Li hails ‘critical role’ of directly channeled funds
Meeting pledges to expand mechanism, ensuring more finances go to grassroots
China will work to expand the coverage of directly channeled funds under the special transfer payment mechanism and improve its management to enable more efficient use of fiscal funds by further advancing reforms, the State Council’s executive meeting chaired by Premier Li Keqiang decided on Wednesday.
It was agreed at the meeting that the special transfer payment mechanism, which ensures that increased fiscal funds go to grassroots governments and businesses, has delivered visible results.
By the end of September, among the 2 trillion yuan ($300.6 billion) of additional fiscal funds, 1.57 trillion yuan of the 1.7 trillion yuan designated for localities had been delivered to primary-level government departments. With the replenishment of fiscal resources, local governments have been in a better position to deliver tax and fee cuts, secure jobs, protect market entities and people’s livelihoods, support major projects and poverty reduction, and perform their functions.
In the first three quarters of this year, new tax and fee reductions exceeded 2 trillion yuan.
“The special transfer payment mechanism has played a critical role in enacting our relief policies on a sizable scale. This highly effective approach shall continue to be well applied,” Li said.
Coverage of the directly channeled funds will be expanded. Transfer payments that can be directly distributed under fiscal responsibilities shared by central and local governments, eligible special transfer payments, and general transfer payments of subsidy funding to guarantee basic fiscal capacity at the county-level can be included in the special mechanism. This will essentially ensure full coverage of livelihood subsidies supported by the central government budget, on-time and in-full payment of teachers’ wages for compulsory education, and greater support for the functioning of primary-level governments.
“Normally, funding from treasury bonds is spent on designated projects. Yet this year we are facing a special situation. Funds raised from the special bond for COVID-19 control shall cover more areas, including current expenditure programs,” Li said. “But primary-level governments must ensure that their spending is well calculated.”
These directly channeled funds will be better managed. Funding to be channeled through transfer payment can be allocated i n advance as appropriate. Government departments nationwide need to step up efforts to ensure that the funds are distributed in a more calibrated, better regulated and more effective way.
“The mechanism shall be further i mproved. The COVID-19 bond is a special step amid unusual times, and primary-level governments are responsible for principal repayment,” Li said.
The meeting required accelerating data opening and sharing among government departments, and enforcing rigorous monitoring over the entire process of t he movement of t he directly channeled funds.
“Auditing and monitoring must be stepped up to ensure that the funds are channeled to the most needed areas and are put to effective use,” Li said. “No muddying the waters or fishing for profit is allowed.”