Since the beginning of 2024, China's economy has shown clear signs of recovery and positive momentumHowever, it still faces numerous challenges and difficultiesThe financial situation remains in a "tight balance," necessitating efforts to continuously optimize the expenditure structure and improve the efficiency of resource allocation.

China's economy has transitioned from a phase of rapid growth to one focused on high-quality developmentThe primary goal remains to satisfy the people's increasing demand for a better lifeIn recent years, the structure of fiscal expenditure in China has been continually adjusted and optimized, with strong support provided for critical areas such as public welfare, thereby bolstering socio-economic development with essential financial backingAmid a backdrop of prominent fiscal imbalances, various levels of government have significantly increased investments in key sectors including education, technology, social welfare, employment, healthcare, agriculture, rural development, and ecological protection, with over 70% of this spending directed towards ensuring livelihoods

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Notably, expenditures for the central government's "three public expenditures" dropped by 20% in 2023 compared to 2019, while spending on key areas like education saw a notable increase of 25.5%. Furthermore, funding for technology grew by 30% from 2018 to 2023 to support national strategic initiatives.

Over the years, the transfer payments from central to local governments have increased from ¥7.44 trillion in 2019 to ¥10.29 trillion in 2023, a substantial rise of 38%, which has further enhanced local fiscal capacitiesHowever, optimizing the fiscal expenditure structure will be influenced by changes in both internal and external environments, development stages, and the priorities of government functions.

Ensuring and improving people's livelihoods remains a paramount focus for fiscal operationsHowever, an unfavorable external environment has deepened current challenges, including insufficient domestic demand, production and operational difficulties faced by certain enterprises, and increased pressure on employment and income for citizens

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Additionally, existing conflicts in fiscal revenue and expenditure persist, along with a long-term issue related to budget rigidity characterized by a formulaic approach to expenditure growthFractured and scattershot spending practices, alongside ineffective allocations and low efficiency in some sectors, pose further issuesGiven the mounting pressure on fiscal revenues, it is essential to seek a multi-faceted balance, continuing to refine the structure of fiscal expenditure and ensure effective use of funds.

It is vital to enhance precise allocations with a greater focus on benefiting the public, stimulating consumption, and bolstering post-pandemic economic recoveryImproving the effectiveness of fiscal resource utilization and policy efficiency is a key objectiveRegarding the allocation of expenditure resources, it is necessary to strengthen the balance between existing and new funds, and ensure an adequate supply of financial resources from multiple dimensions

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Beyond the general public budget, other resources must also be mobilized, such as increasing deficits, expanding the issuance of long-term special bonds, utilizing residual financing, and increasing the profits from state-owned enterprises, among other measures, to fill gaps in revenue and expenditure, while actively revitalizing various idle assets and resources to enhance fiscal coordination.

When directing financial expenditure, it is crucial to maintain a balanced approach, ensuring robust support for key sectors such as public welfare, consumption, and technologyAdhering to the principle of "tightening our belts" in government agencies is necessary to control general expenditure strictly and increase investment in essential services including education, employment, healthcare, elderly care, and social welfareThis focus should prioritize protecting the rights and interests of specific vulnerable and disadvantaged groups while ensuring the foundational "three guarantees" for local governments—security in housing, education, and basic healthcare

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Furthermore, fiscal spending is gradually shifting from heavy investment towards a more balanced approach that emphasizes both investment and consumption.

In terms of fiscal efficiency, performance management must be integrated throughout the entire budgeting process, from formulation to execution and supervision, enforcing accountability for ineffective expendituresIt is important to innovate spending methods while leveraging financial resources to drive more significant engagement from social investments.

To ensure the effectiveness of public investments, the adoption of digital solutions and the implementation of zero-based budgeting reforms are essentialUnder a zero-based budget, every expenditure is justified starting from a baseline of zero, thus establishing a flexible framework that can both increase and decrease spending based on necessityThis approach promotes cross-departmental coordination in policy and resource allocation, harnessing big data and AI technologies to enhance financial tracking and accountability throughout the expenditure process.

Moreover, optimizing the expenditure structure necessitates continuous enhancement of governance capabilities across all levels of government

Ensuring that public welfare improvements are based on sustainable economic growth and fiscal capacity is vital, as is establishing harmony among national and local expenditures, as well as between social welfare spending and economic development fundingIncreasing transfer payments to local governments is indeed necessary, but it is equally important to strengthen central fiscal resource coordination and elevate the central government's fiscal contribution in specific areasThis coordinated approach should focus on realizing high-quality national development as a unified strategyIn public welfare spending, it is crucial to secure a robust safety net for the basic needs of the populace while being responsive to community concerns, albeit avoiding over-promising or setting unrealistic expectationsEfforts must be made to strike a prudent balance, adapting financial commitments to the actual available resources.

Additionally, while it is critical to reduce investment in competitive sectors, it is equally important to localize financial strategies to strengthen investments in significant areas requiring support, such as rural revitalization, technological innovation, and green development