The year 2017 is an important year for implementing the 13th Five-Year Plan and continuing the supply-side structural reform. The new normal in China's economic development is becoming more evident, the fundamentals of the Chinese economy remain favorable for long-term growth, market dynamism is being unleashed, and new drivers of development continue to grow. On the other hand, factors causing instability and uncertainty in the global economy are growing markedly, and China's economy is confronted with many serious problems and difficulties.

On the fiscal front, the potential for increasing revenue exists together with factors that may cause revenue to decline. The divergence between regions in terms of revenue growth will continue. Pressure is mounting from demands for spending in key areas and on inflexible items. The imbalance between revenue and expenditure remains serious. All levels of government must tighten their belts, act as advocates for hard work, plain living, and thrift, and use more financial resources on things that bring tangible benefits to the people.

Given the fiscal and economic situations we face, the thinking guiding the compilation of this year's budgets and public finance work is that we need to:

-- Follow the leadership of the Party Central Committee with Xi Jinping at its core

-- Uphold the great banner of socialism with Chinese characteristics

-- Put into practice the guiding principles from the 18th National Party Congress and the third through sixth plenary sessions of the 18th Party Central Committee

-- Follow the guidance of the Deng Xiaoping Theory, the Theory of Three Represents and the Theory of Sustainable and Balanced Development

-- Put into effect the guiding principles from President Xi Jinping's major policy addresses and his new concepts, thoughts, and strategies related to the governance of China

-- Move ahead with the plan for promoting balanced economic, political, cultural, social, and ecological progress

-- Implement the Four-Pronged Comprehensive Strategy*

-- Continue to make progress while working to keep performance stable

-- Embrace and apply China's new development philosophy

-- Understand, adapt to, and guide the new normal in economic development

-- Concentrate on raising the quality and efficiency of growth

-- Ensure that macro-level policy maintains economic stability, industrial policy is targeted, micro-level policy injects dynamism into the economy, reform policy delivers results, and social policy sees that basic needs are met

-- Focus on advancing supply-side structural reform

-- See that aggregate demand is appropriately expanded

-- Strengthen guidance over expectations

-- Ensure that development is more driven by innovation

-- Make fiscal policy more proactive and effective

-- Channel serious energy into cutting taxes and fees

-- Continue the reform of our fiscal and tax systems

-- Work hard to create a modern public finance system

-- Tighten our belts

-- Step up efforts to improve and integrate government expenditures, ensuring spending in key areas

-- See dormant budgetary funds put to good use

-- Use government funds to greater effect

-- Strictly implement the Budget Law

-- Raise capacity for legal compliance in the management of public finance

-- Strengthen management over local government debt

-- Prevent and defuse fiscal risks

-- Promote steady and healthy economic growth and social harmony and stability

This should ensure that we greet the 19th National Party Congress with brilliant achievements.

*To make comprehensive moves to finish building a moderately prosperous society in all respects, deepen reform, advance the law-based governance of China, and strengthen Party self-governance.

In line with this thinking, we make sure the following principles underpin our preparation of the 2017 budgets:

First, cutting taxes and fees

We should continue to implement and improve policies aimed at reducing taxes and fees -including the replacement of business tax with VAT- and introduce new measures to cut taxes and fees, further reducing the burden of businesses and making sure tax and fee cuts have positive effects on economic and social development.

Second, continuing the reform of our fiscal and tax systems

With a view to creating a modern public finance system, we should move faster to improve the way fiscal powers and expenditure responsibilities are shared between the central and local governments, appropriately determine how they share revenue, work on improving local tax systems, and work to establish fiscal and tax systems whereby the powers, responsibilities, and interests of the central and local governments are clearly defined so that full play is given to the initiative of both.

Third, continuing to adjust and improve our spending structure

On the basis of appropriate expenditure increases, we should work toward stopping spending on some items from constantly increasing and make a big push to cut general expenditures so that our limited funds are used for our priorities. We need to better meet the demands of moving ahead with supply-side structural reform and meeting the basic needs of the people.

Fourth, putting idle budgetary funds to use

We should be integrating special funds that share similar policy goals, investment directions, and modes of management, and transfer more funds from budgets for government-managed funds and state capital operations into general public budgets.

Fifth, guarding against and defusing fiscal risks

We need to keep the deficit-to-GDP ratio at a reasonable level, work to impose ceilings on government debt and bring it under budgetary management, and improve mechanisms for local governments to secure financing and respond to debt-related risk emergencies. We need to give stronger financial support to regions with extremely tough conditions and administrative areas at the provincial level facing particular difficulties to ensure steady operations in their public finance.

Fiscal policy for 2017 will be more proactive and we will work to implement it more effectively.

First, continuing to cut taxes and fees in favor of enterprises

We will improve the policy on trials to replace business tax with VAT, and ensure that tax reductions achieve a greater impact. We will halve corporate income tax for more small and micro businesses by raising annual taxable corporate income threshold from 300,000 to 500,000 yuan. The portion of spending on research and development by small and medium-sized enterprises (SMEs) that is eligible for tax deductions will be raised from 50 to 75 percent. The reduction and exemption policy on six taxes, including the land use tax on logistics companies renting township land for commodity storage facilities, expired at the end of 2016, but we will continue to implement it this year, which will reduce taxes on enterprises by approximately 350 billion yuan. We will fully overhaul government-managed funds to ensure that they are managed according to standards, cancel funds such as the urban public facility surcharges, and authorize local governments to reduce or waive payments into certain funds. We will cancel or suspend 35 central government administrative charges on enterprises, cutting these charges by another more than 50 percent, and release the lists of central and local government administrative charges to the public. We will further overhaul and exercise standard-based management of business and service fees and charges, and make an appropriate cut in the ratio of enterprise contributions to the old-age insurance, medical insurance, unemployment insurance, workers' compensation, maternity insurance, and housing provident fund schemes. All told, this will reduce fees and charges on enterprises by around 200 billion yuan this year.

Second, keeping the deficit-to-GDP ratio at 3 percent while moderately expanding spending

We will keep the deficit-to-GDP ratio the same as last year, and allow an increase in the deficit that corresponds to GDP growth. While working to reduce taxes and fees in support of tax credit policies, the central and local governments must use appropriate revenue budgeting and put all dormant budgetary funds to good use to ensure there is no contraction in spending intensity and there is an expansion in real spending.

Third, ensuring fiscal funding for key areas and making government spending more effective and targeted

In using financial resources newly acquired or freed up by adjusting dormant budgetary funds, we will give preference to promoting supply-side structural reform and ensuring effective demand moderately expands. We will increase investment in key areas of work including meeting our people's basic needs, poverty alleviation, agriculture, education, and promoting ecological progress, and will further slant financial allocations to favor regions facing difficulties as well as counties and townships. We will see that government funds are used more efficiently, and strengthen fiscal capacity to guarantee basic public services.

In implementing proactive fiscal policy, we will endeavor to promote supply-side structural reform and give impetus to the resolution of structural imbalances in supply and demand. In our continued support for the resettlement of workers laid off from the iron, steel, and coal industries as overcapacity is cut, we will make awards and subsidies available based on the level of progress being made in resettling workers in different regions and implement and improve related policies. Regions that face bigger difficulties in resettling workers and meeting spending needs will be given greater priority in relation to resettlement awards and subsidies and relevant employment funds. We will work to prevent and defuse risks resulting from overcapacity in the coal and electricity industries.

We will provide financial support for continued agricultural supply-side structural reform. We will strive to see that the financial sector serves the real economy more efficiently, and more credit flows into the real economy. We will fully leverage the role of funds for promoting industrial transformation and upgrading to support smart manufacturing, green manufacturing, initiatives to build robust foundations for industry development, and the development of manufacturing innovation hubs, and to speed up implementation of the Made in China 2025 strategy.

We will make the funds available for implementation of the development plan for China's strategic emerging industries in the 13th Five-Year Plan period (2016-2020), giving impetus to the growth of strategic emerging industries including energy conservation and environmental protection, next-generation information technology, and high-end equipment manufacturing. We will increase financial support for efforts to popularize application for first sets of key equipment, and will bring new materials under the coverage of insurance subsidies for initial applications of certain products.

We will continue to earmark funds for the development of SMEs and finance the initiative to designate demonstration cities to act as business startup and innovation hubs for small and micro businesses. We will speed up the investment and operations of the National Fund for the Development of Small and Medium-Sized Enterprises and the National Venture Capital Guide Fund for Emerging Industries. We will continue to implement a host of tax credit policies such as those concerning the accelerated depreciation of fixed assets and maker spaces, so as to support business startups and innovations by the general public. We will step up work to pilot the construction of underground urban utility tunnels and the development of sponge cities to improve urban infrastructure. We will set up the Innovative Development Guide Fund for Trade in Services in a bid to cultivate new competitive edges in foreign trade. We will support the implementation of the three key initiatives: the Belt and Road Initiative, the coordinated development of Beijing, Tianjin and Hebei, and the development of the Yangtze River economic belt in order to promote coordinated development between regions.

-- Education

From the spring semester, we will introduce a unified policy whereby Chinese students receiving compulsory education are exempted from paying tuition and fees and paying for textbooks and a subsidy will be provided for the living expenses of students from families with financial difficulties. We will also ensure that the funds for these exemptions and subsidies as well as for the public funding benchmark per student are transferred if students change schools. We will continue to provide funding for improving conditions at badly built or poorly operated schools and other initiatives and for addressing the prominent problems in developing rural compulsory education. We will continue to implement the action plan for preschool education. We will provide financial support for infrastructure improvement for modern vocational education, integration between vocational education and industry, and cooperation between colleges and businesses. We will increase government grants for PhD candidates. We will ensure proper implementation of the budgetary appropriation system for central government institutions of higher learning so that efforts are coordinated to develop world-class universities and disciplines. We will provide further funding for moves to combat poverty through developing education with the focus on poor areas and populations.

-- Science and technology

We will give more financial support to basic research, research on cutting-edge technologies, research for the public benefit, and research and development for major generic key technologies. We will strengthen work to ensure stable financial support for public benefit research institutes (centers) and make funds available to facilitate the reform and development of research institutions and promote the open sharing of scientific and technological resources. We will finance efforts to further advance the establishment of a number of national laboratories in important fields of innovation and implement major science and technology projects. We will provide support to the launch of the Programs for Technological Innovation 2030.

-- Social security and employment

We will increase basic pension payments for retirees as appropriate and establish a mechanism for making reasonable adjustments to basic pensions. We will take steady steps to reform the basic old-age insurance system and expand its coverage. On the basis of progress in all related reform work, we will establish a central regulation system for basic old-age insurance funds. We will also formulate a plan for the transfer of a portion of state capital into social security funds. We will strengthen management over basic pension fund revenue and expenditures, and take effective measures to guard against payment risks.

We will step up the coordination of resources for social assistance and carefully determine the most appropriate subsistence allowances for Chinese citizens. We will improve our policies for providing assistance to people living in extreme poverty. We will strengthen work to secure the welfare of children living in difficult circumstances and ensure care and protection for children remaining in rural areas while their parents work away. We will strengthen financial support for programs that benefit people with disabilities.

We will adjust subsidies and living allowances for entitled groups at an appropriate time. Well-regulated trials will be carried out to establish long-term care insurance schemes. We will implement more proactive employment policies, improving our policies and measures for promoting employment and startups and doing more to help key groups find employment. We will conduct research on developing a system for life-long vocational skills training.

-- Health care

We will improve the mechanisms to ensure stable and sustainable funding for basic medical insurance and to adjust reimbursement rates for medical expenses, uphold the principle that benefit levels must be appropriate, and give particular weight to protection against major diseases. We will increase both annual government subsidies and personal contributions for basic health insurance for rural and non-working urban residents by 30 yuan, bringing the total up to 180 and 450 yuan a year per person, respectively. We will bring basic medical insurance funds under budgetary management and roll out reforms nationwide to the way medical payouts are made, using predominantly payouts according to the type of illness plus multiple other methods, and work to curb any unreasonable growth in medical costs. We will help carry out comprehensive reforms in public hospitals nationwide and improve the operating systems of community-level medical and healthcare institutions. We will raise the basic annual per capita government subsidies for public health services from 45 to 50 yuan.We will support the law-based development of traditional Chinese medicine. Having adopted the policy of allowing all couples to have two children, we will strengthen our maternity medical and healthcare services.

-- Poverty alleviation

The central government will allocate 86.1 billion yuan to subsidize local poverty reduction, an increase of 20 billion yuan, or 30.3 percent over last year. The funds will be used to support implementation of the fundamental strategy of targeted poverty reduction. We will coordinate the use of funds allocated to fields including agriculture, education, social security, and health care that are earmarked for poverty alleviation; further boost investment in the fight against poverty; and ensure that government investment plays a principal and guiding role in poverty reduction through development. We will speed up work to improve the infrastructure and basic public services in poor areas and step up support for reducing poverty by developing local industries, promoting education, and improving health standards. The integration of different rural development funds will be piloted in poor counties throughout the country. We will carry out inspections on the use of funds for poverty reduction.

-- Agriculture, forestry, and water conservation

We will implement the reform plan for building an agricultural subsidy system geared toward ecological conservation, improve our system for subsidizing agriculture, ensure subsidy policies are more precise and better targeted, and boost the development of new industries and new forms of business in agriculture.

We will take constructive, steady steps to reform the pricing mechanism and the purchase and storage systems for grain and other important agricultural products; and we will continue and improve the minimum purchase price policy for rice and wheat, making reasonable adjustments to these prices, to enable reasonable parity between prices. We will make sure the reform of the corn purchase and storage system is carried out effectively, and will improve the system for subsidizing corn production. We will work to reduce excess stockpiles of policy-supported grain and cotton. We will adjust and improve the guaranteed base price policy for cotton and improve the way in which the subsidy for cotton production is granted. We will also adjust the guaranteed base price policy for soybeans. We will improve the mechanism for subsidizing major grain-producing areas and work to better utilize risk funds for grain.

We will increase food crop production based on farmland management and the application of technology, develop high-efficiency water-saving irrigation, and significantly scale up the development of high-grade farmland and land improvement. We will continue support for trials to restore cultivated land contaminated by heavy metals and adjust the production mix of agricultural products, and will expand the coverage of work to deal comprehensively with the over-abstraction of groundwater in north China.

We will step up support for post-disaster water conservancy construction in areas in need of attention. We will move forward with adjusting the production mix of food, cash, and fodder crops, and facilitate the development of appropriately scaled-up agricultural operations. We will move faster to make progress in the development and operation of an agricultural credit guaranty system at and below the provincial level. We will support forest protection, management, and cultivation, and step up support for afforestation and forest improvement efforts.We will improve the dynamic mechanism for adjusting compensation for forest management and conservation efforts that produce a positive ecological impact. We will support wetland protection and restoration efforts to encourage the resumption of wetland growth. We will deepen comprehensive reform in rural areas, move ahead with reforms in state farms, farms on reclaimed land, state forestry farms, forestry areas, and rural supply and marketing cooperatives, and develop and strengthen collective village enterprises.

-- Ecological conservation and environmental protection

We will ensure the support is there for fighting the battle against air, water, and soil pollution. We will provide government awards or subsidies to key regions for efforts to prevent and control air pollution caused by the use of coal or other factors. We will support the prevention and control of water pollution in key water basins and conduct surveys on soil pollution in order to strengthen the prevention and control of water and soil pollution. We will increase transfer payments for key ecological zones. We will act when appropriate to launch the second set of trial projects under the initiative to protect and restore mountain, water, forest and farmland ecosystems. We will fully implement a new round of subsidy and reward policies for grassland ecological conservation, support the new round of initiatives to turn marginal farmland into forest or grassland, expand the coverage of these initiatives, and realize coverage of protective policies for all natural forests. We will move forward with royalty reform for mineral resources and the establishment of a mechanism of intra-river basin compensation for ecological conservation. We will drive the expansion of pilot projects for developing a cap-and-trade system for emissions. We will support trials for the national park system.

We will continue to provide new-energy vehicle subsidies while raising the technological threshold for them and improving the way they are provided. We will ensure thorough implementation of the initiative to demonstrate the integration of fiscal policies for energy conservation and emission reductions. We will support the exploitation and utilization of clean energy resources such as coal seam gas, shale gas, and hydropower in rural areas, as well as the move to improve the quality of refined oil products. We will adjust the mechanism for subsidizing the use of renewable energy for electricity generation. We will also promote the development of a circular economy and clean production. We will give further support for comprehensive measures to address prominent environmental problems in rural areas.

-- Government housing support

We will provide strong support for the rebuilding of housing in rundown urban areas, and continue to promote the development of public rental housing and other government-subsidized housing as well as supporting infrastructure development. We will improve the way people displaced by rebuilding initiatives are helped to relocate and the way public rental housing is allocated, and push to see cities with large housing inventory increase the proportion of people receiving monetary housing compensation rather than housing. We will continue to make progress in renovating dilapidated rural housing, and central government subsidy funds will be used primarily for rebuilding unsafe housing for people eligible for subsistence allowances, for individuals who live at home in rural areas in extreme poverty and receive basic assistance, for the families of people with disabilities affected by poverty, and for households registered as living under the poverty line. Subsidies will also be appropriately increased.

-- Culture and sports

We will support local governments in their implementation of the national standards to guide the provision of basic public cultural services. We will strengthen support for the protection and proper use of cultural relics, and support the implementation of the initiative to develop and pass on China's fine cultural traditions. We will support efforts topromote the creation and production of works of literature and art and share Chinese culture with the outside world. We will increase the level of coordination between investments, resources, and policies for nonprofit cultural institutions and for-profit cultural enterprises, working to form a systematic and comprehensive fiscal policy system for the cultural sector. We will also improve the public sports facilities throughout the country and diversify the supply of services in the sports sector.

-- National defense

We will support efforts to deepen the reform of national defense and the armed forces, with the aim of building a solid national defense and strong armed forces that are commensurate with China's international standing and are suited to our national security and development interests. We will ensure that adequate funds are available to promote further military-civilian development.

-- Fiscal operations and safeguards for basic living standards in regions with acute financial difficulties

We will continue to increase short-term financial subsidies, and coordinate transfer payments to local governments including those for awards and subsidies for implementing the mechanism to ensure the basic financial capacity of county-level governments. We will intensify support to regions that are highly dependent on resources or energy and regions facing fiscal difficulties, and will bolster the safeguards that ensure basic needs are met. We will continue to increase transfer payments to old revolutionary bases, ethnic minority areas, and border areas.

-- Central investment in infrastructure

The central government will earmark 507.6 billion yuan for investment in infrastructure. The expenditure structure will be further improved, with a reduction in subsidizing small and miscellaneous projects, and a focus on poverty alleviation achieved by helping people living in inhospitable areas to relocate, major water conservancy projects and post-disaster water conservancy reconstruction, the improvement of city drainage facilities, a new round of work to upgrade rural power grids, railway construction in the central and western regions, and the rebuilding of rundown urban areas.

-- Cuts in general expenditures

Central departments will take the lead in tightening their belts, with major adjustments and reductions being made to the central government's regular expenditures. This will include the following.

First, we will continue to strictly limit the budget for spending on official overseas visits, official vehicles, and official hospitality in line with the principle that there should only be cuts, and no increases, to such spending. We will reduce expenditures related to meetings, training, publicity, consultation, "soft" research projects, and enterprise-related subsidies.

Second, expenditures for projects where there is some flexibility and for non-key projects will be cut by a margin not lower than 5 percent.

Third, budgetary appropriations will no longer be provided for projects whose policy goals have already been achieved, and new budgets are required for projects for which the environment for implementation has changed.

At the same time, we will require and guide local governments to ensure their related work, including reducing their general expenditures, is carried out to good effect, and take a firm stand against extravagance, waste, and unrestrained spending.

地方一般公共預算本級收入90018億元，增長6%。加上中央對地方稅收返還和轉移支付收入65650億元、地方財政調入資金800億元，地方一般公共預算收入總量為156468億元。地方一般公共預算支出164768億元，比上年執行數（扣除使用結轉結余及調入資金）增長6.2%。地方財政赤字8300億元，比2016年增加500億元，通過發行地方政府一般債券彌補。地方政府一般債務余額限額115489.22億元。

2017年中央一般公共預算平衡關系 新華社發