China to further improve budgetary system guiding state-owned capital

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China’s State Council, the country’s cabinet, issued guidelines on Saturday to improve the operating budget system for state-owned capital, in an effort to give more support to state-owned enterprises (SOEs), and promote high-quality development of China's economy.

The decrees outline detailed measures, aiming to put in place a comprehensive, optimized, smooth and effective budget system by the end of the 14th Five-Year Plan period (2021-25).

According to the document, key reform measures should be implemented to improve the earnings delivery mechanism for state capital operations and enhance the management of revenue from these operations to ensure that profits are correct and credible, and that earnings are declared and turned over in full and in a timely manner.

“Improving the mechanism for handing over the revenue of state-owned capital will help enhance the country’s financial strength by improving the efficiency of state-owned capital,” Wang Peng, an associate researcher from the Beijing Academy of Social Sciences, told the Global Times on Friday.

The guidelines underscore the need to optimize the state capital expenditure structure, guide capital to focus on key areas and weak links, and enhance guarantees for major, national-level strategic programs.

Wang noted that by optimizing the expenditure structure and focusing on major national strategic tasks, the efficiency of the use of state-owned capital can be improved and the development of related industries can be given increased priority, which in turn promotes the restructuring, transformation and upgrading of the Chinese economy.

The document laid out measures to strengthen the management of the operating budget system for state-owned capital, including efforts to strengthen the management of the directory of SOEs, improve budget presentations which will be subject to the supervision of the National People's Congress and the government’s audit office.

“The move can standardize the operation and management of state-owned capital, reduce risks and guarantee appreciation of state-owned capital,” Wang said.

The operating budget system’s important regulatory role towards macroeconomics and the structure of state-owned economy will be fully leveraged, the guidelines noted.

“These new measures will help promote the reform and transformation and upgrade of SOEs, improve their competitiveness and efficiency, and thus promote the high-quality development of China's economy,” the expert noted.

In addition, the measures will improve transparency and standardization of budget management, enhance investor confidence in state-owned capital, stabilize market expectations, and promote the smooth operation of the country’s economy, Wang said.