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Reuters

The government in China is making it harder for its regional governments to get cash transfers from the central authorities in another step to reform its fiscal system and reduce wasteful public spending.
The central government regularly transfers cash to regional authorities through fiscal transfers to ease their financial burden as they are responsible for nearly 80 per cent of all public spending, but get only half of the fiscal income.
These transfers are sometimes abused by local governments, which submit unnecessary investment projects to the central government for approval to get the money that is disbursed under special transfers.
The central government dispenses cash to regional authorities through either special or general transfers.
To reduce such malfeasance, general transfers will now account for more than 60 per cent of all fiscal transfers, the cabinet said in a statement released on the government’s website on Monday.
It did not say the amount of transfers made under general transfers in the past.
The document was dated December 27, but only made public on Monday. No date was given for when the new rule would be effective, but China’s parliament is scheduled to hold its annual meeting from March 5 and a host of new regulations will be passed then.
Controlling government spending and cutting waste is a cornerstone of China’s fiscal reforms.
Regional and local governments are heavily indebted, having borrowed to pay for the construction of public works.
A government audit at the end of 2013 showed local governments owed a total US$3 trillion as of the end of June 2013.
 


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Move comes amid huge debts among local authorities on the mainland


The government in China is making it harder for its regional governments to get cash transfers from the central authorities in another step to reform its fiscal system and reduce wasteful public spending.


China to limit cash transfers to regional governments to curb public spending

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Move comes amid huge debts among local authorities on the mainland

Move comes amid huge debts among local authorities on the mainland