Page 22 - REPORT ON THE EXECUTION OF THE CENTRAL AND LOCAL BUDGETS FOR 2022 AND ON THE DRAFT CENTRAL AND LOCAL BUDGETS FOR 2023

Second, fiscal macro-regulation was steadily improved. We strengthened
cross- and counter-cyclical adjustments as well as targeted, well-timed, and
precision regulation. Most notably, in 2020, we adopted new approaches such as

Covid-19 bonds in response to the epidemic and stimulated economic recovery
with an extraordinary level of policy support. Combining institutional

arrangements with temporary measures, we implemented large-scale tax and fee
cuts to help further lower the overall tax incidence. We set up a regular mechanism
for the direct allocation of government funds and worked to ensure that these

funds went precisely where intended to directly benefit businesses and people in
as quickly as 30 days on average. More financial support was provided to local

governments, with central government transfer payments to them totaling 40.66
trillion yuan over the past five years. This represents an average annual increase of

8.4%, 4.8 percentage points higher than the growth of central government
expenditures. The proportion of transfer payments to local governments in

expenditures of the central general public budget rose to about 70%.
Third, fiscal support became more targeted and effective. Governments at all
levels allocated more funding for poverty alleviation to ensure victory in the battle

against poverty as scheduled and promote alignment of poverty alleviation
achievements with rural revitalization. Over the past five years, the government

kept its spending on education above 4% of GDP, totaling 21 trillion yuan, to
realize a significant increase in the amount of fiscal support per student. Based on

reforms to improve the input and management of government funds for science
and technology, the central government boosted expenditures on basic research by

52.6% and steadily ramped up support to promote the country’s strength in
strategic science and technology and breakthroughs in core technologies in key
fields. We used market-based mechanisms to encourage enterprises to engage in

innovation, offering them more than 1 trillion yuan per year in tax incentives. A
central regulation system for enterprise employees’ basic old-age insurance funds

was established, with the share of centrally-regulated funds rising to 4.5%. On this
basis, unified national management was implemented for these funds. Basic

pensions of retirees and minimum basic pension benefits for rural and
non-working urban residents were raised. State-owned capital was allocated to

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