China's public finance presented quite some spotlights

Backdrop figure: the financial revenue reached RMB 2.635,588 trillion yuan in 2004, an increase of RMB 464.063 billion yuan over that of last year, an increase rate of 21.4 percent. It is the biggest increment in recent years and the best year in fulfilling the financial budget.

This indicates that the total economic amount in China is on the increase with the national economy tending towards a better situation and the economic system reform is being carried out steadily forward. It also indicates that the mechanism for a smooth and steady increase of financial revenue has been established and the reform for a system of taxation distribution is successful. The financial revenue in 2004 has proved to be four times that of 1994. Before the reform of the system of taxation distribution in 1993, the yearly increment saw only an increase of 20 ¨C 30 billion yuan and from 1994 ¨C 1999 the yearly increment registered over 100 billion yuan while the period between 2000 ¨C 2003 witnessed an annual increment of 200 ¨C 300 billion yuan and in 2004 the increment had surpassed 400 billion yuan. If it goes on like this, the financial revenue in 2005 is expected to reach around 3 trillion yuan.

Backdrop figure: the deficit saw a decrease of 19.83 billion yuan and the long-term treasury bonds reduced by 30 billion yuan. The budgeted deficit is going to reduce from a rate of 2.5 percent of the GDP of last year to 2 percent in 2005, a reduction of 0.5 percentage point.

The active financial policy which started to be practiced in 1998 for 7 years on end will gradually fade out. With regard to the financial policy this year it will see a transition from an expanding and active one to a steady and healthy financial policy of a moderate intensity. That is mainly manifested in a reasonable reduction of financial deficit, reasonable shrinking of the issuance of long-term treasury bonds with efforts being made to regulate well the structure of financial expenditure and the structure for the investment of the treasury bonds gathered in.

The adjustment of the financial policy is based on the correct judgment of the economic situation in China. On the one hand, the agriculture, education, science and culture and health work and environment protection, social insurance as well as infrastructures are required to be strengthened and on the other it has witnessed a too fast growth of the investment in some economic sectors and a serious overlapping in construction. It has already indicated a very large investment in the whole society with too much growth of social capitals and so the inflation pressure is still hung overhead.

Backdrop figure: last year saw the expenditure afforded by the central finance for the "3 issues in rural areas" come to a total of 262.6 billion yuan, an increase of 22.5 percent.

The financial support for agriculture include the production, livelihood, social affairs, capital construction, mechanism innovation and the training of farmers and so on and so forth, benefiting wider and wider areas in countryside. The direct subsidy to farmers witnessed a big rate of increase. In 2004, the direct subsidy to farmers covered the three items of fine seeds for grain, direct subsidy for grain, and for the purchase of agro-machineries and it totaled four items if including the former subsidy for returning farmlands to forests. The four items covered some 15 percent of the central finance support for the "3-issues in rural areas" while the rate in 2003 came only to 3 percent. The direct subsidy cut down the intermediary links and brought direct benefits to farmers. The finance in 2004 was focused on promoting the grain increase and the increase of income for farmers, the "double promotions" to express the conception of "taking the people as basis for point of departure" and thereby satisfied the needs of the broad masses of farmers.

This year is going to introduce a big reduction of agro-tax on an extensive scale. The agro-tax will be exempted without exception in 592 counties that have been made by the state as emphasized poverty-aid counties. The provinces which had 1 percentage point reduction of the agro-tax in 2004 will continue to have 4 percentage points reduced this year and those provinces already reduced 3 percentage points to have 2 percentage points further reduced. The levying of agro-tax is going to be exempted throughout the country. The central finance will have a newly added fund of RMB 14 billion yuan for transfer payment to support for the implementation of these policies. There will be no reduction of RMB 10 billion yuan direct subsidy to the main grain production areas this year and the subsidy to fine seeds will see an increase of RMB 850 million yuan and a subsidy of RMB 230 million yuan to the purchase of agro-machineries. And a sum of 15 billion yuan will be allocated for local areas to carry out the "three awards and one subsidy" so as to alleviate the financial difficulties in part of counties and townships of which RMB 5.5 billion yuan will be used for direct award to the major grain production counties.

Backdrop figure: last year saw the national extra-increased revenue come up to RMB 406.1 billion yuan of which the central finance revenue witnessed an extra-increase of RMB 253.771 billion yuan and the local revenue to RMB 152.3 billion yuan.

Of the financial revenue, the budgeted increase has already been allotted to budget expenditure and only the portion of the extra-increased revenue can be used otherwise as disposable one. Therefore, the extra-increased revenue catches much more attention of the people. The financial budget report has made a detailed publicity of the use of the extra-increased revenue of the central finance: the newly added export drawback took up RMB 127.5 billion yuan. A sum of RMB 40.5 billion yuan was used to solve the account in arrears for returning farmlands to forests and another added investment of RMB 15.6 billion yuan was used to support for the reform of agro-tax and fees and for promoting the grain production in rural areas. And a sum of RMB 3.25 billion yuan was used for increasing the basic life pension of the retired and the subsidies for the "low-living standard guarantee" in cities and a sum of RMB 14.9 billion yuan was used to pay for the nationwide social insurance funds and the increase in the expenditure for education, science, return for local taxes, transfer payment in general and the transfer payment for ethnic minority areas came to a total of RMB 32.1 billion yuan.

This indicates first of all the extra-increase of financial revenue has promoted the realization of the macro-control goals by way of reasonable usage. Secondly, it did not incur any base increase in general expenditure. It has ensured a sufficient fund guarantee for the reform year, thereby providing a wider space for the reform. Still more, the extra-increase of financial revenue hasn't been used for offsetting the deficit on an extensive scale yet that it has solved the account in arrears was as good as for reducing the hidden fiscal deficit. Though it is not so widely famed to many people as to solve the deficit in the open it is of great significance. Because it has been used to clear up the past account of export drawback without issuing bonds and so it has helped guarantee the reputation of the government on the one hand and on the other helped reduce the financial risk.

Backdrop figure: in the whole year of last year the fund used by the central finance for social insurance came to RMB 146.5 billion yuan, an increase of 18.1 percent. This year will see an allocation of RMB 10.9 billion yuan for the expense of reemployment, an increase of RMB 2.6 billion yuan as against the budget of last year.

Active measures have been taken by the finance for implementing all kinds of preferential financial and taxation policies by the central administration and increase the capital input for reemployment and to do well the "two guarantees" and the work for the "low living standard guarantee". The basic substance for the life of the people in difficulties has been ensured to be paid in full and in time and the substance for the basic life of the laid-off workers has been carried forward into the same track for unemployment insurance.

Backdrop figure: the central finance has already allotted RMB 129.709 billion yuan for the expenditure of education, science and technology, health work, culture and sports and broadcasting and for family planning as well, an increase of RMB 17.876 billion yuan as against that of last year.

The expenditure carved out by the central finance for supporting science and technology, education, culture, health work and sports activities meant a great deal for strengthening the support of the social affairs for education, science and culture and health work, and it also meant a big deal for improving the basic conditions for running elementary education in rural areas and for forming an initial way for providing free-of-charge text-books to poor students in primary and secondary schools, for exempting their miscellaneous charges and subsidies for boarding students and all in all, this also meant a great deal for helping poverty-stricken students in institutes of higher learning to seek for study-aid loans, the construction of a financial input system supported by the state with solving the life-substances as main contents and it has achieved a great deal in this aspect. The increased fee for education this year will mainly be used for rural areas with RMB 1.3 billion allotted by the central finance and RMB 2.81 billion yuan by local financial bodies. This will be used to provide about 14 million primary and secondary school students of poor families under compulsory education in the 592 poor counties emphatically aided by the state with text-books free of charge, exempting the miscellaneous charges and gradually offering life-substance to boarding students. This year will see the students from poor families under compulsory education who are going to enjoy free-of-charge text-books in rural areas in China's middle and western regions reach a number of around 30 million all told.

By People's Daily Online