Decision of the Standing Committee of the National People’s Congress on Strengthening the Review of and Supervision over the Central Budget

(Adopted at the 13th Meeting of the Standing Committee of the Ninth National People’s Congress on December 25, 1999; and revised at the 28th Meeting of the Standing Committee of the Thirteenth National People’s Congress on April 29, 2021)

The review of and supervision over the central budget must be further strengthened for these purposes: fulfilling the budgetary review and supervision functions of the National People’s Congress and its Standing Committee mandated by the Constitution and laws; acting on plans and requirements of the Central Committee of the Communist Party of China on strengthening the functions of reviewing and supervising budgets and final accounts by the people’s congresses and their standing committees; advancing law-based governance across the board; improving the system of budgetary review and supervision with Chinese characteristics; regulating budgeting behaviors, improving budget performance and practicing economy; and better exerting the significant role of the central budget in the modernization of the country’s governance system and capacity, high-quality development, social progress, improvement of people’s livelihoods, and deepening of reform and opening up across the board. Therefore, the following decisions are made:

I. Exhaustive review and full-process oversight of government budgets and final accounts shall be strengthened. In doing so, the National People’s Congress and its Standing Committee shall, under the centralized, unified leadership of the Central Committee of the Communist Party of China, serve the overall work of the Party and the country, carry out law-based review and supervision through a people-centered approach targeting key areas with an emphasis on the effectiveness, and ensure the implementation of the Constitution and laws and national principles, policies, decisions and plans.

1. The review of and supervision over fiscal policies shall be strengthened. The review and supervision shall focus on the following: compliance with national principles, policies, decisions and plans; alignment with economic and social development goals and the overall requirements of macroeconomic regulations; improvement of medium-term fiscal planning to provide financial support for major national strategic tasks; efforts to fully heed the opinions and suggestions of the deputies to people’s congresses and people from all sectors of society while making fiscal policies; and the soundness, feasibility, and sustainability of fiscal policies.

2. The review of and supervision over general public budgets shall be strengthened. The review of and supervision over the total spending and spending structure of general public budgets shall focus on the following: compliance with national principles, policies, decisions and plans; the total spending and its changes; the size of the fiscal deficit and its proportion to the estimated annual GDP; and the adjustment and optimization of the spending structure, strict control of general expenditures, and the increase in the efficiency of allocating and using government funds.

The review of and supervision over key expenditures and major investment projects shall focus on the following: the coordination of key expenditure budgets and expenditure policies; changes in the scale of key expenditures and their structural improvement; argumentation of decisions on key expenditures, as well as the policy objectives and performance; the compatibility of major investment projects and the national economic and social development plans; and argumentation of decisions on major investment projects, and the allocation and performance of such investments.

The review of and supervision over department budgets shall focus on the following: budgetary management for all departmental revenues and expenditures; the alignment of department budgets, with expenditure policies and departmental responsibilities; the development of project databases; budgets for key departmental projects and their performance; the allocation of new assets; the use of carryover and surplus funds; and the rectification of problems identified in the audit.

The review of and supervision over transfer payments from the Central Government to local governments shall focus on the following:  support for the Central Government in exercising its fiscal powers and fulfilling its expenditure responsibilities through various transfer payments; efforts to maintain a financial balance between regions and improvement of the capability to guarantee public services at the primary level; improvement and standardization of the transfer payment system and improvement of the transfer payment structure; the regular evaluation and exit from special transfer payments; the availability and use of budgeted transfer payments; and the performance of transfer payments.

The review of and supervision over revenues in the general public budget shall focus on the following: the alignment of budgetary revenue projections with economic and social development goals and the overall requirements of national macro-regulation; the reconciliation between tax revenues and the corresponding tax bases; the compliance of budgetary revenue collection with laws and regulations and the integrity of the budgetary revenues; the improvement of the structure and quality of the budgetary revenues; and the law-based regulation of the management of non-tax revenues.

3. The review of and supervision over government debts shall be strengthened. The review of and supervision over Central Government debts shall focus on the following: setting a reasonable Central Government bond ceiling for the year based on the deficit and the Central Government bond limit at the end of the previous year, and  keeping the difference between the balance and limit of the Central Governemnt bonds within an appropriate range; assessing government debt risks and achieving a long-term balance between stable growth and risk prevention. The review of and supervision over local government debts shall focus on the following: budgetary management of local government debts; assessing the risks facing local government debts based on the debt ratio, the interest expense ratio and other indicators; setting a reasonable ceiling for local governments’ new general debts and special debts; repaying local government special debts; and actively defusing local governments’ debt risks.

4. The review of and supervision over the budgets of government-managed funds shall be strengthened. The review and supervision shall focus on the following: the compliance of the establishment, collection, use and duration of funds with laws and regulations; the soundness, feasibility, and sustainability of revenue and expenditure policies and budget allocation; the use of the government-managed funds; and the performance of government-managed funds and their evaluation and adjustment.

5. The review of and supervision over the budgets of state capital operations shall be strengthened. The review and supervision shall focus on the following: the comprehensiveness of the budget and the robustness of the budget system; the performance of duly turning in the revenues of state capital, the proceeds from transfer of state-owned assets, and other proceeds; the use of the expenditures and the compliance of the projects with laws, regulations, and policies; the transfer of funds from budgets of state capital operations to general public budgets; the management of government investment funds; and the improvement in the allocation of state-owned capital and the coordination between state-owned capital allocation and the reform of state-owned capital and state-owned enterprises.

6. The review of and supervision over budgets for social insurance funds shall be strengthened. The review and supervision shall focus on the following: the arrangements in revenues and expenditures, the financial subsidies, and the balance between the budgets for various funds; the implementation of social security policies in budget allocation; the facilitation of national-level unified management of basic old-age insurance funds; the performance of funds and operation and investments; and medium- and long-term revenue and expenditure forecasts and sustainable operation.

7. Release of budgets and final accounts shall be promoted to increase their transparency. The National People’s Congress and its Standing Committee shall, on the principle of “committing to transparency with few exceptions”, supervise the timely release of information on the budgets and final accounts by the Central Government and its departments, their response to issues of public concern, and acceptance of public oversight.

II. Supervision of the central budget preparation process shall be strengthened. The National People’s Congress and its Standing Committee shall, in line with the principle of “creating a budget before spending and spending in strict line with the budget”, ensure that budgets are highly itemized and prepared ahead of schedule. The draft central budget shall be prepared within the time frame prescribed in the Budget Law. The central budget shall, in accordance with the provisions of the Constitution and laws, embody state principles, policies, decisions and plans. The policies involved in the central budget shall be clear, the assessing criteria well-conceived, the arrangements fair and the budget itself readable and reviewable.

The draft central general public budget shall include a statement of budgetary revenues and expenditures, a budget statement of transfer payments, a statement of expenditures on basic construction, and a statement of government debt, and it shall explain the plans for budgetary revenues and expenditures and the performance objectives of transfer payments. The draft budgets for Central Government-managed funds shall be itemized by funds and shall be explained separately. In the budget of government-managed funds, use of funds in specific projects shall be listed in the expenditure section, and carryover and surplus funds and performance objectives shall be explained. In the draft central budget for state capital operations, specific industries or enterprises shall be listed in the revenue section, with the enterprises’ overall operating and financial conditions of the previous year stated; the field of use of funds and the specific uses shall be listed in the expenditure section, with the rationale for project plans and performance objectives explained. The draft central budget for the social insurance fund shall be prepared with reference to insurance items, reflect the progress made in promoting national-level unified management of basic old-age insurance, and illustrate the sustainable operation of social insurance funds.

III. The preliminary review of the central budget shall be strengthened and improved. The department of finance under the State Council shall, in a timely manner, report on the preparation of the central budget to the Financial and Economic Affairs Committee of the National People’s Congress and the Budgetary Affairs Commission of the Standing Committee of the National People’s Congress. The Budgetary Affairs Commission shall take into consideration the comments and input of deputies to the National People’s Congress and people from all sectors of society, communicate with the department of finance and other departments under the State Council, and prepare analytical reports on the annual budget. Forty-five days prior to the opening of the annual session of the National People’s Congress, the department of finance under the State Council shall submit the preliminary draft of the central budget to the Financial and Economic Affairs Committee, which shall conduct a preliminary review of the draft, deliberate on relevant key issues and put forward preliminary review opinions.

In the preliminary review carried out by the Financial and Economic Affairs Committee, the relevant special committees of the National People’s Congress shall conduct targeted reviews of the preliminary department budgets, the transfer payment funds and the policies in relevant areas and put forward targeted review opinions based on state principles, policies, decisions, and plans. In the targeted review opinions, suggestions on increasing certain budgetary expenditures shall be made simultaneously with suggestions on reducing other budgetary expenditures so as to maintain the balance, integrity and coherence of the budget. The targeted review opinions of the relevant special committees shall be submitted to the Financial and Economic Affairs Committee and the Budgetary Affairs Commission for study and handling and shall, when necessary, be distributed as attachments to the preliminary review opinions at the annual session of the National People’s Congress.

IV. Supervision over the execution of the central budget shall be strengthened. Under the leadership of the National People’s Congress and its Standing Committee, the Financial and Economic Affairs Committee and the Budgetary Affairs Commission shall strengthen supervision over the implementation of the central budget. The relevant departments under the State Council shall, in a timely manner, submit the briefing on the implementation of the budget resolutions of the National People’s Congress to the Financial and Economic Affairs Committee and the Budgetary Affairs Commission. The department of finance under the State Council shall regularly present the budget execution statements of the whole country, the central and local governments, with budgetary revenues and expenditures, government debts and other relevant information provided. The relevant departments of the State Council shall, via the national e-government website and other platforms, regularly present policy-related information and data on budget execution, macroeconomics, finance, auditing, taxation, customs, social security, and state-owned assets.

The Standing Committee of the National People’s Congress shall strengthen supervision over the implementation of key revenue and expenditure policies, the allocation and use of government funds in key areas, major fiscal and tax reforms and policy adjustments, and the implementation of major investment projects by listening to and deliberating on special work reports, inspecting law implementation, and carrying out investigation and research. Every August, the State Council shall report to the Standing Committee of the National People’s Congress on the budget execution of the year. The department of finance under the State Council and other relevant competent departments shall provide quarterly updates on the execution of budgets and the implementation of relevant policies and the progress of key projects.

The Standing Committee of the National People’s Congress shall, with the help of modern information technology, conduct integrated online budgetary supervision, improve the performance of budgetary review and supervision, and make the process  internet- and IT-based. Problems identified in integrated online budgetary supervision shall be reported to the relevant departments under the State Council in a timely manner, and the relevant departments shall, after verification, handle the problems and provide feedback on the handling of the problems.

V. The review of the central budget adjustment plan shall be strengthened. In the implementation of the central budget, the following adjustments shall be reviewed and approved by the Standing Committee of the National People’s Congress: any reduction in expenditures in key areas such as agriculture, education, science and technology, and social security; the issuance of new special Central Government bonds; and any increase in the debts borrowed by local governments. In the execution of the central budget, where it is necessary to make budgetary adjustments, the State Council shall work out a plan and submit it to the Standing Committee of the National People’s Congress between June and October of the year, except under special circumstances. Stringent control shall be enforced on budgetary adjustments. Expenditures of all departments and entities shall be carried out in accordance with their budgets. Where adjustments in the budgets are necessary due to major issues, they shall be made in strict accordance with the prescribed procedures. In the execution of the central budget, the department of finance under the State Council shall, in a timely manner, notify the Budgetary Affairs Commission of any important policies and measures introduced to increase fiscal revenue or expenditure, any transfer of funds into the National Social Security Fund, or any major changes in the structure of budgetary revenues and expenditures. The Budgetary Affairs Commission shall inform the Financial and Economic Affairs Committee of the relevant information in a timely manner and, when necessary, report to the Standing Committee of the National People’s Congress.

VI. The review of the central final accounts shall be strengthened. The draft central final accounts shall be prepared in accordance with the items listed in the budgets approved by the National People’s Congress, with the budgetary figures, the adjusted budgetary figures and the final accounts listed and important changes explained. Expenditures in the general public budget shall be itemized by functions with the content detailed down to third-level headings and by economic nature detailed to second-level headings. Budgetary expenditures of government-managed funds, state capital operations and social insurance funds shall be itemized by functions to third-level headings. Before the review of the draft of the central final accounts, reports shall be made to the Standing Committee of the National People’s Congress on specific matters subject to the accrual accounting as stipulated by the State Council. Thirty days prior to the Meeting of the Standing Committee of the National People’s Congress for review and approval, the draft of the central final accounts shall be submitted to the Financial and Economic Affairs Committee, which shall conduct a preliminary review in light of the audit report.

VII. The review of and supervision over budget performance shall be strengthened. All departments and entities shall carry out comprehensive performance-based budget management, strengthen prior performance assessment, manage performance objectives, and improve the system of budget performance indicators and the quality of performance evaluation. The departments and entities shall increase the use of performance evaluation results in policy improvement, budget allocation and management improvement, make budget performance information more open, and present important performance evaluation results while submitting draft final accounts to the Standing Committee of the National People’s Congress for review. The Standing Committee of the National People’s Congress shall strengthen its review of and supervision over the performance targets and evaluation results of the key expenditures and major projects. Where necessary, it shall convene a budget performance hearing.

VIII. The audit of and supervision over the central budget execution and final accounts shall be strengthened. Audit institutions shall conduct authentic, lawful, and effective audit of and supervision over the execution of the central budget, other fiscal revenues and expenditures, and the draft final accounts. They shall support the Standing Committee of the National People’s Congress in its review of and supervision over the execution of budgets and final accounts. In June of each year, the State Council shall submit to the Standing Committee of the National People’s Congress an audit report on the implementation of the central budget and other revenues and expenditures of the previous year. The audit report shall focus on the audit of the execution of the central budget and the draft final accounts of the previous year, the implementation of major policies, and the performance of government funds. The audit report shall reflect comprehensively and objectively the problems discovered in auditing, reveal the causes of the problems, and put forward suggestions for improvement. Problems identified in the auditing process shall be rectified and handled lawfully. The use and impact of audit results shall be increased, accountability be strengthened, and the auditing and rectifying mechanism be improved, with greater transparency in the rectification. Where necessary, the Standing Committee of the National People’s Congress may make resolutions on the audit report.

IX. Supervision over the rectification of problems identified in auditing shall be strengthened. The Standing Committee of the National People’s Congress shall conduct follow-up supervision over the rectification of the major problems identified in the auditing process. Supervision shall be strengthened by adopting a variety of approaches, including listening to and deliberating on special work reports and questioning about specific issues, to make supervision more effective. The establishment of a sound long-term mechanism for rectification shall be encouraged, and the budget management system shall be improved. To bring in synergy in supervision, efforts shall be made to strengthen the mechanism for coordinating the National People’s Congress’ budgetary review and supervision, with supervision based on discipline inspection and auditing, and to improve information sharing.

In December of each year, the Standing Committee of the National People’s Congress shall listen to and deliberate on the State Council's report on the rectification of problems identified in auditing, and may, when necessary, listen to individual reports on the rectification of problems made by the departments held responsible for such problems. Heads of these departments shall attend the meeting to hear comments and answer questions. The rectification reports submitted by the State Council shall correspond to the problems revealed and suggestions put forward in the audit report, with a focus on the rectification progress, and the detailed rectification results of each major problem found in audits and the problems found in the audit of the budget execution of the central departments. When necessary, the Standing Committee of the National People’s Congress may make resolutions on reports on the rectification.

X. The recording system shall be implemented in accordance with the law to enhance legal liability in budgeting. The State Council shall, in a timely manner, report the following to the Standing Committee of the National People’s Congress for record: regulations and other normative documents relating to budgeting; specific measures for categorizing revenues and expenditures of the central and local budgets, for local governments to turn over their revenues to the Central Government, and for the Central Government to make tax rebates and transfer payments to local governments; a compilation of the budgets and final accounts submitted to the State Council for record by the governments of provinces, autonomous regions and municipalities directly under the Central Government; the comprehensive financial report of the Central Government; and other matters that shall be reported.

Relevant organs, departments, entities, and local governments shall, in a timely manner, examine and address problems identified by the Standing Committee of the National People’s Congress in its review of and supervision over budgets and final accounts, and shall be held legally liable for violations of the provisions of the Budget Law and other laws. Where administrative actions need to be imposed, the relevant working bodies of the Standing Committee of the National People’s Congress shall notify the supervisory organs in a timely manner.

XI. Roles of deputies to the National People’s Congress shall be given full play to. The department of finance and other departments under the State Council shall give thought to the comments and input of deputies to the National People’s Congress and bear in mind their concerns when drafting budgets, formulating policies and promoting reforms, by holding seminars and briefings, conducting investigation and research on specific subjects, handling proposals and suggestions, and inviting deputies to the National People’s Congress to go on inspection tours. The relevant special committees of the National People’s Congress, and the relevant working bodies of its Standing Committee shall improve communication with deputies to the National People’s Congress and give full play to their roles. The mechanism for engaging deputies to the National People’s Congress in budgetary reviews shall be refined.

XII. Responsibilities of the Budgetary Affairs Commission. The Budgetary Affairs Commission is a working body of the Standing Committee of the National People’s Congress. It assists the Financial and Economic Affairs Committee in fulfilling the functions of  the National People’s Congress and its Standing Committee in reviewing budgets, final accounts, and budget adjustment plans and supervising budget execution. It supervises the management of state-owned assets and conducts follow-up supervision over the rectification of major problems identified in the auditing process. It engages in the integrated online supervision over budgets and state-owned assets. As entrusted by the Council of Chairpersons, the Budgetary Affairs Commission drafts relevant laws and assists the Financial and Economic Affairs Committee in deliberating on the relevant draft laws. It undertakes other specific tasks related to budgeting as stipulated in this Decision, and as assigned by the Standing Committee of the National People’s Congress and the Council of Chairpersons, and as requested by the Financial and Economic Affairs Committee. As agreed by the Council of Chairpersons, the Budgetary Affairs Commission may request relevant government departments and entities to provide budgetary information, relevant data and explanations. With the approval of the Council of Chairpersons, the Budgetary Affairs Commission may conduct investigations into the use of budgetary funds and special funds of all departments, budgetary institutions and major construction projects, and the relevant government departments and entities shall cooperate and provide assistance thereto.

This Decision shall come into force on the date of promulgation.