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3. Budgetary revenue and expenditures in 2016
1) General public budgets
Revenue in China's general public budgets reached 15.955208 trillion yuan, representing 101.5 percent of the budgeted figure and an increase of 4.5 percent over 2015, after allowing for, among other things, the inclusion into general public budgets of five government-managed funds. Adding in the 727.108 billion yuan of utilized carryover and surplus funds, plus funds from other sources, this revenue totaled 16.682316 trillion yuan.
Expenditures in China's general public budgets reached 18.784114 trillion yuan, representing 103.9 percent of the budgeted figure and an increase of 7.4 percent after deducting local governments' utilized carryover and surplus funds and funds from other sources. Including the 78.202 billion yuan used to replenish the Central Budget Stabilization Fund, these expenditures totaled 18.862316 trillion yuan. Expenditures therefore exceeded revenue, leaving a deficit of 2.18 trillion yuan, which is the same as the budgeted figure.
Revenue in the central government's general public budget reached 7.235731 trillion yuan, representing 100 percent of the adjusted budgeted figure and an increase of 1.2 percent over 2015. Adding in the 100 billion yuan contributed by the Central Budget Stabilization Fund and the 31.506 billion yuan from the budgets of central government-managed funds and central government state capital operations, this revenue totaled 7.367237 trillion yuan.
Expenditures in the central government's general public budget amounted to 8.689035 trillion yuan (this consists of 2.7404 trillion yuan in central government expenditures and 5.948635 trillion yuan in tax rebates and transfer payments from the central to local governments), representing 99.1 percent of the adjusted budgeted figure and an increase of 4.5 percent. Adding in the 78.202 billion yuan contributed to the Central Budget Stabilization Fund, these expenditures totaled 8.767237 trillion yuan. They exceeded revenue, leaving a deficit of 1.4 trillion yuan, which is the same as the budgeted figure. Central government reserve funds budgeted for 2016 were 50 billion yuan; of this, actual expenditures accounted for 14.61 billion yuan, and the remaining 35.39 billion yuan was transferred in full to the Central Budget Stabilization Fund. At year end 2016, outstanding central government debt was 12.006675 trillion yuan, well within the budgeted 12.590835 trillion yuan limit. The Central Budget Stabilization Fund had a balance of 267.806 billion yuan, including 150.183 billion yuan in recovered central government carryover funds.
Revenue in local government general public budgets reached 14.668112 trillion yuan. This figure consists of 8.719477 trillion yuan in local government revenue, an increase of 7.4 percent over 2015, and 5.948635 trillion yuan in central government tax rebates and transfer payments to local governments. Adding in the additional 595.602 billion yuan of utilized carryover and surplus funds and funds from other sources, this revenue totaled 15.263714 trillion yuan. Expenditures in local government general public budgets totaled 16.043714 trillion yuan, representing an increase of 7.4 percent after deducting utilized carryover and surplus funds and funds from other sources. Total expenditures exceeded total revenue, leaving a local government deficit of 780 billion yuan, which is the same as the budgeted figure.
2) Budgets for government-managed funds
In 2016, revenue into China's government-managed funds reached 4.661862 trillion yuan, up 11.9 percent. Adding in the 24.984 billion yuan carried over from 2015 and 400 billion yuan raised by local governments through the issuance of special bonds, this revenue totaled 5.086846 trillion yuan. Expenditures from these funds amounted to 4.685152 trillion yuan, an increase of 11.7 percent.
Figure 1
Revenue and Expenditures in the 2016 Central Government General Public Budget
Revenue into central government-managed funds reached 417.808 billion yuan, representing 97.8 percent of the budgeted figure and an increase of 2.6 percent. Adding in the 24.984 billion yuan carried forward from 2015 and the 759 million yuan turned over by local governments, this revenue totaled 443.551 billion yuan. Expenditures from central government-managed funds totaled 399.998 billion yuan, representing 88.5 percent of the budgeted figure and a 6.8 percent decrease. This figure breaks down as central government expenditures of 288.986 billion yuan and transfer payments to local governments totaling 111.012 billion yuan. Revenue into central government-managed funds exceeded expenditures by 43.553 billion yuan. Of this figure, 29.85 billion yuan was carried forward to 2017; 11.072 billion yuan from carryover funds of individual government-managed funds, which exceeded 30 percent of the revenue of their respective funds in 2016, was contributed to the Central Budget Stabilization Fund in accordance with regulations; and 2.631 billion yuan represented surplus funds from the three items to be transferred from government-managed fund budgets into the general public budget in 2017.
Revenue into funds managed by local governments reached 4.244054 trillion yuan, an increase of 12.9 percent, of which proceeds from selling state-owned land-use rights accounted for 3.745663 trillion yuan. Adding in the 111.012 billion yuan in transfer payments from central government-managed funds and the 400 billion yuan raised by local governments through the issuance of special bonds, this revenue totaled 4.755066 trillion yuan. Expenditures through local government-managed funds totaled 4.396166 trillion yuan, up 13 percent, which includes 3.840584 trillion yuan in expenditures funded using the proceeds from selling state-owned land-use rights.
3) Budgets for state capital operations
In 2016, budgetary revenue from China's state capital operations totaled 260.184 billion yuan, up 2 percent, and budgetary expenditures through these operations totaled 217.146 billion yuan, up 18.2 percent.
Budgetary revenue from central government state capital operations was 143.017 billion yuan, representing 102.2 percent of the budgeted figure and a decrease of 11.3 percent. Adding in the 39.447 billion yuan carried forward from 2015, the revenue totaled 182.464 billion yuan. Budgetary expenditures through these operations reached 145.061 billion yuan, representing 93.5 percent of the budgeted figure and an increase of 28.1 percent. These expenditures consisted of 93.708 billion yuan in central government expenditures and 51.353 billion yuan in transfer payments to local governments. A total of 24.6 billion yuan was transferred into the general public budget. A total of 12.803 billion yuan of budgetary revenue from these operations was carried over to 2017.
Budgetary revenue from the state capital operations of local governments reached 117.167 billion yuan, up 24.9 percent. Adding in the 51.353 billion yuan in transfer payments to local governments through the central government's state capital operations budget, the revenue totaled 168.52 billion yuan. Budgetary spending through local government state capital operations amounted to 123.438 billion yuan, up 48.5 percent. A total of 24.691 billion yuan was transferred into the general public budget.
4) Budgets for social security funds
In 2016, revenue into China's social security funds reached 4.827253 trillion yuan, representing 102.4 percent of the budgeted figure and an increase of 4.1 percent. This revenue includes 3.506586 trillion yuan from insurance premiums and 1.110434 trillion yuan from government subsidies. Expenditures from these funds amounted to 4.391894 trillion yuan, representing 100.9 percent of the budgeted figure and an increase of 12.3 percent. The social security fund surplus for 2016 was 435.359 billion yuan, which was rolled over to make the year-end balance 6.329467 trillion yuan.
In addition, in compliance with the State Council's requirement to strengthen overall coordination in the use of government funds, a number of items were transferred from local government-managed funds into local government general public budgets and the corresponding outstanding balance of special debt totaling 11.682 billion yuan and the ceiling for this balance were transferred to general debt, leaving the ceiling for local government debt unchanged.
4. Implementation of main policies regarding expenditures in 2016
-- Education
We established a unified benchmark for public funding per student in China's compulsory education schools. Eligible students from families with financial difficulties at regular senior secondary schools were exempted from tuition and miscellaneous fees. We funded improvements to basic conditions in more than 80,000 badly built or poorly operated schools providing compulsory education in poor areas. We established a funding system for secondary vocational schools based on student enrollment. We implemented a new budgetary appropriation system for institutions of higher learning directly under the central government. State financial assistance was granted to over 84 million students over the course of last year.
-- Scientific and technological innovation
We improved the structure of science and technology expenditures, giving high priority to funding science and technology activities for the public interest, and increasing funding for basic research. We finished improving central government plans, special programs, and funds for funding scientific and technological advancements. We improved the mechanism ensuring stable funding for the reform and development of research institutions. We funded both systematic pilot reforms focused on all-around innovation and the development of national innovation demonstration zones. We funded efforts to promote the transfer and commercialization of scientific and technological achievements.
-- Social security
Basic pension benefits for the retirees of enterprises, Party and government offices, and public institutions were increased by around 6.5 percent. We funded pilot reforms to develop at-home and community-based elderly care. Subsistence allowances for Chinese citizens were increased. We moved forward with the establishment of a sound system for providing assistance to people living in extreme poverty. We worked to ensure entitled groups received their benefits. Support was ensured for the proper settlement of demobilized military personnel. A system was put in place nationwide for granting living allowances to people with disabilities in financial difficulty and nursing subsidies to people with serious disabilities. We provided subsidies for social security programs and vocational training to encourage enterprises to employ those experiencing employment difficulties, to help workers improve their vocational skills, and to provide better public employment services.
-- Reform of the medical and health care system
Annual government subsidies for basic medical insurance for rural and non-working urban residents were increased from 380 to 420 yuan per person. Pilot reforms of urban public hospitals were expanded to 200 cities and reforms were carried out in all county-level public hospitals. We funded the standardized training of 190,000 resident physicians and the first batch of 5,000 assistant general practitioners. Per capita government spending on basic public health services was raised from 40 to 45 yuan per year. We continued to fund major public health service projects to, among other things, prevent and control diseases and provide maternal and child care.
-- Modern agriculture
We provided direct subsidies to grain growers, subsidies for purchasing superior crop varieties, and general subsidies for the purchase of agricultural supplies nationwide. We subsidized trials to shift from growing grain crops to producing soybeans on 333,300 hectares of farmland and from growing grain crops to cultivating feed crops on 400,000 hectares of cultivated land. We also subsidized trials in using systems of crop rotation and fallow land. More funds were made available for trials to restore cultivated land contaminated by heavy metals and adjust the agricultural production mix, as well as trials to deal comprehensively with the over-abstraction of groundwater in more areas.
We deepened reform of the purchase and storage system for important agricultural products. The policy on the temporary purchasing and stockpiling of corn was scrapped in favor of a new mechanism for purchasing corn at market prices plus subsidies, and a system was established for subsidizing corn production. We adopted a broad range of measures to reduce excess policy-supported stockpiles of grain, cotton, and edible oil. We provided support for the initiatives to foster new agricultural operational systems. Thanks to government funding, the area of cropland covered by efficient water-saving irrigation was increased by 1.33 million hectares, and efforts toward comprehensive agricultural development saw the addition of 1.87 million hectares of high-grade cropland. We financed the extension of trials to integrate the development of primary, secondary, and tertiary industries to more rural areas, and to support the development of collective village enterprises. Around 300,000 village-level public works projects launched on the basis of decision making by villagers were completed using government awards and subsidies.
-- Ecological conservation
Funds for the prevention and control of soil pollution were launched, and funding was made available for implementing the action plan for addressing soil pollution. We allocated more funds for addressing air pollution, with the focus on tackling key areas such as pollution from coal burning and industrial pollution. We continued to develop a reserve of projects for addressing water pollution, making additional funding available for the prevention and control of water pollution in key areas and major drainage basins. We launched a new round of policies to subsidize and reward grassland ecological conservation, covering 254.07 million hectares of grassland. We provided financial support for implementation of a new round of initiatives to turn a further 1.01 million hectares of marginal farmland into forest or grassland. We funded the implementation of the protective policies for all natural forests nationwide. We made funding available for four pilot projects for ecological conservation and restoration including the Beijing-Tianjin-Hebei Water Source Conservation Area in Hebei Province. Funding was also made available for the establishment of mechanisms for trans-regional and intra-watershed compensation for ecological conservation efforts in four drainage basins including the Jiuzhoujiang River, and for action in the Blue Bay environmental improvement initiative in 18 cities.
-- Government support for basic housing
We funded the rebuilding of 6.06 million housing units in rundown urban areas and 3.14 million dilapidated rural houses, meeting the targets for the year for both programs. The proportion of people displaced through such programs who received monetary housing compensation rather than housing reached 48.5 percent, up 18.6 percentage points over the previous year.
-- Reform and development in the cultural sector
We subsidized efforts to keep 49,871 public cultural facilities free to the public and make 1,260 public sports complexes free or inexpensive to public users. We also funded 1,791 programs to protect key national cultural relics. Support was given to encourage the creation and production of cultural products, facilitate cultural exchange with foreign countries, share Chinese culture globally, reform state-owned cultural enterprises directly under the central government, and promote the coordinated development of cultural programs and industries.
For a more detailed account of budget execution related to the above items, please refer to the Report on the Execution of the 2016 Budgets of the People's Republic of China and Its 2017 Draft Budgets in Chinese.
Overall, our fiscal operations in 2016 remained stable and achievements were made in the reform and development of public finance, which gave impetus to steady and sound economic and social development. We owe these achievements to the leadership of the CPC Central Committee and the State Council; to the oversight and guidance of the NPC, deputies to the NPC, the CPPCC National Committee and its members; and to the joint efforts of all regions, government departments, and the Chinese people.
On the other hand, we are soberly aware of the following main difficulties and problems in our fiscal operations and finance work.
-- Within the context of considerable downward pressure on China's economy, there is a lack of impetus for government revenue growth and the growth prospects of local government revenue are mixed; imbalances in government revenue and expenditures are becoming more pronounced in some regions that are resource-dependent or whose traditional industries have a large share in their respective economies; and some township-level governments are having financial difficulty in keeping themselves operating and meeting people's basic needs.
-- The structure of budgetary spending is not balanced, with spending on some items constantly increasing.
-- Some reform measures have not truly been implemented as they should while for others progress has been slow.
-- The management of transfer payments is in urgent need of standardization as special transfer payments have yet to be overhauled to full effect, and progress in the reform of the transfer payment systems at and below the provincial level has been patchy.
-- In some localities, budgets and final accounts lack transparency, the use of government funds is not in line with standards and ineffective, and more funds are becoming idle.
-- Some localities are weak on government debt management and are guarantying debt or making borrowings in breach of regulations, thus increasing the hidden debt-related risks of local governments.
We view these problems as extremely important and will take measures to effectively resolve them.
