People's lives continued to improve. Implementing a more proactive employment policy
We implemented policies on subsidies for employment and business start-ups, and strengthened capacity building for providing better public employment services. The central budget's employment subsidies totaled 46.878 billion yuan, a rise of 6.8%; a total of 13.61 million new urban jobs were created over the year.
Promoting reform and development in education
A total of 84.4% of the central budget's transfer payments for education went to the central and western regions, and were weighted especially toward poor areas. This has resulted in exemption of all tuition and miscellaneous fees and free textbooks for around 145 million students in compulsory education around the country, living allowances for 13.92 million boarding students from financially disadvantaged families, 14 million children living with migrant worker parents in cities being able to have their fiscal outlays for education transferred along with them, and 37 million students receiving subsidies for nutritious meals. Funding support was also provided for the development of preschool education, regular senior high schools, vocational education, and higher education.
Ensuring the basic wellbeing of the people
Basic pension payments for retirees of enterprises, Party and government offices, and public institutions were raised by around 5%. The minimum basic pension benefits for rural and non-working urban residents under the basic aged-care insurance scheme were raised to 88 yuan per person per month, and mechanisms were established to set standards on and regularly adjust basic aged-care insurance benefits. Work was carried out to transfer a portion of state capital to top up social security funds; this work was basically completed on a trial basis in five central government enterprises and in Zhejiang and Yunnan provinces, and is ongoing in 19 central government enterprises. This has promoted the establishment of an operating mechanism for combining transferring a portion of state capital with efforts to gradually make up for shortfalls in enterprise employees' basic aged-care pension funds. The government subsidy for basic medical insurance for rural and non-working urban residents was raised to 490 yuan per person per annum, with half of the 40-yuan increase being allocated to the serious disease insurance scheme. Annual per person government subsidies for basic public health services were raised to 55 yuan.
We supported the provision of subsistence allowances and of assistance and aid to people living in extreme poverty or facing financial difficulties. Subsidies and living allowances were increased for entitled groups, benefiting over 8.6 million people around the country. We continued to provide support for the rebuilding of housing in run-down urban areas and for the development of supporting infrastructure for public rental housing, funding the rebuilding of 6.26 million housing units in run-down urban areas and 1.9 million dilapidated rural houses. We deepened our efforts to bring cultural benefits to the people, subsidizing over 50,000 public cultural facilities to keep them free and open to the public.
We intensified fiscal and tax reforms. Accelerating reform of the fiscal system
We released reform plans on defining the respective fiscal powers and expenditure responsibilities of central and local governments for basic public services and for the medical and healthcare sector. Looking forward, we are actively advancing these reforms in fields like education, science and technology, and transportation.
Deepening reform of the budget management system
We implemented the CPC Central Committee and the State Council's Guidelines on Implementing Comprehensive Performance-Based Budget Management, and established an initial management system of this kind for project outlays of the central budget, covering the whole budget process from performance targets to execution oversight and performance self-evaluation for all central government projects and special transfer payments to local governments. We also put in place a mechanism to ensure the regular performance evaluation of key budgets, and during 2018 organized performance evaluations by third-party organizations on 38 key policies regarding public wellbeing and major projects, involving a total of 551.3 billion yuan; the evaluation results have been used to improve management, budget arrangement, and relevant polices. Central government budgets and final accounts were released in more detail, and further progress has been made in advancing the disclosure of budgets and final accounts of local governments andtheir departments at the provincial, city, and county levels. The trial preparation of government financial statements was expanded.
Improving the tax system
Amid tax and fee cuts, we took initial steps to establish an individual income tax system based on both adjusted gross income and specific types of income, and reformed and improved the VAT system. We pressed for tax legislation, for the smooth implementation of the Environmental Protection Tax Law, Vessel Tonnage Tax Law, and Tobacco Leaf Tax Law, for the deliberation and adoption by the NPC Standing Committee of the Tax Law on Farmland Used for Non-agricultural Purposes and the Vehicle Purchase Tax Law, and for the submission as per procedure of the Resource Tax Law to the NPC Standing Committee for its first reading.
Deepening the reform of state capital and SOEs
For the first time, we presented to the NPC Standing Committee a comprehensive report on the management of all state-owned assets and a specific report on state-owned assets in financial enterprises. We drove forward the issuance of guidelines on piloting reforms in state capital investment and management companies, on piloting unified oversight and supervision over state-owned productive assets of central Party and government offices and public institutions, and on improving the management of state-owned financial capital, and we made steady and solid progress in ensuring their implementation. We made major progress in relieving SOEs of their obligations to operate social programs and in resolving their other longstanding issues.
We continued to improve fiscal management. Strengthening basic work on fiscal management
Through a combination of measures, we accelerated the pace of budget execution, and improved the preparation and allocation of funds for transfer payments to local governments. In addition to this, we supported local governments in their efforts to ensure payment of salaries, normal operations, and the basic wellbeing of the people, to ensure that rural migrant workers get paid, and to clear up overdue payments to private enterprises. Work on conducting dynamic monitoring of budget execution was accelerated, and mechanisms for the dynamic monitoring of budget execution were established in 36 provincial-level budget institutions and in most city- and county-level governments. We built an online platform to enable online reimbursement of official travel expenses. We strengthened control over suspense payments of local governments, and basically completed the work of reviewing and overhauling local governments' special accounts. A basic system of governmental accounting principles and institutions was established, and internal control standards and systems for administrative agencies and public institutions were improved.
Tightening up financial discipline
We stepped up oversight and compliance checks around the implementation of major fiscal and tax policies, and inspected local governments' debt management, their financial support for poverty alleviation, their use of funds for pollution prevention and control, and their implementation of preferential tax policies for economic development zones. We strengthened oversight of governmental accounting and government procurement agencies and strictly dealt with violations of laws and regulations.
Conscientiously rectifying problems uncovered in auditing
We put strong emphasis on rectifying problems discovered through the auditing process such as the proportion of transfer payments for specific purposes being too high and the coverage of performance-based budget evaluation being too narrow, determined responsibility for correction, produced detailed rectification measures, and made steady progress in resolving the issues. At the same time, we earnestly studied and adopted suggestions from auditing bodies and, with a focus on applying lessons learned from experience, established institutions and mechanisms for solid corrective results.
Overall, budget execution in 2018 was satisfactory and we achieved new outcomes in the reform and development of public finance, which gave strong impetus to sustained and healthy economic and social development. We owe these achievements to the firm leadership of the Party Central Committee with Comrade Xi Jinping at its core; to the sound guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era; to the oversight of the NPC and the CPPCC National Committee together with their deputies and members; and to the concerted efforts of all regions, all departments, and the people of all our nation's ethnic groups.
At the same time, we have yet to overcome the following main problems and challenges in budget execution and public finance work:
The foundation for revenue growth is fragile, while expenditures remain inflexible; some city- and county-level governments face serious budgetary constraints in ensuring payment of salaries, normal operations, and the basic wellbeing of people in their jurisdictions.
Accuracy in budget compilation still requires improvement and budgets are less binding than they should be; there are a number of weak links in budget allocation and management, and internal controls need to be further strengthened; and some local governments and departments fail to provide a solid foundation for budget execution, and their slow implementation leads to funds sitting idle.
Mechanisms for exit of special transfer payments need to be improved, and the coverage of periodic assessments is too narrow.
The execution of some projects under government-managed fund budgets is too slow, leading to a large carry-over; budget compilation has yet to cover all state capital operations; and enterprise employees' basic aged-care pensions have not been placed under nationally coordinated management, mechanisms for ensuring sustainable funding and benefit adjustments for medical insurance schemes need improvement, and there are challenges in ensuring sustained financing for social security funds.
Some local governments make promises beyond their financial capacity and in disregard of the actual situation, which harms their fiscal sustainability. Some local governments are still guarantying debt or making borrowings in breach of regulations, making it hard to keep debt risk under control. Poor implementation of some policies is masking any sense of benefit that enterprises and the public would otherwise be feeling. We attach the utmost importance to these problems and will adopt strong measures for their resolution.