Page 3 - REPORT ON THE EXECUTION OF THE CENTRAL AND LOCAL BUDGETS FOR 2020 AND ON THE DRAFT CENTRAL AND LOCAL BUDGETS FOR 2021

With quarter-on-quarter improvement, our economy gradually returned to normal,

making China the world’s only major economy to achieve growth in 2020. We
attained a complete victory in the fight against poverty, and we scored decisive
achievements in securing a full victory in building a moderately prosperous
society in all respects. Overall, we have performed in a manner worthy of the

history books, earning the approval of our people and capturing worldwide
attention.

Looking back on the past year, it is apparent that the Covid-19 epidemic
brought difficulties and challenges to fiscal operations on a level that has not been
seen for many years. In the first quarter, national fiscal revenue fell by 14.3%
year-on-year due to the outbreak and spread of the virus, the first instance of

negative growth since 2009. In February and March alone, revenue fell by 21.4%
and 26.1% respectively, with 30 out of 31 provincial-level units seeing negative

growth of fiscal revenue that led to glaring imbalances between government
revenue and expenditure and particular difficulties in fiscal operations for local
governments. Facing this grave state of affairs, finance departments resolutely
carried out the requirements of the Party Central Committee and the State Council

on pursuing a more proactive and impactful fiscal policy. While making every
effort to ensure spending in key areas, we took prompt action to adjust and

improve the budget and strengthen counter-cyclical regulation, established a
mechanism for ensuring that new fiscal funds are directly allocated to
primary-level governments, and leveraged opportunities to increase revenue and
cut spending, thus keeping the budget balanced and fiscal operations stable.

Through arduous efforts, and as the epidemic situation improved and the
economy gradually recovered, fiscal operations picked up each quarter. Revenue
bounced back in the second quarter with the size of the drop shrinking to 7.4%,

went from negative to positive in the third quarter with an increase of 4.7%, and
continued to improve in the fourth quarter with an increase of 5.5%. Consequently,
budgetary targets for the year as a whole were largely met. Execution of both

central and local budgets was satisfactory.
1. Revenue and expenditure in the general public budget in 2020
1) National general public budget

Revenue in the national general public budget was 18.289492 trillion yuan,
representing 101.5% of the budgeted figure, a decrease of 3.9% compared with 2019.

2