Funding to local govts to increase by 12.8%

The Chinese central government will increase the funds transferred to local governments by 12.8 percent, mainly to support infrastructure investment as a measure to counter economic fallout, said the finance minister on Friday.

That will be the highest growth rate of the transfer payments to local governments in history, to safeguard employment and people's livelihoods, as fiscal income is projected to decrease this year due to the novel coronavirus pandemic, Finance Minister Liu Kun told the media after the opening of the third session of the 13th National People's Congress, the country's top legislature.

He said that local governments' income is projected to reduce by 800 to 900 billion yuan ($112.39-126.48 billion) this year, and some areas may face large pressure.

"In the earlier months, the central government has accelerated fund delivery to local governments to ease financial difficulties. Generally, the operation of local governments is normal and stable," said Liu.

China's deficit-to-GDP ratio this year is projected at more than 3.6 percent. The ratio was 0.8 percentage points higher than that of last year. The deficit increase is projected at 1 trillion yuan ($140.6 billion) over last year, according to the 2020 Government Work Report.

All the funds increased by the raised fiscal deficit ratio will be transferred to local governments, and the issuance of a 1 trillion yuan central government special bond to contain the virus will also be delivered to the local governments, according to the minister.