Full Text: Report on China's central, local budgets
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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.
Figure 5 Budgetary Balance of the Central Government for 2010
Billions of 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.
Figure 6 Central Government Revenue in 2010
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.
Figure 7 Central Government Expenditures in 2010
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 billon 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 billon 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.
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