Report on the Implementation of the Central and Local Budgets for 2005 and on the Draft Central and Local Budgets for 2006

Fellow Deputies,

The Ministry of Finance has been entrusted by the State Council to submit this report to the Fourth Session of the Tenth National People's Congress (NPC) on the implementation of the central and local budgets for 2005 and the draft central and local budgets for 2006 for your deliberation and approval, and also for comments and suggestions from members of the National Committee of the Chinese People's Political Consultation Conference (CPPCC).

I. Implementation of the Central and Local Budgets for 2005

Under the firm leadership of the Central Committee of the Communist Party of China (CPC) and the State Council and guided by the scientific outlook on development, all localities and departments in 2005 followed the principles and policies set by the central authorities and relevant decisions and resolutions passed at the Third Session of the Tenth NPC, resulting in continued economic development, further development of all social programs and improvement in people's lives. Financial, taxation, customs and other departments at all levels administered public finance in accordance with the law, improved financial oversight and management and worked hard to increase revenue and cut expenditures. As a result, the budgetary targets for both the central and local governments were successfully achieved.

National revenue broke through the 3 trillion yuan mark to reach 3.162798 trillion yuan (excluding revenue generated through debt, both here and below), up 523.151 billion yuan or 19.8% compared to the figure for 2004, representing 108.1% of the budgeted figure. National expenditures amounted to 3.370812 trillion yuan, a year-on-year increase of 522.123 billion yuan or 18.3%, representing 104.5% of the budgeted figure. Expenditures exceed revenue by 208.014 billion yuan.

The separate figures for the budgets of the central and local governments are as follows:

Total revenue in the central government budget came to 1.724979 trillion yuan, an increase of 258.102 billion yuan or 17.6% over the figure for 2004 on a comparable basis (after allowing for the additional 58.411 billion yuan used for export tax rebates), representing 106.4% of the budgeted figure. This included 1.653594 trillion yuan collected by the central government, 258.06 billion yuan or 18.5% more than the amount for 2004, representing 108.5% of the budgeted figure. Total expenditures of the central government amounted to 2.024941 trillion yuan, 238.887 billion yuan or 13.4% more than that for 2004, representing 105.4% of the budgeted figure. Total expenditures included 877.573 billion yuan incurred at the central government level, an increase of 88.165 billion yuan or 11.2% over the amount for 2004, representing 104% of the budgeted figure. Expenditures for tax rebates and subsidies for local governments totaled 1.147368 trillion yuan, 150.722 billion yuan or 15.1% more than the amount in 2004, representing 106.5% of the budgeted figure. The deficit in the central government budget for 2005 is 299.962 billion yuan, 38 million yuan less than the 300 billion yuan approved at the Third Session of the Tenth NPC, equivalent to 1.6% of GDP. The total amount paid out from the central government budget to repay the principal due on domestic and foreign debts in 2005 came to 392.325 billion yuan in 2005. To cover this expense and the deficit for 2005, the central government issued 692.287 billion yuan worth of treasury bonds. In addition, it issued 10 billion yuan worth of treasury bonds for local governments. Revenue from funds controlled by the central government amounted to 139.91 billion yuan and expenditures by the central government taken from the above funds amounted to 139.91 billion yuan.