The State Council released a guideline on transfer payment - a redistribution of income in the market system - on Feb 2, in a bid to further support equal development - especially in China’s central and western areas.
The authorities said the current transfer payment mechanism falls short of the requirements of a modern fiscal and taxation system, and the country will thus implement a comprehensive, transparent and refined mechanism to ensure efficient fund use, and step up reforms of the system.
The plan - which will first aim to address urgent or widely recognized issues - will aim to learn from the experience of other countries, and practical problems will also be taken into consideration.
According to the guideline, the powers and expenditure responsibilities of government bodies will be clarified - in an effort to streamline administrative management.
Areas such as national defense, foreign affairs, national security - and issues related to nationwide market rules - will be the responsibility of the central government.
The transfer payment structure will be improved by raising the share of general transfer payment and strictly controlling special transfer payment.
Additionally, local governments should plan - in a rational way - on how to use fiscal funds.
The government will allow the market to play a decisive role, and will gradually restrict special transfer payment in competitive businesses and industries, to maintain a fair environment for market competition.
Efficient management and strict supervision of the transfer payment system will be required to facilitate the distribution of funds and to improve efficiency.
The latest budget report issued by the National People’s Congress in 2014 said there had been an increase in transfer payments, with payments from the central to local governments growing at a steady pace. The funds mainly went to central and western regions, thus promoting equality of basic public services in different areas.