Reform of the budgetary system gradually made progress. The budgetary system for managing state capital was put into trial operation. The new classification system for government revenue and expenditures was widely adopted in compiling budgets and final accounts and implementing budgets. The reform requiring all central and local government departments to prepare their budgets was deepened, and progress was made in improving the system of standards for expenditures. Trials to set allowable limits for in-kind expenditures and to evaluate performance of budgetary expenditures were conducted. The reform to set up a centralized treasury payment system was carried out in all central government departments, their subsidiary bodies responsible for preparing their own budgets, governments of provincial-level localities and cities specially designated in the state plan, and bodies of most cities and counties that prepare their own budgets. This reduced the steps in the transfer of funds. Trials were conducted on the computerized horizontal integration of the bank accounts for the tax revenue of finance departments and tax departments with the treasury in more than ten provinces. Reform of the collection and transfer of non-tax revenue was carried out in approximately 50 central government departments and nearly all localities, ensuring that revenue finds its way to the state treasury in a timely manner. We improved the government procurement system and deepened the reform of separating revenue from expenditures. Steady progress was made in standardizing the distribution of income to civil servants. Support for corporate and financial reform was also strengthened.

Overall rural reform was deepened. This reform was carried out to varying degrees in 31 provincial-level localities across the country. The tax and fee reform in state-owned farms was promoted, saving 18.56 million farm workers 6.2 billion yuan, or 332 yuan per person. Six billion yuan was appropriated from the central budget to pay off rural debts that were incurred in making nine-year compulsory education universal. Local governments also actively took steps to raise financial resources for this purpose. The overall reform in large lake regions to ease the financial burden of farmers there was steadily advanced, saving 26.16 million farmers 2.3 billion yuan, or 89 yuan per person.

6. Financial management and oversight were enhanced.

The timeframe for budgetary preparation was extended, and procedures for preparing and submitting budgets were standardized. Supervision of budgetary preparation was strengthened. Budget implementation work was strengthened. Relevant institutions and measures were improved, and budgetary implementation became more efficient. Trials of paying the expenses of official business with bankcards progressed smoothly. Review of state-owned assets in administrative bodies and government-affiliated institutions was completed. A number of laws and regulations, including the new Law on Corporate Income Tax, were enacted. Research on reform of government accounting was deepened. The new General Rules on Corporate Finance and Rules on Finance in Financial Enterprises were issued and implemented. A system of corporate accounting norms was steadily implemented in both listed companies and some unlisted SOEs. The new system of auditing norms was widely instituted in accounting firms. Notable results were achieved in fiscal oversight. A total of 56.9 billion yuan was found to have been used contrary to regulations or disciplinary rules, of which 21.5 billion yuan was recovered, and responsible persons were held accountable for the losses. Steady progress was made in the computerization of financial management, and its successes are gradually becoming apparent. The State Council gave careful consideration to the relevant decisions and resolutions of the NPC as well as the comments and suggestions raised in the auditing report, and it requested that the Ministry of Finance and other relevant departments willingly accept the oversight by the NPC, the auditing authorities and the public, and take effective steps to rectify their problems. The Ministry of Finance and other relevant departments have worked hard to identify the causes of problems and conscientiously rectified them. The State Council has submitted a report on this matter to the Standing Committee of the Tenth NPC.

The year 2007 was the last year in the term of this government. A review of the past five years shows that work in public finance took on a new aspect.

Financial strength was constantly increased. Between 2003 and 2007, national revenue totaled about 17 trillion yuan, 10 trillion yuan more than the total of the preceding five years, and an average annual increase of 22.1%. National expenditures totaled about 17.7 trillion yuan, 9.6 trillion yuan more than the total of the preceding five years, and an average annual increase of 17.6%.

Note:

Figures for 2007 are performance figures and may differ somewhat from the final accounting figures.