BEIJING, Feb. 2 (Xinhua) -- While coping with heavy blows to the economy by COVID-19, China has set up a special transfer payment mechanism to ensure that fiscal funds can be directly channeled to primary-level governments and benefit businesses and the people.

The leadership has hailed the special mechanism, designed to channel increased fiscal funds in 2020 straight to the prefecture and county-level governments, an extraordinary measure in an extraordinary time and an important innovative step in macro regulation.

As the fiscal year of 2020 came to an end, what progress has China achieved? How is the mechanism defined? Will it be implemented in 2021? The following are some explanations.

-- A GREEN CHANNEL

Instead of adopting a deluge of strong stimulus policies amid disruption due to COVID-19, China has turned its focus toward improving the efficiency of funds transfer and usage.

In the 2020 government work report, the central government said it would increase the country's deficit by 1 trillion yuan (about 154 billion U.S. dollars) over the previous year and issue 1 trillion yuan of government bonds for COVID-19 control.

The aforementioned 2 trillion yuan would be transferred in full to local governments, and a special transfer payment mechanism would be established to ensure that the funds go straight to preserving jobs, people's livelihood and market entities, according to the report.

"No such funds are allowed to be withheld or diverted for non-designated uses," it said, noting that this measure must be promptly and fully implemented.

At a State Council's executive meeting on June 9, those at the meeting decided to set up the mechanism to channel the funds to prefecture and county governments at the earliest possible time and in full.

-- QUICK FUNDS TRANSFER

On June 30, China started the transfer of the funds, and its first monitoring system for directly funneled funds was put into operation the next day.

It took only 20 days for the country to channel more than 90 percent of the funds to the prefecture and county-level governments, finance minister Liu Kun told Xinhua in an interview in early January.

Provincial governments took only one week on average to transfer the funds to lower-level authorities.

In normal years, it would take more than 100 days to transfer such funds level-by-level to primary governments.

As of Dec. 29, 1.52 trillion yuan of the funds had been put into use, Liu said.

-- A REGULARIZED PRACTICE

China will explore establishing a regularized special transfer payment mechanism, a State Council's executive meeting decided on Oct. 21.

Transfer payments that can be directly distributed under fiscal responsibilities shared by central and local governments, eligible special transfer payments and general transfer payments of subsidy funding to guarantee basic fiscal capacity at the county-level can be included in the special mechanism, said a statement released after the meeting.

This year, the Ministry of Finance will summarize experience on the mechanism, improve relevant practices and turn it into a regularized institutional arrangement, Liu said.

In 2021, the amount and scope of directly distributed funds will be larger, he said, adding that efforts will be made to enhance fiscal and audit regulation, promote data sharing and incorporate the mechanism into the country's budget management procedures. ■

Source: Xinhua