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PRC Ministry of Finance, Report on the Implementation of the Central and Local Budgets for 2009 and the Draft Central and Local Budgets for 2010, March 5, 2010
The report was presented on March 5, 2010 and adopted by the National People’s Congress on March 13, 2010.
March 5, 2010
Report on China's Central, Local Budgets
The following is the full text of the Report on the Implementation of the Central and Local Budgets for 2009 and on the Draft Central and Local Budgets for 2010, which was submitted for review on March 5, 2010 at the Third Session of the Eleventh National People's Congress and was adopted on March 14:
Third Session of the Eleventh National People's Congress
March 5, 2010
Ministry of Finance of the People's Republic of China
Fellow Deputies,
The Ministry of Finance has been entrusted by the State Council to submit this report on the implementation of the central and local budgets for 2009 and the draft central and local budgets for 2010 for your deliberation and approval, and for the members of the National Committee of the Chinese People's Political Consultative Conference (CPPCC) to provide their comments and suggestions.
I. Implementation of the Central and Local Budgets for 2009
The year 2009 was the most difficult year for our country's economic development since the beginning of the new century. Under the firm leadership of the Communist Party of China (CPC), the people of all our ethnic groups took Deng Xiaoping Theory and the important thought of Three Represents as their guide, thoroughly applied the Scientific Outlook on Development, comprehensively carried out the central leadership's strategic arrangements, conscientiously implemented the pertinent resolution of the Second Session of the Eleventh National People's Congress (NPC), implemented a proactive fiscal policy and a moderately easy monetary policy, comprehensively implemented and constantly enriched and improved the package plan and the policies and measures for responding to the impact of the global financial crisis, and achieved significant new results in reform, opening up and socialist modernization. On this foundation, the central and local budgets were satisfactorily implemented and new progress was made in the reform and development of public finance.
National revenue was 6.847688 trillion yuan, an increase of 714.653 billion yuan or 11.7% over 2008 (here and below). This consisted of 3.589614 trillion yuan collected by the central government and 3.258074 trillion yuan collected by local governments. The central budget stabilization fund contributed 50.5 billion yuan. National expenditures were 7.587364 trillion yuan, an increase of 1.328098 trillion yuan or 21.2%. They consisted of 1.527984 trillion yuan of central government spending and 6.05938 trillion yuan of local government spending. Local government expenditures carried over to 2010 amounted to 260.824 billion yuan. National expenditures exceeded revenue by 950 billion yuan.
Revenue collected by the central government was 3.589614 trillion yuan, 100.1% of the budgeted figure and an increase of 321.558 billion yuan or 9.8%. The central budget stabilization fund contributed 50.5 billion yuan, raising the total revenue used by the central government to 3.640114 trillion yuan. Expenditures of the central government were 4.390114 trillion yuan, 100.1% of the budgeted figure and an increase of 851.258 billion yuan or 24.1%. They consisted of 1.527984 trillion yuan of central government spending, an increase of 14.5%, and 2.86213 trillion yuan of tax rebates and transfer payments to local governments, up 29.8%. Central government expenditures exceeded revenue, resulting in a budget deficit of 750 billion yuan, which was the budgeted figure. The outstanding balance on government bonds in the central budget at the end of 2009 was 6.023768 trillion yuan, which was under budgeted ceiling of 6.270835 trillion yuan for the year.
Central government tax rebates and transfer payments made to local governments. In 2009, central government tax rebates and transfer payments made to local governments totaled 2.86213 trillion yuan, 99.1% of the budgeted figure. This discrepancy was mainly due to less spending on disaster relief than estimated at the beginning of the year, resulting in a decrease in transfer payments. This total consisted of 494.227 billion yuan of tax rebates, an increase of 48.2%, with the increases coming mainly from implementation of the reform of taxes and fees on refined oil products (according to regulations, the central government is required to rebate increases in sales tax on refined oil products to local governments); 1.131989 trillion yuan of general transfer payments, an increase of 29.4%; 1.235914 trillion yuan of special transfer payments, an increase of 24.1%, the majority of which consisted of increased central government spending for investment and stimulating consumption, which was provided to local governments in the form of subsidies. A total of 39.1% of local government spending came from central government transfer payments.
Revenue of local governments was 6.120204 trillion yuan, an increase of 1.050786 trillion yuan or 20.7%. This consisted of 3.258074 trillion yuan collected by local governments, amounting to 53.2% of total revenue, and 2.86213 trillion yuan of tax rebates and transfer payments from the central government, amounting to 46.8% of total revenue. Local government expenditures were 6.05938 trillion yuan, an increase of 1.134531 trillion yuan or 23%. Local government expenditures carried over to 2010 (mainly because some of the money was not used for its intended purposes in 2009, and a portion of the funds will be used this year for the same purposes) amounted to 260.824 billion yuan. Expenditures exceeded revenue by 200 billion yuan. With the approval of the State Council, the Ministry of Finance offset this shortfall by issuing local government bonds on behalf of local governments.
The following is an overview of the major issues in the implementation of the budgets in 2009:
1. Fiscal revenue of the central government
It was more difficult in 2009 than in any other recent year to reach the budgeted figure for fiscal revenue. Financial departments at all levels as well as tax and customs departments resolutely implemented the decisions and arrangements of the central leadership, conscientiously carried out a proactive fiscal policy, energetically promoted steady and rapid economic development, and laid a foundation for increasing revenue. At the same time, they genuinely made fiscal management more scientific and meticulous, strictly collected and managed revenue in accordance with the law, adopted measures to increase revenue such as adjusting the sales tax on tobacco products and pursuing taxpayers with unpaid tax bills from previous years, and ensured they reached their budgeted revenue targets for the year.
Main sources of revenue in the central budget. Domestic VAT revenue was 1.391599 trillion yuan, 95.6% of the budgeted figure and an increase of 3.1%. The shortfall was mainly due to decreased revenue from a decline in producer prices of manufactured goods. Domestic sales tax revenue was 475.912 billion yuan, 107.3% of the budgeted figure and an increase of 85.3%. Surplus revenue derived mainly from increasing tax rates on tobacco products during implementation of the budget. Revenue from VAT and sales tax on imports was 772.915 billion yuan, 96.7% of the budgeted figure and an increase of 4.6%. Revenue from customs duties was 148.357 billion yuan, 78.1% of the budgeted figure and a decrease of 16.2%. The main reason for this shortfall was that the total volume of imports fell considerably short of predictions. VAT and sales tax rebates on exports amounted to 648.656 billion yuan (which represents a decrease in revenue by the same amount), 96.7% of the budgeted figure and an increase of 10.6%. The main reason for this shortfall was that the total volume of exports fell considerably short of predictions. Corporate income tax revenue was 761.882 billion yuan, 100.2% of the budgeted figure and an increase of 6.2%. Personal income tax revenue was 236.672 billion yuan, 99% of the budgeted figure and an increase of 5.9%. Revenue from stamp tax on securities transactions was 49.504 billion yuan, 202.1% of the budgeted figure and a decrease of 47.9%. Revenue from this source exceeded the budgeted figure because securities transactions exceeded expectations. Revenue from vehicle purchase tax was 116.317 billion yuan, 119.9% of the budgeted figure and an increase of 17.5%, mainly due to the rapid increase in sales of motor vehicles. Non-tax revenue was 253.666 billion yuan, 123.6% of the budgeted figure and an increase of 48.2%. This increase was mainly attributable to the collection of back taxes owed by enterprises for special surcharges on oil sales.
2. Main expenditures in the central budget
In accordance with the decisions and arrangements of the central leadership, the 2009 budget called for further improving the structure of expenditures, and increasing spending on agriculture, education, medical and health care, social security, employment, low-income housing, science and technology, and environmental protection. In the course of implementing the budget, reserve funds were also used mainly in the aforementioned areas, thereby providing assurances for important expenditures, including central government spending and transfer payments to local governments.
1) Total spending on agriculture, forests, and water conservancy came to 350.124 billion yuan, 101.6% of the budgeted figure and an increase of 79.293 billion yuan or 29.3%. This sum consisted of 31.869 billion yuan of central government spending and 318.255 billion yuan of transfer payments to local governments. We improved the dynamic mechanism for adjusting general subsidies for agricultural supplies and provided subsidies for superior varieties of rice, wheat, corn and cotton throughout the country; provided subsidies for superior varieties of soybeans throughout the northeast and initiated trials of subsidies for growing potatoes using pre-elite seeds; and provided subsidies for purchasing agricultural machinery and tools in all farming and herding counties of the country. Spending on these subsidies amounted to 112.35 billion yuan. We extended the scope of subsidies for conducting soil testing to determine appropriate fertilizer formulas to all farming counties in the country. We used 6.5 billion yuan to promote the development of modern agriculture. We spent 16.5 billion yuan on comprehensively developing agriculture, including the upgrading of low- and medium-yield cropland, developing 1.773 million hectares of high-grade cropland, and increasing overall grain production capacity by 3.273 million tons. Subsidies to cover the costs of agricultural insurance amounted to 5.97 billion yuan, and 127 million farming households bought agricultural insurance policies. We implemented a poverty alleviation policy for all low-income rural residents, and raised the levels of assistance. Altogether 19.73 billion yuan in subsidies was disbursed to 40.07 million recipients. We spent 116.87 billion yuan on improving infrastructure for rural areas and agriculture. Considerable support was given to the South-to-North Water Diversion Project and other major water conservancy projects. We reinforced 3,970 large and medium-sized reservoirs and dilapidated key small reservoirs. Some 60.69 million rural residents benefited from the Rural Water Safety Project. The area of national public forests funded by the central government through the forest ecological conservation fund was expanded to 69.93 million hectares.
2) Total expenditures on education amounted to 198.139 billion yuan, 100% of the budgeted figure and an increase of 37.769 billion yuan or 23.6%. This sum consisted of 56.762 billion yuan in central government spending and 141.377 billion yuan of transfer payments to local governments. A total of 66.61 billion yuan was spent on reforming the system for guaranteeing the costs of rural compulsory education. All of the country's approximately 150 million rural students were exempted from paying tuition and miscellaneous fees and supplied with free textbooks. In the central and western regions, around 11.2 million rural students receiving compulsory education whose families have financial difficulties received subsidies enabling them to live in school dormitories. Urban students receiving compulsory education were exempted from paying tuition and miscellaneous fees. The central government supported cities in solving the problem of providing education to 8.8 million children of rural migrant workers, and provided 5.17 billion yuan in subsidies so that children who met local government conditions for school enrollment were exempted from paying tuition, miscellaneous fees, and non-resident surcharges. The policy to link the pay of compulsory education teachers with their performance was steadily implemented. We launched the national project to make primary and secondary school buildings safe, and spent 8 billion yuan on renovating 120 million square meters of school buildings. We spent 1.13 billion yuan on the construction of vocational education training facilities. We exempted tuition for approximately 4.26 million rural students in secondary vocational schools whose families have financial difficulties and students who are studying agriculture-related majors, and provided 2.4 billion yuan in subsidies to cover these costs. A total of 16.23 billion yuan was spent on providing government scholarships and grants to about 4.7 million college students and 11.2 million secondary vocational school students who are outstanding both academically and morally and whose families have financial difficulties. Beginning on September 1, 2009, the standard ordinary scholarship for PhD students at central government institutions of higher learning was raised from 240-280 yuan per month to 1,000 yuan per month. We launched a pilot project to reduce the debt burden of central government institutions of higher learning and provided 10.3 billion yuan for that purpose. We spent 42 billion yuan on the 211 Project and other projects to promote the development of higher education.
3) Expenditures on medical and health care reached 127.714 billion yuan, 108.2% of the budgeted figure and an increase of 42.269 billion yuan or 49.5%. The over-budget amount was mainly concentrated on community-based medical and health care. This sum consisted of 6.35 billion yuan of central government spending and 121.364 billion yuan of transfer payments to local governments. The central government spent 116.2 billion yuan on supporting the reform of the pharmaceutical and healthcare systems. A total of 830 million people were covered by the new type of rural cooperative medical care system, and 180 million urban residents participated in the basic medical insurance system for non-working urban residents, with subsidies reaching 80 yuan per person. We supported retirees from closed or bankrupt state-owned enterprises who were not covered by medical insurance in subscribing to basic health insurance for local urban workers. We increased medical assistance in both urban and rural areas, and provided financial assistance for urban and rural residents experiencing financial hardship to enable them to subscribe to medical insurance and reduce their burden of medical expenses. We implemented a system for basic drugs in 30% of community-level medical institutions. We improved the community-based medical and health service system, and supported the construction of 29,000 hospitals and 5,000 central hospitals in towns and townships. We set up a sound mechanism for guaranteeing funding for basic public health services in urban and rural areas, and implemented major public health service programs.
4) Expenditures on social security and employment work amounted to 329.666 billion yuan, 98.4% of the budgeted figure and an increase of 55.307 billion yuan or 20.2%. The surplus was mainly from less spending on disaster relief than the budgeted figure at the beginning of 2009. This sum consisted of 45.436 billion yuan of central government spending and 284.23 billion yuan of transfer payments to local governments. Expenditures on social security came to 290.575 billion yuan, an increase of 41.424 billion yuan or 16.6%. Trials of the new old-age insurance system for rural residents were carried out in 320 counties. Subsistence allowances for urban and rural residents increased by 15 and 10 yuan per month per person respectively, with total expenditures of 54.085 billion yuan. We provided one-off living allowances to over 75.7 million poverty-stricken people in urban and rural areas throughout the country, with expenditures of 9.067 billion yuan. We provided 132.629 billion yuan for old-age pension funds of enterprises, launched pilot projects to fully fund enterprise employees' personal accounts for basic old-age pensions, continued to raise basic pension benefits for enterprise retirees with a focus on special groups, and established a system of basic old-age insurance at the provincial level throughout the country. We increased allowances for entitled groups, bringing total allowances to 17.3 billion yuan.
We implemented a stronger employment policy. Spending on employment work was 39.091 billion yuan (adding spending on employment work listed in other items to this figure, total spending reached 42.621 billion yuan), an increase of 13.883 billion yuan or 55.1%. We substituted work for relief through government financing of public works projects. We helped enterprises with financial difficulties to keep their employment levels stable by allowing them to postpone their payments of contributions to five types of social security for a set period of time, including contributions to basic old-age pensions, and temporarily reduced their contributions to four types of insurance, including unemployment insurance. We continued to implement tax support policies for laid-off workers to become self-employed and for enterprises to provide employment opportunities to laid-off workers. We instituted the policies of reimbursing tuition and granting state education assistance loans to promote the employment of college graduates. We introduced preferential policies for key enterprises and research projects to absorb college graduates in order to keep their employment stable. We improved the employment assistance system for college graduates who have difficulty finding jobs. We launched special vocational training programs for the urban unemployed and 21 million rural migrant workers who had returned to their villages.
5) Expenditures on low-income housing amounted to 55.056 billion yuan, 111.7% of the budgeted figure and an increase of 36.866 billion yuan or 202.7%. Excess spending was mainly due to greater financial support for the construction of low-income housing. This amount consisted of 2.643 billion yuan of central government spending and 52.413 billion yuan of transfer payments to local governments. A total of 33 billion yuan was used to raise the level of investment subsidies to local governments for building low-rent housing, and intensify the construction of low-rent housing and other low-income housing to solve the housing problems of 2.6 million low-income urban families. We spent 10 billion yuan on accelerating the renovation of run-down areas in state-owned forest regions and land reclamation zones and around coalmines, and helping to solve the housing problems of 1.3 million households. We spent 2.3 billion yuan to carry forward the project to build permanent housing for nomads in ethnic minority areas, and provided 92,000 families with permanent homes. We provided 4 billion yuan in subsidies for expanding pilot projects to renovate dilapidated rural houses to more areas, which benefited 800,000 households.
6) Expenditures on culture, sports, and mass media totaled 32.073 billion yuan, 114.6% of the budgeted figure and an increase of 6.792 billion yuan or 26.9%. Excess spending was largely on public culture in rural areas. This total consisted of 15.475 billion yuan of central government spending and 16.598 billion yuan of transfer payments to local governments. We vigorously developed non-profit cultural programs and supported free admission to museums, memorial halls, and national patriotic education demonstration centers. The central government granted subsidies to 1,444 museums and memorial halls for this purpose. Implementation of key cultural projects that benefit the people, such as rural reading rooms and the extension of radio and television coverage to all villages, progressed smoothly. We strengthened the protection of major cultural and historical sites, key cultural relics, and our intangible cultural heritage.
7) Expenditures on the reserves of grain, edible oil, and other materials totaled 174.662 billion yuan, 98.1% of the budgeted figure and an increase of 64.789 billion yuan or 59%. This total consisted of 80.543 billion yuan of central government spending and 94.119 billion yuan of transfer payments to local governments. We provided 15.1 billion yuan in ongoing direct subsidies to grain growers. A total of 72.119 billion yuan was used to strengthen the reserves system to gradually increase the grain and edible oil reserves of the central government and its temporary grain and edible oil reserves, and also to increase the reserves of important materials including nonferrous metals and special steel products by 2.49 million tons. We supported significant increases in minimum grain purchase prices, and spent 9.9 billion yuan to subsidize related interest and expenses. We disbursed 32 billion yuan in subsidies implementing the policy to encourage rural residents to purchase home appliances and motor vehicles including motorbikes and consumers to trade-in old home appliances and motor vehicles for new ones. We used 7.6 billion yuan to promote the development of the logistics services industry and improve the rural logistics system.
8) Expenditures on science and technology came to 151.202 billion yuan, 103.5% of the budgeted figure and an increase of 34.879 billion yuan or 30%. This figure consisted of 143.385 billion yuan of central government spending and 7.817 billion yuan of transfer payments to local governments. We spent 94.676 billion yuan on intensifying basic and applied research, and 32.8 billion yuan on accelerating the development of major science and technology projects. We disbursed 20 billion yuan in technological innovation funds to implement the plan for restructuring and invigorating ten key industries, support 4,441 technological upgrading projects, and promote technological upgrading and independent innovation in enterprises. We promoted the development of regional scientific and technological innovation systems and the intimate integration of enterprises, universities, research institutes, and end-users.
9) Expenditures on environmental protection came to 115.18 billion yuan, 93.1% of the budgeted figure and an increase of 11.15 billion yuan or 10.7%. Spending was less than the budgeted figure mainly because the subsidies actually paid out for returning farmland to forests were less than forecast. This sum consisted of 3.79 billion yuan of central government spending and 111.39 billion yuan of transfer payments to local governments. A total of 56.747 billion yuan was spent on encouraging energy conservation and emissions reductions, supporting 1,318 key energy-saving projects and 132 key recycling and resource conservation projects, and helping 1,116 enterprises to retrofit energy-conserving technology. We constantly improved our environmental monitoring capabilities, and helped standardize 497 environmental monitoring stations and 617 environmental oversight and law enforcement bodies. We carried out 1,049 projects in the course of implementing major programs for reducing pollution, including the prevention and control of water pollution in key watersheds. We supported the construction of 13,800 kilometers of pipelines for urban sewage treatment systems. We implemented a project to promote products that conserve energy and benefit the people, and put more than 5 million energy-saving air-conditioners and 150 million energy-efficient light bulbs into use. We increased the application of high-efficiency, energy-conserving products and motor vehicles powered by new energy sources. We spent 7.679 billion yuan on accelerating the development of renewable energy. We pushed forward the implementation of the Golden Sun Project and developed the photovoltaic industry. We promoted the development of biomass energy and wind power. We used 46.636 billion yuan to protect virgin forests, consolidate progress already made in returning farmland to forests, and conserve grasslands. We improved all aspects of the environment in 1,465 villages in order to make them ecological conservation models.
10) Expenditures on public security amounted to 128.745 billion yuan, 110.9% of the budgeted figure and an increase of 41.441 billion yuan or 47.5%. The excess consisted mainly of increased expenses for equipment and operation of procuratorial, judicial, and public security departments. This sum consisted of 84.579 billion yuan of central government spending and 44.166 billion yuan of transfer payments to local governments. We reformed the funding mechanism for procuratorial, judicial, and public security departments; increased financial assistance for local procuratorial, judicial, and public security departments, especially those at the county level in the central and western regions; and enhanced their ability to perform their functions. We continued to intensify efforts to informationize procuratorial, judicial, and public security departments, and the People's Armed Police Force.
11) Expenditures on post-Wenchuan earthquake recovery and reconstruction reached 96.999 billion yuan (excluding the money appropriated for this purpose out of vehicle purchase tax revenue and lottery ticket proceeds), which was 100% of the budgeted figure. This figure consisted of 13.06 billion yuan of central government spending and 83.939 billion yuan of transfer payments to local governments. In accordance with plans, these funds were used in the areas of housing, infrastructure, public services, industrial rebuilding, and improvement of the ecosystem.
12) National defense spending came to 482.985 billion yuan, 102.1% of the budgeted figure and an increase of 72.844 billion yuan or 17.8%. This amount consisted of 482.501 billion yuan of central government spending and 484 million yuan of transfer payments to local governments. These funds were used to improve the living conditions and benefits of army officers and enlisted personnel, intensify the development of informationization, increase the army's equipment and supporting facilities by an appropriate amount, and improve its ability to respond to emergencies and disasters.
13) Expenditures on transportation and transport amounted to 217.871 billion yuan, 115.4% of the budgeted figure and an increase of 60.677 billion yuan or 38.6%. The excess consisted mainly of increased spending on highway construction resulting from unexpectedly high vehicle sales tax revenue, which is required by regulations to be spent for this purpose. This sum consisted of 106.918 billion yuan of central government spending and 110.953 billion yuan of transfer payments to local governments. We spent 76.51 billion yuan on the construction of the expressway network and passenger railway lines nationwide, and trunk railway lines in the western region. Another 62 billion yuan was used to increase subsidies for the construction of rural highways in ethnic minority, border, and poverty-stricken areas in the central and western regions, and support the construction or upgrading of 380,000 kilometers of rural highways. We spent 10.5 billion yuan of fuel purchase subsidies for some public service sectors, such as urban public transport and rural passenger transport. We spent 26 billion yuan on subsidies to local governments for phasing out tolls on government-financed Grade II highways, and spent 6.1 billion yuan on improving postal services.
14) Expenditures on general public services came to 132.663 billion yuan, 101% of the budgeted figure and an increase of 11.145 billion yuan or 9.2%. This consisted of 108.422 billion yuan of central government spending and 24.241 billion yuan of transfer payments to local governments. These funds were used mainly to ensure the normal operation of government offices and assist local governments in providing severance packages to personnel leaving the armed services to find other employment.
15) Expenditures on interest on government bonds amounted to 132.07 billion yuan, 96.3% of the budgeted figure and an increase of 4.201 billion yuan or 3.3%.
Central government expenditures on the above items in areas that directly affect the people's lives such as education, medical and health care, social security, employment, low-income housing, and culture totaled 742.648 billion yuan, an increase of 31.8%. This sum is even larger if we include central government expenditures on environmental protection, transportation and transport, which also affect people's lives. Central government expenditures on agriculture, rural areas, and farmers totaled 725.31 billion yuan, up 21.8%. This figure included 267.92 billion yuan for agricultural production; 127.45 billion yuan for direct subsidies to grain growers, general subsidies for purchasing agricultural supplies, and subsidies for purchasing superior crop varieties and agricultural machinery and tools; 272.32 billion yuan for social programs such as education and health in rural areas; and 57.62 billion yuan for expenses and interest related to reserves of agricultural products. A large proportion of the central government's tax rebates and general transfer payments to local governments were also used to improve people's wellbeing and benefit agriculture, rural areas, and farmers.
3. Revenue and expenditures from government-managed funds
In 2009, revenue from government-managed funds nationwide was 1.833504 trillion yuan, and expenditures amounted to 1.611879 trillion yuan. This broke down as follows:
Revenue from central government-managed funds reached 250.767 billion yuan, 108.8% of the budgeted figure and an increase of 82 million yuan. The majority of the surplus revenue came from compensation for the use of land newly designated for development and lottery ticket proceeds. Total revenue included 19.598 billion yuan from the Three Gorges Project construction fund, 54.411 billion yuan from the railroad construction fund, 11.499 billion yuan from civilian airport administration and development fees, 10.555 billion yuan from port development fees, 27.494 billion yuan from compensation for the use of land newly designated for development, 15.882 billion yuan from the fund for providing continuing aid to residents relocated to make way for the construction of large and medium-sized reservoirs, and 20.117 billion yuan from lottery ticket proceeds. Adding the 57.458 billion yuan carried over from 2008, total revenue came to 308.225 billion yuan. Expenditures from central government-managed funds totaled 242.654 billion yuan, 84.2% of the budgeted figure and down 3.2%, with this decrease primarily attributable to carrying over from last year a portion of compensation for the use of land newly designated for development and the fund for providing continuing aid to residents relocated to make way for the construction of large and medium-sized reservoirs. This included 19.923 billion yuan from the Three Gorges Project construction fund, 54.411 billion yuan from the railroad construction fund, 11.014 billion yuan from civilian airport administration and development fees, 10.22 billion yuan from port development fees, 19.811 billion yuan in expenditures related to land newly designated for development, 15.114 billion yuan from the fund for providing continuing aid to residents relocated to make way for the construction of large and medium-sized reservoirs, and 20.79 billion yuan from lottery ticket proceeds spent on social welfare programs, sports, education and other public service programs. A total of 65.571 billion yuan was carried over to 2010 from central government-managed funds.
Revenue collected by local governments from funds under their control reached 1.582737 trillion yuan, including 1.396476 trillion yuan of revenue from the transfer of state-owned land-use rights, which consists the fees for the transfer of these rights, income of the state-owned land income fund and the agricultural land development fund, and compensation for the use of land newly designated for development; 21.175 billion yuan from lottery ticket proceeds; 33.66 billion yuan from urban infrastructure construction fees; and 17.844 billion yuan from local education surcharges. Expenditures from local government-managed funds totaled 1.429155 trillion yuan. This included 1.23271 trillion yuan in revenue from the transfer of state-owned land-use rights, consisting of 518.058 billion yuan in compensation for land expropriation, housing demolition and resident relocation, and subsidies to farmers whose land was expropriated; 142.971 billion yuan for developing land; 43.31 billion yuan for strengthening rural infrastructure; 334.099 billion yuan for promoting urban development; 47.756 billion yuan for improving land and developing arable land; 8.689 billion yuan for transferring land; and 137.827 billion yuan for low-rent housing, and for assisting laid-off employees of state-owned enterprises that went bankrupt or were converted into joint stock companies using income from those enterprises' land. A total of 23.147 billion yuan from lottery ticket proceeds was spent on social welfare programs, sports, education and other public service programs; 21.469 billion yuan was spent on urban infrastructure construction; and 12.883 billion yuan went to local education programs.
In 2009, the discrepancy between revenue and expenditures from these funds arose primarily because revenue was used exclusively for its intended purposes and a portion of it was carried over to this year in accordance with fund management regulations.
4. Implementation of a proactive fiscal policy
We worked hard to counter the impact of the global financial crisis; took maintaining steady and rapid economic development as the top priority of our fiscal work; made full use of the role of public finance; implemented a proactive fiscal policy; used a full range of policy tools such as budgets, government bonds, and taxes; maintained an appropriate intensity and pace of policy implementation; did all we could to boost domestic demand; ensured and improved people's wellbeing; pushed ahead with economic restructuring; and encouraged the turnaround of the economy.
We increased government investment and intensified the development of key areas. On the basis of overall plans for the use of public finance budget funds, revenue from government-managed funds, and income from the operations of state capital, the central government spent a total of 924.3 billion yuan on investment, 101.8% of the budgeted figure and an increase of 503.8 billion yuan over the budgeted figure of the previous year. This total included 256.7 billion yuan for developing agricultural infrastructure and improving rural residents' lives; 96.5 billion yuan for promoting education, health care, and other social programs; 55.1 billion yuan for building low-income housing; 77.7 billion yuan for conserving energy, reducing emissions, and improving ecosystems; 68.1 billion yuan for funding independent innovation, technological upgrading, and the service sector; 215.1 billion yuan for developing major infrastructure facilities; and 130.5 billion yuan for financing post-Wenchuan earthquake recovery and reconstruction. We strengthened the unified leadership, supervision, and inspection of central government investment to ensure it was used effectively in accordance with regulations. We issued 200 billion yuan of bonds for local governments to finance their associated expenditures. These investments increased immediate demand, stimulated non-government investment and consumer spending, and shored up weak links in economic and social development.
We optimized the taxation system and carried out structural tax reductions. We introduced VAT on consumer products across the country, adjusted the criteria for classifying small-scale VAT payers, and lowered their rate of VAT to encourage enterprises to invest more in independent innovation and technological upgrading. We carried out the reform of taxes and fees on refined oil products to make the tax burden equitable and promote energy conservation and emissions reductions. The sales tax rate for passenger vehicles with engine displacement of 1.6 liters or less was temporarily reduced to 5%. The export tax rebate rates for textiles, garments, petrochemicals, electronic information, and other products were lowered four times, and the import and export tariffs on some commodities were adjusted many times. One hundred administrative fees were either rescinded or suspended. Implementation of the existing tax reduction and exemption policies was continued. All together, these policies on tax and fee reductions and exemptions reduced the burden of businesses and individuals by about 500 billion yuan and thereby helped expand corporate investment and stimulate individual consumption.
We increased the incomes of both urban and rural residents and strengthened their consumption capacity. We further increased subsidies for farmers and significantly raised the minimum purchase prices of grain to increase farmers' incomes. We raised allowances for urban and rural recipients of subsistence allowances, enterprise retirees, and entitled groups. We implemented the policies of subsidizing the sale of home appliances and motor vehicles including motorbikes in the countryside and getting consumers to trade-in old motor vehicles and home appliances for new ones. We also constantly improved our operational methods so that government subsidies were used more effectively. Preliminary statistics show that 34.5 million home appliances were sold at subsidized prices in the countryside.
5. Progress in fiscal, taxation, and related reforms
We comprehensively implemented VAT reform, eliminated instances of duplicate tax charges and optimized the taxation system. We proceeded smoothly with the reform of taxes and fees on refined oil products, clarifying what these taxes and fees are, standardized government fee collection practices, and established an effective long-term mechanism for raising highway construction funds and a new mechanism for using tax policy to guide energy consumption. We improved policies on the implementation of the Law on Corporate Income Tax. We comprehensively implemented the revised Provisional Regulations on Business Tax and the detailed rules for implementing them, and improved business tax policies. We adjusted the sales tax policy on tobacco products. We unified real estate tax regulations for domestic and overseas-funded enterprises and Chinese and foreign nationals. We improved the system of transfer payments to ethnic minority areas as well as the methods for making transfer payments to cities once dependent on now-depleted mineral resources and to major functional ecological zones. We explored ways to create a mechanism to ensure basic funding for county-level governments, and steadily carried forward the reform to place county finances directly under the management of provincial governments. We deepened the reform of the budget management system, and continued to push ahead with reforms of the systems for departmental budgeting, centralized treasury collection and payment, and government procurement. We instituted the reform of tenure in collective forests throughout the country. We helped 14 selected provincial-level administrative areas repay 49.3 billion yuan of debts incurred in providing nine-year compulsory education in rural areas. The trial of a government award and subsidy system for village-level public works projects, the launching of which will be determined by the villagers through deliberation, was expanded to 17 provincial-level administrative areas, resulting in investment exceeding 60 billion yuan and benefits for 260 million farmers.
6. Implementation of the NPC resolution on budgets
In accordance with the pertinent resolution of the Second Session of the Eleventh NPC and the guidelines of the Financial and Economic Affairs Commission of the NPC, we diligently implemented the policies on reforming taxes and fees, and strengthened the collection and management of revenue; implemented policies benefiting agriculture, rural areas, and farmers, and made good use of funds supporting them; worked hard to ensure and improve people's wellbeing; raised the performance of government investment; and pushed ahead with the reform of the public finance system. We made management of public finance more scientific and meticulous. We made substantial progress in revising the Budget Law, promulgated and implemented the Regulations on Lottery Management, and made continued progress in improving public finance legislation. We researched ways to set up a complete government budget system, further improved the system for managing the budgets of government-managed funds and the budget system for state capital operations, and started to compile budgets for social security funds on a trial basis. Budgetary spending was implemented more quickly, and implementation of the budget gradually became more balanced and efficient. We carried out a special examination of the budget for the appropriation of new assets, and intimately integrated asset management and budgetary management. The pilot program to assess the performance of budgetary spending in departments of the central government was expanded from 108 items in 74 departments in 2008 to 167 items in 94 departments last year. We created sound regulations and policies for managing fees and funds are deposited, put administrative and institutional fees collected by national and central government departments and institutions under budgetary management, and comprehensively carried out reform of non-tax revenue collection and management. We continued to improve the system of standards for employee quotas and fixed funding for basic expenditures, steadily advanced the pilot project for setting spending levels of departments on the basis of their assets, and accelerated the development of a system of standards for setting expenditure levels for programs. We reviewed programs and intensified work on creating a program database. We strengthened local public finances to guarantee the effective implementation of policies for ensuring people's wellbeing. We intensified oversight and inspection of public finance, with the focus on monitoring the use of funds and increasing oversight of the implementation of policies for boosting domestic demand and promoting economic growth. We urged local governments to accelerate the implementation of the central government investment budget, and ensured safe and efficient use of budgetary funds. We continued to informationize public finance and strengthen basic supervision of accounting and related work. We worked harder to make the administration of government finances more open, and gradually increased the timeliness and transparency of this work. We closely monitored and controlled debts owed by corporations to local financing platforms, and worked out policies and measures to effectively guard against risk from local government debts. A new stage was reached in controlling unauthorized departmental coffers.
The new achievements in budget implementation and other fiscal work in 2009 would not have been possible without the scientific decision making and firm leadership of the CPC Central Committee and the State Council; the oversight, guidance, and staunch support of the NPC and the CPPCC National Committee; and the close collaboration and hard work of all localities and departments. Nevertheless, we are keenly aware that serious problems concerning fiscal operations and management still exist. The structure of revenue growth is not sufficiently balanced, and funding for ensuring people's wellbeing needs to be increased. The system of departmental budgets needs to improve, and budgetary expenditures need to be implemented at a more balanced pace. Local government debts are mounting and financial risks cannot be overlooked. The transfer payment system is not yet sufficiently standardized; fiscal systems at and below the provincial level need to further improve, and township- and county-level governments in some areas are experiencing financial difficulties. Fiscal management remains fairly weak and there is an urgent need for the performance of government funds to improve. We will pay close attention to these problems and continue to adopt measures to solve them.
II. Draft Central and Local Budgets for 2010
This is a crucial year for continuing to deal with the global financial crisis, maintaining steady and rapid economic development, and accelerating the transformation of the pattern of economic development. It is also an important year for achieving all the targets of the Eleventh Five-Year Plan and laying a solid foundation for development on the basis of the Twelfth Five-Year Plan.
1. The current financial situation in China
On the whole, public finance in 2010 faces a more favorable environment than last year, but the situation remains complex. Regarding revenue, improvements in the macroeconomic situation and the performance of enterprises, and an increase in prices will help increase revenue. Nevertheless, the implementation of the policy of structural tax reductions, last year's increases in export tax rebate rates for some products, and other factors will affect this increase. It will be difficult for imports and exports to return to their pre-crisis levels anytime soon, and import and export tax revenue will not increase significantly. Some industries' and enterprises' profits will be low, making increases in corporate income tax revenue unlikely. In addition, last year's special measures to increase revenue will affect revenue increases this year. Regarding expenditures, huge sums of money will be needed to support ongoing projects. Further increases in financial support will be required to raise the incomes of low-income groups; improve key links in economic and social development, such as agriculture, rural areas, farmers, education, science and technology, social security, employment, medical and health care, low-income housing, and energy conservation and emissions reductions; and develop ethnic minority areas and border areas. In these areas, the base figure for expenditures is large and there is little leeway. In addition, major increases in investment are needed to support post-Wenchuan earthquake recovery and reconstruction, launch a pilot program for a new old-age insurance system for rural residents, and proceed with the reform of the pharmaceutical and healthcare systems and other reforms. This year will therefore be a very difficult year for public finance.
Faced with this situation, we must, on the one hand, take note of all favorable conditions and positive factors and fortify our confidence, and on the other hand, take into full consideration the difficulties and challenges we will face and avoid blind optimism. We need to raise our awareness of potential dangers and risks, be thoroughly prepared to respond to risks and challenges, and firmly maintain the initiative in our work.
2. General requirements for budget preparation and financial work
In accordance with the requirements of the central leadership that we correctly handle the relationship between maintaining steady and rapid economic development, restructuring the economy and managing inflation expectations, that we maintain continuity and stability in our macroeconomic policy, and that we strive to make our policies more targeted and flexible in line with new situations and circumstances, the guiding thought for budget preparation and financial work in 2010 is as follows. We need to conscientiously implement the guiding principles of the Seventeenth National Party Congress and the third and fourth plenary sessions of the Seventeenth Central Committee; take Deng Xiaoping Theory and the important thought of Three Represents as our guide; thoroughly apply the Scientific Outlook on Development; continue to follow a proactive fiscal policy; vigorously adjust the pattern of national income distribution; carry out reform of the fiscal and taxation systems; improve the structure of government expenditures; increase support for agriculture, rural areas, farmers, education, science and technology, medical and health care, social security, low-income housing, energy conservation, emissions reductions, and underdeveloped areas; promote economic growth, economic restructuring, balanced development between regions, and coordinated development between urban and rural areas; and effectively ensure and improve the people's wellbeing. We need to adhere to the principles of managing public finance in accordance with the law, taking all factors into consideration, and increasing revenue and reducing expenditures. We need to make the management of public finances more scientific, strictly control general expenditures, utilize funds more effectively, and promote steady and rapid economic development.
Based on this guiding thought, in our financial work in 2010 we will place greater emphasis on promoting economic restructuring and improving the quality and efficiency of economic development; on boosting domestic demand, particularly consumer demand, and achieving steady and rapid economic growth; on ensuring and improving people's wellbeing, and promoting balanced economic and social development; on deepening fiscal and taxation reforms, and enhancing the internal impetus for and vitality of economic and financial development; and on managing public finance in a more scientific and meticulous manner and utilizing funds more effectively. In continuing to follow a proactive fiscal policy we must focus on the following areas.
First, we will increase urban and rural incomes and boost consumer demand. We will promote the adjustment of the distribution of national income; increase government subsidies; raise the people's consumption capacity, particularly that of low- and middle-income earners; improve fiscal and taxation policies for guiding consumption; and get consumption to play a bigger role in driving economic growth. We will further increase subsidies to farmers and raise minimum prices for the purchase of key grain varieties to increase their incomes. We will raise subsistence allowances for urban and rural residents, basic old-age pensions for enterprise retirees, and subsidies and living allowances for entitled groups. We will vigorously expand employment, and support implementation of the minimum wage system to increase the income of low-income earners. We will apply a performance-based salary system in schools providing compulsory education, public health institutions, and community-based medical and health service institutions. We will improve policies for promoting purchases of home appliances and motor vehicles including motorbikes by rural residents, and for subsidizing trade-ins of old home appliances and motor vehicles for new ones, and we will guide consumer spending.
Second, we will arrange and use public investment well and vigorously optimize its structure. We will focus on supporting low-income housing, rural infrastructure, social programs such as education and medical and heath care, energy conservation, environmental protection, ecological conservation, independent innovation and restructuring, as well as underdeveloped areas. Investment funds will be used mainly for carrying on and completing projects and making sure we don't leave projects half finished. We will strictly control the launching of new projects and prevent redundant construction. We will support recovery and reconstruction in earthquake-hit areas. We will expand the scope of substituting awards for subsidies in projects funded through government investment and stimulate non-government investment.
Third, we will implement a structural tax reduction, and guide enterprise investment and consumer spending. We will build upon progress in VAT reform and the reform of taxes and fees on refined oil products. We will apply a preferential income tax policy to some small enterprises with low profits. We will temporarily reduce sales tax on passenger vehicles with engine displacement of 1.6 liters or less to 7.5%. We will continue to implement tax and fee reduction and exemption policies, and find a way to eliminate expired policies. We will tighten management of the examination and approval of administrative fees and projects financed through government-managed funds.
Fourth, we will improve the structure of government spending, and ensure and improve people's wellbeing. Following the principles of considering all factors, maintaining some expenditures while reducing others, and stressing key areas, we will give high priority to building a new socialist countryside; shoring up weak links in the development of social programs; and helping poverty-stricken areas, primary-level institutions, and the masses. We will increase spending on public services, agriculture, rural areas, and farmers; science and technology; education; medical and health care; social security; low-income housing; energy conservation; and environmental protection to improve people's wellbeing and promote the development of social programs. We will control spending on official visits overseas, the purchase and use of official cars, and the entertaining of official guests; greatly reduce general expenditures such as public spending; and lower administrative costs.
Fifth, we will vigorously support balanced development among regions and economic restructuring, and promote transformation of the pattern of economic development. We will increase central government transfer payments to local governments; increase support for old revolutionary base areas, ethnic minority areas, border areas, and poverty-stricken areas; research and formulate fiscal and taxation policies to increase support for the large-scale development of the western region; facilitate the all-round vitalization of northeast China and other old industrial bases; vigorously promote the rise of the central region; and support the eastern region in taking the lead in development. We will increase support for innovation in science and technology and encourage key industries and enterprises to enhance their capacity for independent innovation. We will increase funds for supporting the development of small and medium-sized enterprises, particularly small enterprises, and promote their technological innovations, restructuring, and employment expansion. We will support the development of emerging industries of strategic importance, and work vigorously to conserve energy, reduce emissions, and eliminate backward production capacity. We will reform the resource tax system, comprehensively promote reform of the system of compensation for exploiting mineral resources, improve the compensation and credit trading system for pollution rights, expand the trials of pollution rights trading, and promote resource conservation and environmental protection.
Overview of budgeted revenue and expenditures, and the deficit for 2010. In accordance with 2010 targets for economic development set at the Central Economic Work Conference and the requirement of continuing to implement a proactive fiscal policy, after calculating all revenue and expenditure items individually, we have set the following major targets for the 2010 government budget.
Revenue in the central budget will reach 3.806 trillion yuan, an increase of 216.386 billion yuan or 6% over the figure for 2009 (here and below). The central budget stabilization fund will contribute 10 billion yuan, bringing total revenue to 3.816 trillion yuan. Expenditures in the central budget will reach 4.666 trillion yuan, an increase of 275.886 billion yuan or 6.3%. This total consists of 1.6049 trillion yuan of central government spending, an increase of 76.916 billion yuan or 5%, and 3.0611 trillion yuan of tax rebates and transfer payments to local governments, an increase of 198.97 billion yuan or 7%. Expenditures in the central budget will exceed revenue, resulting in a deficit of 850 billion yuan, an increase of 100 billion yuan. With a corresponding increase in the volume of government bonds issued, the limit for the outstanding balance of government bonds issued by the central government will be 7.120835 trillion yuan.
Local government revenue will amount to 3.587 trillion yuan, up 10.1%. Added to the 3.0611 trillion yuan of tax rebates and transfer payments from the central government, total local government revenue will be 6.6481 trillion yuan, an increase of 527.896 billion yuan or 8.6%. Local government spending will amount to 6.8481 trillion yuan, an increase of 788.72 billion yuan or 13%. Expenditures will exceed revenue by 200 billion yuan, and the Ministry of Finance will issue 200 billion yuan of government bonds on behalf of local governments, subject to the approval of the State Council, and incorporate the funds into provincial-level government budgets. Total combined revenue of central and local governments is budgeted at 7.393 trillion yuan, an increase of 8%. Adding 10 billion yuan from the central budget stabilization fund, total national revenue is projected to reach 7.403 trillion yuan. Total national expenditures are budgeted at 8.453 trillion yuan, up 11.4%. Total expenditures will exceed total revenue by 1.05 trillion yuan.
The national budget deficit is estimated at 2.8% of GDP in 2010, basically the same as last year. This figure is mainly based on the following considerations. Although China's economy is showing signs of turnaround, its foundation is still not solid, and we therefore need to maintain continuity and stability in our fiscal policies. Due to the small increase in revenue and immense pressure on expenditures, the disparity between them is significant; therefore, the deficit for 2010 has to remain at an appropriate level. At the same time, in order to promote the sustainable development of public finance, actively fend off financial risks, and leave some leeway to gradually reduce the deficit in future years, we must keep the deficit under 3% of GDP.
Overview of the central budget stabilization fund. The outstanding balance of the fund stood at 11.9 billion yuan at the end of 2009. After 10 billion yuan is transferred to the 2010 budget, 1.9 billion yuan will remain.
3. Main revenue items provided for in the central budget
Revenue from domestic VAT will amount to 1.535 trillion yuan, an increase of 143.401 billion yuan or 10.3%. This figure is based mainly on GDP growth of approximately 8%, an increase in the value-added of large industrial enterprises of approximately 11%, and projected price changes in 2010.
Revenue from domestic sales tax will amount to 524.1 billion yuan, an increase of 48.188 billion yuan or 10.1%. This figure is based mainly on estimated sales of cigarettes, alcohol, refined oil products, and motor vehicles as well as a revenue increase from higher sales tax on tobacco products.
Revenue from customs duties together with revenue from VAT and sales taxes on imports will amount to 965 billion yuan, an increase of 43.728 billion yuan or 4.7%. This figure consists of 158 billion yuan of revenue from customs duties, up 6.5%, and 807 billion yuan of revenue from VAT and sales tax on imports, up 4.4%.
Revenue from corporate income tax will amount to 806.1 billion yuan, an increase of 44.218 billion yuan, up 5.8%. This figure is based mainly on expected corporate profits and the preferential income tax policy for some small enterprises with low profits that will be implemented in 2010.
Revenue from personal income tax will amount to 254.2 billion yuan, an increase of 17.528 billion yuan or 7.4%.
Revenue from stamp tax on securities transactions will amount to 51.6 billion yuan, an increase of 2.096 billion yuan or 4.2%.
Export tax rebates will amount to 707 billion yuan, an increase of 58.344 billion yuan or 9%, which will result in a decrease in revenue by the same amount. This figure is based mainly on the projected increase in general exports and the carry-over effect of raising rebate rates for some exports several times in 2009, which will increase export tax rebates in 2010.
Revenue from vehicle purchase tax will amount to 133.8 billion yuan, an increase of 17.483 billion yuan or 15%. This figure is based mainly on the projected increase in vehicle sales and the reduction of the purchase tax on passenger vehicles with engine displacement of 1.6 liters or less to 7.5%.
Non-tax revenue will amount to 207.7 billion yuan (including 1 billion yuan from the budget for state capital operations of the central government), a decrease of 45.966 billion yuan or 18.1%. This decrease is due to 41.5 billion yuan of special surcharges on oil sales overdue from previous years that were collected in 2009.
4. Main expenditure items provided for in the central budget
There is only a slight projected increase in the disposable revenue of the central government in 2010, but spending will increase 6.3%. The plans for expenditures call for strictly controlling general expenditures; lowering administrative costs; and giving top priority to ensuring funding for key items such as agriculture, education, social security, employment, and low-income housing. To help NPC deputies review the budget and to highlight expenditure items more clearly, we have adjusted their classification to make them more specific. The main expenditure items including central government spending and transfer payments to local governments are as follows.
1) The appropriation for education spending is 215.99 billion yuan, an increase of 17.851 billion yuan or 9%, and 2.7 percentage points higher than the average increase in total expenditures in the central budget. This figure consists of 61.035 billion yuan of central government spending and 154.955 billion yuan of transfer payments to local governments. We have appropriated 73.15 billion yuan to further improve the mechanism to guarantee funding for rural compulsory education, implement the policy to exempt urban students receiving compulsory education from tuition and miscellaneous fees, and ensure that children of rural migrant workers have equal access to compulsory education in cities. We have appropriated 19.78 billion yuan in subsidies to implement a performance-based salary system in rural schools providing compulsory education. Six billion yuan in subsidies has been appropriated to implement the policy of exempting rural 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 10 billion yuan to support projects to renovate rural junior secondary school buildings in the central and western regions and ensure the safety of primary and secondary school buildings nationwide. We have appropriated 22.6 billion yuan to implement policies to provide scholarships and grants to students from poor families and offer interest-subsidized state loans to students. We will strengthen the development of pre-school education and special education schools. We have appropriated 11.6 billion yuan to continue to experiment with reducing the debt burden of central government institutions of higher learning, and launch a new phase of the May 1998 Program for developing higher education. We have appropriated 42.6 billion yuan to support the 211 Project and the development of higher education in central and western regions in order to raise the quality of higher education. Ten billion yuan has been appropriated to implement the Outline of the National Medium- and Long-Term Program for Education Reform and Development.
2) The appropriation for science and technology spending is 163.285 billion yuan, an increase of 12.083 billion yuan or 8%, and 1.7 percentage points higher than the average increase in total expenditures in the central budget. This figure consists of 159.719 billion yuan of central government spending and 3.566 billion yuan of transfer payments to local governments. We have appropriated 30.19 billion yuan in the budget to implement major science and technology projects. We have appropriated 110.116 billion yuan to support basic research, research in cutting-edge technologies, research for public benefit, and R&D on major, generic, key technologies. We will expand trials of independent research on and production of major scientific research equipment. We will create new ways to invest in science and technology; promote intimate integration of the efforts of enterprises, universities, research institutes, and end-users; and become better able to facilitate progress in science and technology. We will improve the income distribution system so that better fosters the application of scientific and technological advances. We will encourage imports of key equipment and parts, and advanced technologies.
3) The appropriation for spending on culture, sports, and media is 31.449 billion yuan, a decrease of 1.9%. This figure consists of 15.796 billion yuan of central government spending and 15.653 billion yuan of transfer payments to local governments. The project included in the Eleventh Five-Year Plan to extend radio and TV coverage to all villages has already been basically completed, and spending in this area will decrease accordingly. However, expenditures in other areas will increase by 9.5%. These include continuing to provide free access to museums and memorial halls, implementing major cultural programs such as the national shared database for cultural information and resources, improving the protection of our cultural heritage, strengthening the broadcasting capability of the news media, giving greater support to the development of the cultural industry, actively supporting reform of the cultural management system, and focusing on transforming 148 commercial publishers affiliated to central government departments or agencies into enterprises.
4) The appropriation for medical and health care spending is 138.918 billion yuan, an increase of 11.204 billion yuan or 8.8%, and 2.5 percentage points higher than the average increase in total expenditures in the central budget. This figure consists of 4.331 billion yuan of central government spending and 134.587 billion yuan of transfer payments to local governments. We have appropriated 126.82 billion yuan to support the reform of the pharmaceutical and healthcare systems. We will further raise the participation rate in the new type of rural cooperative medical care system and basic medical insurance for non-working urban residents, and raise the subsidy from 80 yuan to 120 yuan per person per annum. We will strengthen medical assistance in urban and rural areas. We will improve the funding system for urban and rural basic public health services, and continue to carry out major public health service projects. We will support implementation of the basic drug system in 60% of community-based medical and health care institutions. We will promote the trial reform of public hospitals, and improve the community-based medical and health care service system. We will also promote the development of traditional Chinese medicine.
5) The appropriation for social security and employment spending is 358.225 billion yuan, an increase of 28.559 billion yuan or 8.7%, and 2.4 percentage points higher than the average increase in total expenditures in the central budget. This figure consists of 30.797 billion yuan of central government spending and 327.428 billion yuan of transfer payments to local governments. We have appropriated 318.508 billion yuan to social security, an increase of 27.933 billion yuan or 9.6%. We have appropriated 7 billion yuan in subsidies to carry out trials of a new rural old-age insurance system and gradually carry forward the pilot reform of old-age insurance in institutions. We have appropriated 156.1 billion yuan to subsidize old-age insurance funds of enterprises to raise the basic pensions of retirees, implement a national unified method for transferring basic old-age insurance policies of enterprise employees, and consolidate the overall planning system for old-age pensions at the provincial level. We have appropriated 63.3 billion yuan in subsidies to increase urban and rural subsistence allowances. We have appropriated 21.3 billion yuan in subsidies to raise benefits for entitled groups. Eight billion yuan in subsidies has also been appropriated to continue carrying out policy-mandated closures or bankruptcies of state-owned enterprises.
We have appropriated 39.717 billion yuan of employment funds for continuing to implement a more active employment policy (adding employment funding listed in other parts of the budget raises the total amount to 43.267 billion yuan). Policies to support employment that would have expired at the end of 2009 will be extended for one year and will be adjusted and improved based on changes in the employment situation. We will encourage college graduates to take jobs in small and medium-sized enterprises, at the community level, and in the central and western regions. We will encourage people to find jobs on their own and start their own businesses. We will support skills training, create public service jobs, and provide greater assistance to low- and zero-employment households.
6) The appropriation for housing spending is 99.258 billion yuan, up 1.4%. This figure consists of 37.658 billion yuan of central government spending and 61.6 billion yuan of transfer payments to local governments. We have appropriated 63.2 billion yuan for low-income housing, an increase of 8.144 billion yuan or 14.8%, which will be used to build more low-rent and other low-income housing; resolve the housing problems of 3.75 million low-income urban families; renovate run-down areas in cities, in forests, on reclaimed land, and near coalmines; carry out trials on renovating ramshackle houses in rural areas; and build permanent housing for nomads in ethnic minority areas. We have appropriated 36.058 billion yuan for housing reform, a decrease of 6.818 billion yuan. This decrease is largely due to a smaller number of demobilized soldiers and retirees being entitled to housing allowances.
7) The appropriation for spending on agriculture, forestry, and water conservancy is 377.894 billion yuan, an increase of 26.77 billion yuan or 7.6%, and 1.3 percentage points higher than the average increase in total expenditures in the central budget. This figure consists of 32.195 billion yuan of central government spending and 345.699 billion yuan of transfer payments to local governments. We have appropriated 83.5 billion yuan in general subsidies for agricultural supplies. We have appropriated 20.4 billion yuan to subsidize the purchase of superior varieties of crops, introduce subsidies for planting superior varieties of highland barley, carry forward the pilot program for subsidizing the purchase of superior varieties of peanuts, and gradually improve implementation procedures. We have appropriated 14.49 billion yuan to improve the system of subsidies for purchasing agricultural machinery and tools, and for increasing the scope of subsidies and extending them to more types of machinery and tools. We have appropriated 8 billion yuan to stimulate the development of modern agriculture and industries with unique local advantages. We will support implementation of the plan to increase grain production capacity by 50 million tons nationwide. We have appropriated 19 billion yuan for overall agricultural development to improve average- and poor-yield farmland, nurture high-yield farmland, promote industrialized agricultural operations, and improve the overall grain and agricultural production capacity, with the focus on main grain-producing areas. We have appropriated 22.23 billion yuan to poverty alleviation and development in rural areas. We have appropriated 10.32 billion yuan to subsidize insurance premiums for crops, breeding pigs, and dairy cows. We have appropriated 115.01 billion yuan to strengthen agricultural infrastructure, specifically to finish reinforcing large and medium-sized reservoirs, build auxiliary facilities, and upgrade water-saving equipment in large and medium-sized irrigated areas, and upgrade rural power grids. We will further increase the number of designated counties where small water conservancy facilities will be built, and expand the area in which major national water and soil conservation projects are built. We will continue to carry out methane projects in rural areas, and make drinking water safe for 60 million rural people. We will improve the system of operating expenses in village-level organizations, comprehensively clear up and pay off debts incurred from providing compulsory education in rural areas, and improve the government award and subsidy system for village-level public works projects, the launching of which is determined by the villagers through deliberation.
8) The appropriation for spending on land, resources, and meteorology is 33.625 billion yuan, an increase of 9.187 billion yuan or 37.6%. This is due to a considerable increase in revenue from fees for mineral prospecting and mining rights and from mineral resource compensation fees, which are required by relevant regulations to be used exclusively for exploring and utilizing mineral resources and improving the geological environment in mining areas. This figure consists of 13.132 billion yuan of central government spending and 20.493 billion yuan of transfer payments to local governments.
9) The appropriation for environmental protection spending is 141.288 billion yuan, an increase of 26.108 billion yuan or 22.7%. This figure consists of 5.526 billion yuan of central government spending and 135.762 billion yuan of transfer payments to local governments. We have appropriated 83.3 billion yuan for energy conservation and pollution reduction to promote the development of low-carbon technology; support retrofitting energy-conserving technology, retiring backward production facilities, making buildings more energy-efficient, and developing motor vehicles powered by new energy sources; expand the project to promote products that conserve energy and benefit the people to include energy-efficient air-conditioners and electric motors; strengthen heavy-metal pollution treatment and prevention, and control water pollution in major watersheds; improve environmental monitoring and supervision; build sewer lines to complement urban wastewater and garbage treatment facilities and carry out major pollution reduction projects; and help improve all aspects of the rural environment and carry out rural ecology demonstration projects. We have appropriated 10.9 billion yuan to implement the Golden Sun Project to promote the development of renewable energy. We have appropriated 36.526 billion yuan to invigorate major forestry projects, improve the ecosystems of grasslands, and consolidate the results achieved in returning farmland to forests. We will encourage imports of key energies, resources, and raw and semi-finished materials, and strictly control exports of resource products and products whose production is energy-intensive and highly polluting. We will support the implementation of the National Climate Change Program.
10) The appropriation for spending on transportation and transport is 211.919 billion yuan, down 2.7%. The main reason for this decrease is lower spending on the construction of railroads, expressways, and airports. This figure consists of 128.874 billion yuan of central government spending and 83.045 billion yuan of transfer payments to local governments. We have appropriated 132.3 billion yuan, an increase of 17.5 billion yuan, to build rural roads, national and provincial trunk highways and other public transportation infrastructure; and 300,000 kilometers of rural highways will be built or upgraded this year. We will continue to provide fuel price subsidies for urban public transport and some public service industries. We have appropriated 26 billion yuan in subsidies for local governments to phase out tolls on government-financed Grade II highways, and 12.5 billion yuan to build railroads, expressways, and airports, a decrease of 14.06 billion yuan.
11) The appropriation for spending on resource exploration, electricity, and information is 69.612 billion yuan, down 18.2%. This reduction is largely because less income from selling power-related assets will be used to cover some of these expenses. This figure consists of 43.244 billion yuan of central government spending and 26.368 billion yuan of transfer payments to local governments. We have appropriated 42.8 billion yuan for the construction of infrastructure for resource exploration, electricity, and information. We have appropriated 9.37 billion yuan exclusively to promote the development of all kinds of small and medium-sized enterprises (adding funds for developing these enterprises listed in other parts of the budget raises the total amount to 10.57 billion yuan). We will encourage the use of newly developed important technological equipment that is manufactured domestically.
12) The appropriation for spending on managing reserves of grain, edible oil, and other materials is 107.841 billion yuan, down 4.4%. This decrease is mainly due to postponing payment for policy-supported grain purchases bought on credit. This figure consists of 78.161 billion yuan of central government spending and 29.68 billion yuan of transfer payments to local governments. We have appropriated 23.6 billion yuan for grain risk funds to improve the policy on these funds and continue to increase central government subsidies in this area. We have appropriated 10 billion yuan to raise the floor prices of rice and wheat. We have also appropriated 65.71 billion yuan to pay interest and costs incurred from increasing the reserves of grain, edible oil, petroleum, nonferrous metals, and other important materials.
13) The appropriation for spending on commerce and services is 85.258 billion yuan, an increase of 23.455 billion yuan or 38%. This is mainly due to the increase in subsidies for further expanding consumer spending. This figure consists of 20.192 billion yuan of central government spending and 65.066 billion yuan of transfer payments to local governments. We have appropriated 15.2 billion yuan in subsidies for purchases of home appliances by rural residents, which will be extended to employees of state-owned farms and tree farms. We have appropriated 13.5 billion yuan to continue implementing the policy to sell more motor vehicles including motorbikes in the countryside. We have appropriated 10.3 billion yuan to implement the policy of getting people to trade-in old home appliances and motor vehicles for new ones. We have appropriated 13.457 billion yuan to subsidize state reserves of cotton and meat. We have also appropriated 8.1 billion yuan to build a new rural modern logistics network and support the development of the logistics services industry.
14) The appropriation for spending on post-Wenchuan earthquake recovery and reconstruction is 78.001 billion yuan. This figure consists of 4.293 billion yuan of central government spending and 73.708 billion yuan of transfer payments to local governments. In addition, 2 billion yuan from the budget for the central government's state capital operations, 10 billion yuan from vehicle sales tax revenue, 5.442 billion yuan from the state lottery fund, and 2 billion yuan from the central government's portion of land-use fees for land newly designated for development will be used for recovery and reconstruction work in the earthquake area. All this adds up to 97.443 billion yuan in central government funds for post-Wenchuan earthquake recovery and reconstruction, which will be used for infrastructure construction, industrial rebuilding, improving the ecosystem, and disaster preparation and mitigation. This figure, together with the 74 billion yuan appropriated in 2008 and the 130.451 billion yuan appropriated in 2009, adds up to 301.894 billion yuan, meeting the target set for the central government's financial support for post-Wenchuan earthquake recovery and reconstruction.
15) The appropriation for national defense spending is 519.082 billion yuan, an increase of 36.097 billion yuan or 7.5%. This figure consists of 518.577 billion yuan of central government spending and 505 million yuan of transfer payments to local governments. These funds will be used mainly to modernize the army.
16) The appropriation for public security spending is 139.069 billion yuan, an increase of 10.324 billion yuan or 8%. This figure consists of 81.674 billion yuan of central government spending and 57.395 billion yuan of transfer payments to local governments. We will continue to deepen reform of the funding system for procuratorial, judicial, and public security departments. We will assist in providing security for large-scale events such as the Shanghai World Expo and intensify development of our disaster preparedness, mitigation and emergency response system.
17) The appropriation for general public service spending is 101.495 billion yuan, a decrease of 6.73 billion yuan. The main reason for this decrease is that surplus funds from the 2009 appropriation for implementing a performance-based salary system in institutions will be carried over to 2010 and no new appropriation will be made for 2010. In addition, we will continue to cut ordinary expenditures for official visits overseas. This figure consists of 85.72 billion yuan of central government spending and 15.775 billion yuan of transfer payments to local governments.
18) The appropriation for interest on government bonds is 153.516 billion yuan, an increase of 21.446 billion yuan or 16.2%.
An analysis of the above expenditures shows that in 2010 the central government will spend a total of 807.782 billion yuan on areas that are directly related to people's lives, such as education, medical and health care, social security, employment, low-income housing, and culture, an increase of 65.134 billion yuan or 8.8%. The central government will spend a total of 818.34 billion yuan to benefit agriculture, rural areas, and farmers, an increase of 93.03 billion yuan or 12.8%. This figure includes 316.38 billion yuan for agricultural production; 133.49 billion yuan in direct subsidies to grain growers, general subsidies for purchasing agricultural supplies, and subsidies for purchasing superior crop varieties and agricultural machinery and tools; 310.85 billion yuan for rural education, health care, and other social programs; and 57.62 billion yuan for the expenses and interest related to reserves of agricultural products and associated interest payments. Tax rebates and general transfer payments from the central government to local governments will be used primarily to improve people's lives and benefit agriculture, rural areas, and farmers.
In 2010, total central government investment from public finance budget funds, revenue from government-managed funds and income from state capital operations used in government investment funds will reach 992.7 billion yuan, an increase of 572.2 billion yuan over the 2008 budgeted figure. Adding 104 billion yuan from the last quarter of 2008 and the increase of 503.8 billion yuan in 2009, we will achieve the target of 1.18 trillion yuan in new central government public investment.
5. Central government spending on tax rebates and transfer payments to local governments
Central government tax rebates and transfer payments to local governments in 2010 will reach 3.0611 trillion yuan, an increase of 198.97 billion yuan or 7%. This figure consists of 500.436 billion yuan in tax rebates, an increase of 6.209 billion yuan or 1.3%, and 1.229573 trillion yuan of general transfer payments, an increase of 97.584 billion yuan or 8.6%, constituting 48% of total transfer payments. Special transfer payments will reach 1.331091 trillion yuan, an increase of 95.177 billion yuan or 7.7%, accounting for 52% of total transfer payments. The main reason for this large share of special transfer payments is that the majority of expenditures for continuing to implement a proactive fiscal policy and boosting domestic demand will be borne by the central government by way of special transfer payments to local governments. General transfer payments used for making access to basic public services more equal will amount to 416.8 billion yuan, an increase of 25 billion yuan. These funds will be used principally to strengthen the public finances of the central and western regions and the functional ecological zones around the sources of the Yangtze, Yellow, and Lancang rivers. The total amount of transfer payments to ethnic minority areas will be 33 billion yuan, an increase of 5.412 billion yuan, and will be used to energetically support social and economic development in Tibet, Xinjiang, and other ethnic minority areas. Transfer payments of 7.5 billion yuan, an increase of 2.5 billion yuan, have been appropriated to help cities formerly dependent on now-depleted mineral resources mitigate their longstanding social burdens. A total of 66 billion yuan, an increase of 11.221 billion yuan, has been appropriated to establish a mechanism to ensure adequate basic funding for county-level governments and enhance their capacity to provide basic public services. Transfer payments of 10.8 billion yuan from the reform of taxes and fees on refined oil products have been appropriated to strengthen the maintenance and development of transportation infrastructure.
6. Other budgetary revenue and expenditures provided for in the government budget
Beginning in 2010, in addition to the budgets for revenue and expenditures of public finances specified above, the State Council will submit to the NPC a budget for government-managed funds and a budget for the central government's state capital operations. The State Council will also compile a national budget for social security funds on a trial basis to lay a foundation for submitting a social security budget to the NPC for its deliberation and approval in the future. The budgets for public finances, state capital operations, government-managed funds, and social security will be coordinated to form a more complete system of government budgets.
1) Aggregate budgetary revenue and expenditures projected for government-managed funds. In 2010 budgetary revenue from central government-managed funds will be 255.449 billion yuan, an increase of 4.682 billion yuan or 1.9%. This figure includes 1 billion yuan from the Three Gorges Project construction fund, 58.2 billion yuan from the railroad construction fund, 10 billion yuan from port development fees, 12.1 billion yuan from civilian airport administration and development fees, 20.469 billion yuan from lottery ticket proceeds, and 15 billion yuan from the fund for providing continuing aid to residents relocated to make way for the construction of large and medium-sized reservoirs. Adding the 65.571 billion yuan in revenue carried over from last year, the total budgetary revenue from central government-managed funds will be 321.02 billion yuan. Budgetary expenditure from central government-managed funds has been set at 321.02 billion yuan, an increase of 78.366 billion yuan or 32.3%. This total consists of two parts. The first is 205.012 billion yuan of central government spending, an increase of 22.288 billion yuan or 12.2%. This includes 2.79 billion yuan for developing the Three Gorges Project; 58.2 billion yuan for building railroads; 4.82 billion yuan for developing ports; 7.031 billion yuan for civilian airport administration and development; and 16.794 billion yuan of lottery ticket proceeds used to finance social welfare, sports, education, and other social programs. The second part is 116.008 billion yuan of transfer payments to local governments, an increase of 56.078 billion yuan or 93.6%.
Revenue from local government-managed funds will reach 1.615 trillion yuan, an increase of 32.263 billion yuan or 2%. This figure includes 1.365517 trillion yuan of revenue from the transfer of state-owned land-use rights, which consists of the fees for the transfer of these rights, income of the state-owned land income fund and the agricultural land development fund, and compensation for the use of land newly designated for development; 34 billion yuan from urban infrastructure construction fees; 21.5 billion yuan in lottery ticket proceeds; and 18 billion yuan from local education surcharges. Adding 116.008 billion yuan of transfer payments from the central government, the budgetary revenue from local government-managed funds will be 1.731008 trillion yuan. The budget for expenditures from these funds has been set at 1.731008 trillion yuan, an increase of 301.853 billion yuan or 21.1%. This total includes 1.421412 trillion yuan of revenue from the transfer of state-owned land-use rights for spending on compensation for land expropriation, housing demolition, and resident relocation as well as on land development; 31.615 billion yuan from lottery ticket proceeds used to finance social welfare, sports, education, and other social programs; 34 billion yuan for urban infrastructure construction; and 18 billion yuan for local education. Budgetary revenue and expenditures from local government-managed funds will be submitted by local governments to the people's congresses at their respective levels for deliberation and approval.
Total revenue from funds managed by both central and local governments will reach 1.870449 trillion yuan, an increase of 36.945 billion yuan or 2%. Adding the 65.571 billion yuan in revenue carried over from last year from central government-managed funds, the total revenue from government-managed funds is projected to be 1.93602 trillion yuan. Expenditures from these funds will also total 1.93602 trillion yuan, an increase of 324.141 billion yuan or 20.1%.
2) Budgetary revenue and expenditures projected for the central government's state capital operations. In 2010, the budget for the central government's state capital operations will include the revenue and expenditures of enterprises subject to the oversight and supervision of the State-Owned Assets Supervision and Administration Commission of the State Council as well as the China National Tobacco Corporation and the China Post Group, and it will be gradually expanded in the future. Revenue from state capital operations of central government enterprises will reach 42.1 billion yuan, an increase of 3.226 billion yuan or 8.3%. Adding the 1.9 billion yuan carried over from 2009, total budgetary revenue will be 44 billion yuan. Budgeted expenditures from the central government's state capital operations also come to 44 billion yuan, consisting of 2 billion yuan for post-Wenchuan earthquake recovery and reconstruction, 18.3 billion yuan for restructuring the state sector of the economy and industrial restructuring, 12 billion yuan in subsidies for reforming central government enterprises and making them profitable, 3.2 billion yuan to help such enterprises make major scientific and technological innovations, 3 billion yuan for getting them to conserve energy and reduce emissions, another 3 billion yuan for them to invest overseas, 500 million yuan for their social security expenditures, 1 billion yuan toward the public finance budget to be spent on social security and other programs to improve people' s wellbeing, and 1 billion yuan to be held in reserve.
In addition, the State Council has decided to compile a national budget for social security funds on a trial basis beginning in 2010. The budget will first include the funds for five types of social security: basic old-age insurance and unemployment insurance for enterprise employees, and basic medical insurance, workers' compensation, and maternity insurance for urban workers. Conditions will also be created to gradually bring other social security funds set up in accordance with state laws and regulations within the control of the national budget for social security funds. When conditions are ripe, the State Council will submit this budget to the NPC.
III. Managing Public Finance in Accordance with the Law and Practicing Scientific Management to Ensure Successful Implementation of the 2010 Budgets
1. We will effectively implement a proactive fiscal policy. We will earnestly carry out all fiscal policies and measures, and carefully monitor the implementation of a proactive fiscal policy. We will maintain the focus, intensity, and pace of policy implementation, and improve related policies and measures as needed in light of developments and changes in the domestic and international economic situations. We will strive to use government funds and fiscal policy to guide non-government investment and consumer spending, and arouse the initiative of enterprises, individuals, and other market players, and let market forces better play their basic role in allocating resources. We will strengthen the coordination of our macroeconomic policies to create unified macro-control.
2. We will improve fiscal and taxation systems and mechanisms conducive to developing scientifically. We will improve the transfer payment system, and establish a sound public finance system in which the financial resources of governments are commensurate with their responsibilities. We will optimize the structure of fiscal transfer payments, increase general transfer payments, do more to standardize special transfer payments, and improve the method of distributing transfer payments. We will improve fiscal systems at and below the provincial level, improve the mechanism for guaranteeing that county-level governments have adequate basic financial resources, and press ahead with the reform to place county finances directly under the management of provincial governments. We will reform the system of resource taxes. We will improve the sales tax and housing property tax systems. We will extend urban construction and maintenance tax and education surcharges to foreign enterprises and nationals. We will continue to effectively implement VAT reform and further improve the VAT system. We will implement all the measures for reforming taxes and fees on refined oil products. We will closely monitor the operations of the government budget system, improve the budget systems for government-managed funds and state capital operations, and do a good job of compiling the national budget for social security funds on a trial basis. We will carry out the reform requiring government departments at the county level throughout the country to prepare their own budgets. We will continue to improve the single treasury account system. We will deepen the reform to set up a centralized treasury collection and payment system and a government procurement system. We will improve the government revenue and expenditures classification system. We will study how to reform government accounting. We will deepen overall rural reform. We will vigorously support reforms of income distribution, the financial system, and the pricing system for basic products.
3. We will strive to make the management of public finance more scientific and meticulous. We will speed up the revision of the Budget Law and the Law on Certified Public Accountants. We will energetically promote the enactment of the VAT Law, the Vehicle and Vessel Tax Law, and other fiscal and taxation laws and regulations. We will standardize the procedures for compiling budgets, compile them in advance, make budget content more meticulous, reduce the number of budgets compiled by the central government for local governments, make budget implementation more on track at the beginning of the year, and strictly manage departmental budgets. We will accelerate budget implementation, improve the responsibility system for budgetary expenditures, strengthen management of basic expenditures and project expenditures, improve the mechanism for effectively linking budget preparation for one year with budget implementation of the pervious year, and make budget implementation more uniform and effective. We will improve management of all kinds of budgetary revenue and expenditures, and create a sound oversight mechanism for the entire process of using all government funds. We will focus on tightening oversight and inspection of the implementation of major fiscal and taxation policies, improve and tighten management of the implementation of the central government investment budget and the use of funds, resolutely investigate and punish violations of fiscal and budgetary laws and regulations, and improve the quality of and returns on government investment. We will actively evaluate the performance of budgetary expenditures, and explore ways to set up a mechanism for making the results of such evaluations open to the public and establish an effective accountability system. We will improve basic fiscal management work and strengthen public finance at the county and township levels. We will vigorously promote openness in the budget, establish a sound and standard mechanism to ensure openness, and willingly accept oversight by the general public. We will intensify the campaign to bring unauthorized departmental coffers under control, and look for ways to set up a permanent mechanism to prevent their occurrence. We will strengthen government debt management and effectively guard against and fend off potential financial risks.
4. We will work hard to increase revenue and reduce expenditures. We will intensify revenue monitoring, strengthen tax collection in accordance with the law, resolutely put a stop to and rectify unauthorized tax reductions and exemptions, severely crack down on the use of fake invoices and other means to evade and defraud taxes, and strive to achieve the budgetary revenue target. In accordance with the principle of strengthening tax revenue and clearing up fees, we will strictly manage non-tax revenue and bring extrabudgetary funds into the budget nationwide. We will spend what is necessary for key items, such as spending to benefit agriculture, rural areas, and farmers, and improve people's wellbeing, while reducing general expenditures. We will also strictly control the construction of office buildings for Party and government departments and prohibit their remodeling in excess of set standards. We will continue to tighten supervision of expenditures for official business, and deepen the reform to require payment of official business expenses with credit cards. We must strictly adhere to the "two imperatives" [It is imperative to always be modest, prudent, and free from arrogance and rashness in our work, and it is imperative to continue following the principle of hard struggle and plain living - Tr.], be more willing to practice austerity, observe strict financial and economic discipline, and oppose extravagance and waste.
Fellow Deputies,
It is of great importance that we implement the 2010 budgets well. Under the leadership of the Party Central Committee with Comrade Hu Jintao as General Secretary, we will hold high the great banner of socialism with Chinese characteristics, take Deng Xiaoping Theory and the important thought of Three Represents as our guide, thoroughly apply the Scientific Outlook on Development, willingly accept the guidance and oversight of the NPC, and listen to comments and suggestions from the CPPCC National Committee with an open mind. We will fortify our confidence, forge ahead in spite of difficulties, break new ground, work diligently, implement our proactive fiscal policy well, ensure complete implementation of the budgets, and energetically contribute to achieving the targets for economic and social development in 2010 and the objectives set forth in the Eleventh Five-Year Plan.
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