-conserving projects; promote cleaner production, the retrofitting of energy-conserving technology and the development of energy-conserving industries; continue to support the work of retiring backward production facilities; make buildings more energy-efficient; further intensify the implementation of the project of promoting energy-saving products to benefit the people; expand the scope of subsidies for purchasing energy-saving and alternative-fuel vehicles; strengthen heavy metal pollution treatment and comprehensive ecological treatment in key areas and rivers; and comprehensively improve the rural environment. We have appropriated 12.2 billion yuan to support the implementation of the Golden Sun Project, use biomass energy more comprehensively, carry out demonstrations on the use of renewable energy in buildings, and encourage enterprises to develop circular production and to re-manufacture and re-use materials. We have appropriated 14.084 billion yuan, up 120%, to give impetus to the implementation of the second phase of the natural forest resources protection project. We have appropriated 32.7 billion yuan to support the implementation of major ecological restoration projects and consolidation of achievements made in returning farmland to forests. We will encourage imports of important energy resources, natural resources and raw materials and strictly control exports of resource products and products whose production is energy-intensive and highly polluting. We will promote the dissemination of research on low-carbon technology in key areas, and support the implementation of the National Climate Change Program.

(10) The appropriation for spending on transportation and transport is 286.691 billion yuan, up 10.3%. This figure consists of 40.024 billion yuan of central government spending and 246.667 billion yuan in transfer payments to local governments. We have appropriated 196.64 billion yuan to build rural roads, national and provincial trunk highways, and other public transportation infrastructure. We have appropriated 29.647 billion yuan to continue to provide fuel subsidies for urban and rural public transport and some other public service industries. We have appropriated 26 billion yuan for subsidies to local governments to phase out tolls on government-financed Grade II highways.

(11) The appropriation for spending on resource exploration, electricity, and information is 74.486 billion yuan, down 10%. This reduction is largely because of less spending on capital construction. This figure consists of 41.088 billion yuan of central government spending and 33.398 billion yuan in transfer payments to local governments. We have appropriated 38.1 billion yuan for the construction of infrastructure for resource exploration, electricity, and information. We have appropriated 3.5 billion yuan in special funds to support R&D and demonstration in strategic emerging industries. We have appropriated 10.344 billion yuan exclusively to promote the development of all kinds of small and medium-sized enterprises.

(12) The appropriation for spending on stockpiling grain, edible oils, and other commodities is 113.05 billion yuan, up 23.9%. This figure consists of 79.628 billion yuan of central government spending and 33.422 billion yuan in transfer payments to local governments. We have appropriated 29.3 billion yuan to eliminate local contributions to grain risk funds in major grain-producing areas and increase central government subsidies. We have appropriated 70.387 billion yuan to support steadily raising the floor prices of wheat and rice and increase reserves of grain, edible oils, petroleum, nonferrous metals, and other important commodities.

(13) The appropriation for spending on the commercial services industry is 70.614 billion yuan, an increase of 3.3%. This figure consists of 2.466 billion yuan of central government spending and 68.148 billion yuan in transfer payments to local governments. We have appropriated 42.6 billion yuan in subsidies to improve the policies to encourage the sale of home appliances in rural areas and the trading in of old home appliances for new ones. We have appropriated 9.4 billion yuan to continue to build a modern logistics network in the new countryside and promote the development of the logistics services industry. ( (14) The appropriation for national defense spending is 583.591 billion yuan, an increase of 12.6%. This figure consists of 582.956 billion yuan of central government spending and 635 million yuan in transfer payments to local governments. These funds will be used mainly to modernize the army and improve the living conditions of officers and enlisted personnel.

(15) The appropriation for public security spending is 161.732 billion yuan, an increase of 9.6%. This figure consists of 102.453 billion yuan of central government spending and 59.279 billion yuan in transfer payments to local governments. We will continue to reform the funding system for procuratorial, judicial, and public security departments and improve the equipment of primary-level procuratorial, judicial, and public security departments and their ability to handle cases.

(16) The appropriation for general public service spending is 111.884 billion yuan, up 4.3%. We will strictly control regular expenditures. Spending on official overseas visits, purchases and the use of vehicles, and official entertainment shall not exceed the reduced allowance for 2009. The above figure consists of 87.685 billion yuan of central government spending and 24.199 billion yuan in transfer payments to local governments.

(17) The appropriation for payment of interest on government bonds is 183.984 billion yuan, an increase of 21.7%.

Consolidating the above expenditures shows that in 2011, the central government will spend a total of 1.050992 trillion yuan, an increase of 18.1%, in areas that directly affect people' s lives, namely education, medical and health care, social security and employment, guaranteeing adequate housing, and culture. Expenditures on agriculture and water conservancy, transportation and transport, and environmental protection are all closely related to the people' s wellbeing, and most of the tax rebates and general transfer payments from the central government to local governments will also be used to ensure and improve the people' s wellbeing. Expenditures on the people' s wellbeing will account for around two thirds of central government expenditures. The central government has appropriated a total of 988.45 billion yuan, up 15.2%, to benefit agriculture, rural areas, and farmers. This figure consists of 393.87 billion yuan for agricultural production; 140.6 billion yuan in direct subsidies to grain growers, general subsidies for purchasing agricultural supplies, and subsidies for purchasing superior crop varieties and agricultural machinery; 396.36 billion yuan to support the development of rural education, health care, and other social undertakings; and 57.62 billion yuan for expenses incurred through stockpiling agricultural products and associated interest payments. We have appropriated a total of 382.6 billion yuan for central government investment in capital construction.

3) Central government spending on tax rebates and transfer payments to local governments

We will further improve the structure of transfer payments. Central government expenditures on tax rebates and transfer payments to local governments in 2011 will amount to 3.731 trillion yuan, an increase of 15.3%. This figure consists of 506.799 billion yuan in tax rebates, an increase of 1.4%; 1.733677 trillion yuan in general transfer payments, up 18.5%; and 1.490524 trillion yuan in special transfer payments, an increase of 17.1%. General transfer payments for making access to basic public services more equal will amount to 660.911 billion yuan, up 21.2%. This figure includes 77.5 billion yuan in awards and subsidies to county-level governments to ensure their basic funding and improve their ability to provide basic public services, and 30 billion yuan to strengthen public finance guarantees for functional ecological zones such as the Sanjiangyuan functional ecological zone around the sources of the Yangtze, Yellow, and Lancang rivers. A total of 37 billion yuan in transfer payments has been appropriated to support leapfrog development in Tibet, Xinjiang, and other ethnic minority areas. A total of 13.5 billion yuan in transfer payments has been appropriated to continue helping cities formerly dependent on now-depleted mineral resources. A total of 58.1 billion yuan in transfer payments has been appropriated for the reform of taxes and fees on refined petroleum products.

(Figure 7 Central Government Expenditures in 2011)