Perspective | Research on the Allocation of Intergovernmental Responsibilities and Expenditure Responsibilities in Shandong Province

1994'sTax Sharing System Reforminvolved the adjustment of powers and interests between the central and local governments, as well as among local governments at various levels, and was an unprecedented major reform. Clarifying intergovernmental fiscal relations is an essential part of this reform. The essence of the tax-sharing system is a significant adjustment of the interest pattern between local and central governments, and among local governments, in an institutionalized manner. Although the 1994 tax-sharing system reform effectively resolved the relationship between the central and local governments, the concentration of power and the need for regulation made the growth of central fiscal revenue the driving force behind China's fiscal system reform. Unfortunately, this system did not address the fiscal system of governments below the provincial level. In the past decade since the 18th National Congress, China has successively formulated plans and guiding opinions on the division of powers and expenditure responsibilities between central and local governments in various key areas, and based on this, arranged and deployed powers and expenditure responsibilities. Specifically, at present, the powers and fiscal expenditures between the central and local governments in areas such as national defense, foreign affairs, and administrative management have been basically clarified. However, there are still ambiguities in the division of powers and fiscal expenditures related to the protection of citizens' basic rights, especially in education, social security, and healthcare. In addition, in China, the special status of provincial governments often transcends the concept of local governments, becoming synonymous with local governments. Therefore, the discussion on local government fiscal expenditures needs to address not only the upward division but also the downward division. After the basic completion of reforms at the central and provincial levels, accelerating the definition of fiscal powers and expenditure responsibilities below the provincial level has become an essential part of continuing to deepen the reform.

The Decision of the Third Plenary Session of the 18th Central Committee of the Communist Party of China proposed that "we should establish a system that matches powers and expenditure responsibilities, further clarify the division of income between the central and local governments, and the central and local governments should bear and share expenditure responsibilities according to the division of powers." The expression "matching powers and expenditure responsibilities" in the Decision has attracted widespread attention from many experts and scholars. Although the concepts of "powers" and "expenditure responsibilities" were mentioned in the economic field in the 1980s and 1990s, it is not common to explain their connotations from a legal perspective. Therefore, analyzing the legal connotation of "powers" and "expenditure responsibilities" from the perspective of fiscal and tax law is particularly important.

"Powers" generally refer to the responsibilities and obligations that various levels of government should undertake in public affairs and services. Governments in different countries have differences in economic systems, political systems, and regional characteristics, and the functions of each country's government have both commonalities and differences. Currently, it is widely believed that in a market economy environment, the primary task of the government is to provide public services, and correspondingly, the powers of the government are the responsibilities and obligations it undertakes in providing public services.
 

From a legal perspective, the Constitution and relevant laws grant powers to various levels of government. Articles 62, 67, and 89 of the Constitution and Articles 8, 44, 59, and 61 of the Law on the Organization of Local People's Congresses and Local People's Governments at All Levels are all "power clauses" that stipulate the powers of the National People's Congress and its Standing Committee, the powers of local people's congresses at all levels and their standing committees, and the powers of local people's governments at or above the county level. Therefore, the legal connotation of powers should be based on the basic meaning of powers, clarifying the specific powers and legal boundaries of various levels of government and their subordinate departments. Since the state provides public services and public goods to its citizens, and receiving public services and products provided by the state is a basic right enjoyed by citizens as stipulated in the Constitution, powers are a term with constitutional significance. From a legal perspective, powers refer to the constitutional obligations that various levels of government should undertake in public affairs and services.

"Expenditure responsibilities," also known as fiscal expenditure responsibilities, generally refer to the fiscal guarantee obligations that the state should bear to complete a certain established public affair. There are various views in academia regarding the nature of expenditure responsibilities, including "responsibility theory," "obligation theory," and "combination of obligation and responsibility theory," among which "obligation theory" occupies a mainstream position. The author believes that the "obligation theory" should be adopted, as rights and obligations are relative, and powers and expenditure responsibilities are also a set of relative concepts. The government's powers essentially represent a function of public service, while expenditure responsibilities refer to the manifestation of government powers in fiscal expenditures, specifically including expenditure guarantee responsibilities and expenditure management responsibilities. In any fiscal system, the rights and responsibilities of the expenditure side are based on income and budget and should be considered within the entire fiscal legal system. Considering comprehensively, the legal concept of expenditure responsibilities should be the inescapable constitutional fiscal expenditure obligations of various levels of government in fulfilling fiscal powers.
 

The "Implementation Opinions of the Shandong Provincial People's Government on Deepening the Reform of the Fiscal Management System Below the Provincial Level" (Lu Zheng Fa [2019] No. 2) makes principled provisions regarding the powers of Shandong Province: the provincial level generally undertakes ten affairs including provincial general public services, public safety, education, science and technology, culture, tourism, sports and media, social security and employment, health, urban and rural community affairs, and agricultural, forestry, and water affairs, as well as transportation; municipal and county (city) levels generally undertake municipal and county (city) general public services, public safety, education, science and technology, culture, sports and media, social security and employment, health, environmental protection, urban and rural community affairs, agricultural, forestry, and water affairs, transportation, and industrial, commercial, and financial affairs. The powers of the province and the city and county are basically the same. This article mainly uses the "Shandong Statistical Yearbook - 2021" and the "Shandong Province 2021 Budget Execution Situation and 2022 Budget Draft" as data sources. Due to the slow update of overall data in the province, the 2021 data has not been fully updated. To better understand the phased situation of various expenditures among Shandong Province's governments, data from the five years from 2016 to 2020 is selected to analyze and compare the current situation of expenditures and expenditure responsibilities of the two levels of government in Shandong Province, aiming to identify the problems existing in the powers and expenditure responsibilities among local governments in Shandong Province through data induction and comparison.

From 2016 to 2020, in the public financial expenditure of Shandong Province, the average proportions of general public services, public safety, education, social security and employment, health, urban and rural communities, and agricultural, forestry, and water affairs were 9.678%, 6.82%, 20.308%, 12.838%, 8.91%, 10.704%, and 10.094%, respectively, with a total average of 79.352%. The average proportions for transportation, science and technology, culture, tourism, sports, and media were 3.838%, 2.24%, and 1.578%, with a total average of 7.656%. The total average of these 10 expenditures reached 87.008%. From the structure of provincial-level financial expenditures, it can be seen that the top five responsibilities and expenditure obligations are mainly concentrated in education, social security and employment, urban and rural communities, agricultural and forestry water affairs, and general public service expenditures. Among them, the largest expenditure is for education, followed by social security and employment expenditures.
 

In 2020, there were significant disparities in public financial expenditures among cities in Shandong Province, making the average proportions calculated for each city misleading. The top three cities for general public expenditure were Qingdao, Jinan, and Yantai, accounting for 14.11%, 11.47%, and 7.53% of the province's general public expenditure, respectively. Qingdao, the first, is nearly twice that of Yantai, the third. The three cities with the least proportion of general public expenditure were Zaozhuang, Rizhao, and Dongying, accounting for 2.41%, 2.55%, and 2.77% of the province, respectively. Zaozhuang, with the least proportion, is only one-sixth of Qingdao's general public expenditure, about one-fifth of Jinan's. Except for education expenditure, urban and rural community expenditure, and social security and employment expenditure, there are large differences in expenditure proportions across other fields among cities. Except for Jinan, the highest proportion is for education expenditure, while Jinan has the highest proportion for urban and rural community expenditure; except for Zibo and Liaocheng, the lowest proportion in each city is for financial expenditure, while Zibo and Liaocheng have the least proportion for expenditures related to natural resources, marine, and meteorological affairs. Overall, the highest proportion at the city level is for education expenditure, followed by social security and employment expenditure.

According to the fiscal expenditure situation in 2021, there were also significant differences in fiscal expenditures among cities. Among the 16 cities in Shandong Province, Qingdao had the highest fiscal expenditure amounting to 170.57 billion yuan, making it the only city in the province with expenditures exceeding 160 billion yuan; Jinan ranked second with 129.31 billion yuan, surpassing 120 billion yuan, followed by Weifang, which exceeded last year's third-ranked Yantai, reaching 87.98 billion yuan, and the third was Linyi (80.66 billion yuan). The fiscal expenditure scales differ from the second-ranked Jinan by 41.33 billion yuan and 48.65 billion yuan, respectively. The last two are Zaozhuang (27.38 billion yuan) and Rizhao (27.06 billion yuan), both below 30 billion yuan. The gap in fiscal expenditure scale between the highest Qingdao and the lowest Zaozhuang is 6.3 times, lower than the gap in regional economic development and fiscal revenue scale, but higher than the gap level in 2020. According to the growth situation of fiscal expenditure in 2021, there are obvious differences among cities. Liaocheng had the fastest growth rate of fiscal expenditure at 13.7%, followed by Jining (12.9%), Weifang (10.5%), and Dezhou (10.4%), all above 10%. Only four cities exceeded the provincial average growth rate (9.5%). Surprisingly, Yantai (-5.0%) and Weihai (-2.0%) experienced negative growth in fiscal expenditure.

From the comparison of fiscal revenue and expenditure growth in 2021, the correlation between the two is relatively low. Except for Jining (12.9%), where the growth rate of fiscal expenditure exceeded that of fiscal revenue (7.0%), the growth rates of fiscal expenditure in the other 15 cities were slower than those of fiscal revenue. This is mainly because, after the COVID-19 pandemic, the recovery growth of the economy has driven the revenue growth of various cities. The smallest difference between the two (fiscal expenditure growth - fiscal revenue growth) is in Liaocheng, indicating a relatively balanced growth of fiscal revenue and expenditure in that region; the largest gap is in Heze (18.9%), close to 20%, showing an imbalance in the growth of fiscal revenue and expenditure.

In 2020, the general public budget expenditure of Shandong Province was 112,335,163,000 yuan, plus transfer payments of 12,984,305,000 yuan, totaling 125,319,468,000 yuan. In 2020, Shandong Province's general public budget for each city.General transfer payments.Among them, the three cities with the highest proportion of transfer payments are Heze, Linyi, and Jining, mainly concentrated in the basic financial guarantee mechanism subsidy funds at the municipal and county levels, medical and health joint fiscal responsibilities transfer payments, and social security and employment joint fiscal responsibilities transfer payments.
 

In 2021, the execution amount of the provincial general public budget expenditure was 1,264,453,000 yuan, and the amount of general transfer payments to municipalities and counties was 210.526 billion yuan, plus special transfer payments, tax refunds, and other expenditures, totaling 25,082,077,000 yuan. From the fiscal revenue and expenditure situation of each city in 2021, the correlation between fiscal revenue and fiscal expenditure is relatively high. Among the 16 cities, the rankings of Qingdao, Jinan, and Weifang remained unchanged, while the rankings of the other 13 cities changed slightly; among them, 7 cities (Yantai, Jining, Zibo, Binzhou, Weihai, Dongying, and Rizhao) had higher fiscal revenue rankings than fiscal expenditure, with the largest ranking differences being Binzhou (3 places), Weihai (3 places), and Dongying (3 places), indicating that these three cities made a relatively large "contribution"; 6 cities (Linyi, Heze, Dezhou, Tai'an, Liaocheng, and Zaozhuang) had lower fiscal revenue rankings than fiscal expenditure, with the largest ranking difference being Liaocheng (4 places), indicating that this city "enjoyed" the "contribution" made by other cities.

From the overall expenditure responsibility pattern, from 2016 to 2019, the ratio of provincial-level, municipal-level, and fiscal expenditure was 1:1.77. From the trend of changes, both provincial and municipal expenditures showed a downward trend, but due to the emergence of the COVID-19 pandemic, general transfer payments at the provincial and municipal levels showed an upward trend in 2020 and 2021. On one hand, this was to enhance the ability of grassroots governments to "ensure basic livelihoods, ensure salaries, and ensure operations," guaranteeing the basic financial needs for grassroots governments to implement public management, provide basic public services, and implement central and various livelihood policies; on the other hand, it was to ensure the full payment of basic pensions for residents and the implementation of medical insurance benefits for residents. Overall, in the division of expenditure responsibilities, municipal expenditures account for a larger proportion than provincial expenditures in Shandong Province, and this proportion has been increasing year by year.

From the perspective of functional expenditure responsibility, provincial and municipal governments at all levels have undertaken expenditure responsibilities to varying degrees in various types of expenditures. In the two functional expenditures of health and social security and employment, there is a significant issue of excessive nominal expenditure burden on the municipal level. However, after the adjustment of provincial transfer payments, the actual expenditure division pattern between the province and the city is basically reasonable, with the province taking on more responsibilities for powers and expenditures. However, the fact that the municipal level relies too much on provincial transfer payments to meet the funding needs for grassroots social security and health care cannot be ignored. In this regard, the provincial government should reclaim some powers related to social security and health care and increase its direct expenditure proportion to balance the social security and health care services among cities. In the expenditures for education, science and technology, and public safety, the expenditure responsibilities borne by municipal governments are significantly excessive, leading to a heavy expenditure pressure on grassroots governments. Therefore, the provincial government should focus on increasing its fiscal powers and expenditure responsibilities in these three public service projects, gradually taking on the main responsibility as the province.

In the current fiscal system, the responsibilities of grassroots governments are essentially an extension or refinement of the responsibilities of higher-level governments. Therefore, starting from the national conditions of China, this study takes the issues in the allocation of intergovernmental responsibilities and expenditure responsibilities in Shandong Province as an example to research the issues in the allocation of fiscal expenditure responsibilities in China.

So far, China has not formulated specific laws regarding the division of government responsibilities and intergovernmental responsibilities. In the absence of the "Fiscal Revenue and Expenditure Division Law," the "Three Determinations Plan" led by various levels of planning departments has somewhat compensated for the shortcomings in the division of responsibilities. However, from the overall framework of fiscal rule of law construction, it can no longer meet the requirements of deepening fiscal and tax system reform. Currently, only specific notifications regarding responsibilities, mainly concerning funding guarantees, have been issued by various provinces and cities in fields such as education, science and technology, sports, and culture, in a government-led manner through the "one matter, one discussion" approach. The lack of a legal basis for the division of government responsibilities means the informalization of administrative power. When there is no law to regulate government responsibility actions, it allows higher-level governments to have decision-making power over the responsibilities of lower-level governments, resulting in a certain degree of randomness and arbitrariness in the scope of responsibilities of grassroots governments.
 

There is overlapping and repetitive responsibility and expenditure between governments at all levels and among departments at the same level. First, the responsibilities of governments are structurally similar, with blurred boundaries of responsibilities at all levels. There is a phenomenon of "vertical alignment and similar responsibilities" among governments at all levels, where both higher and lower levels have similar functions, resembling a replication of the central government's powers. The same matter is managed collectively by governments at all levels, leading to overlapping responsibilities among various government departments, with multiple management of the same responsibility, resulting in situations where sometimes no one manages and sometimes everyone manages. Second, the boundary between government and market is unclear, prominently reflected in the coexistence of government functions "overstepping" and "missing." On one hand, from the perspective of expenditure classification, currently, government expenditure in China covers almost all fields. Especially some local governments, driven by performance considerations, have a strong impulse to invest, replacing market functions and occupying limited government financial resources, which weakens livelihood expenditure. On the other hand, basic public services such as public health, social security, public safety, and ecological construction are relatively lacking in support. Currently, taking Shandong Province as an example, the lack of government fiscal expenditure is manifested in the insufficient burden capacity for social affairs such as education, medical care, and social security, leading to lagging basic education, medical shortages, and widening wealth gaps.
 

1. Mismatch between Responsibilities and Expenditure Responsibilities
 

On one hand, responsibilities that belong to the central government are largely borne by local governments, especially grassroots governments, which take on more responsibilities for policy safety nets, leading to a situation where "lower levels pay for higher-level matters." Although the central government addresses the financial inadequacies of local governments through subsidies, the issue of misalignment in expenditure responsibility has not been fundamentally resolved. On the other hand, responsibilities that belong to local governments are often borne by higher levels. Many special subsidy projects have externalities within their jurisdictions, ranging from regional infrastructure construction to rural toilet renovation projects, where responsibilities and expenditure should largely or entirely fall under provincial or lower-level governments. However, due to the central government's concentration of financial power, expenditure responsibilities are shifted upwards, leading to "higher levels paying for lower-level matters," which can easily cause unfair distribution of funds among regions and induce power rent-seeking. In China, social insurance, as an important national public service, is mainly borne by governments below the provincial level; local governments also bear some defense affairs and expenditures; higher education has strong characteristics of national public service, but the central government's responsibility is clearly insufficient.

2. High Expenditure Pressure on Governments Below the Provincial Level

First, from a vertical perspective, the expenditure responsibility of municipal governments (including transfers to county-level governments) accounts for a much higher proportion than that of provincial governments. Second, from a horizontal perspective, in the pattern of functional expenditure responsibility, the expenditure proportions of municipal and lower-level governments are all higher than those of provincial governments, bearing most of the expenditure responsibilities. Third, from the perspective of revenue and expenditure balance, the financial capacity of municipal and lower-level governments is relatively weak, but they have many responsibilities, leading to a direct result of "more responsibilities and less money," which causes significant expenditure pressure on municipal governments.

The mismatch between fiscal expenditure responsibilities and financial capacity is prominently reflected in the insufficient fiscal funds at the grassroots level and the multitude of responsibilities. Although higher-level governments have also adopted some transfer payment methods to provide financial subsidies to relatively poor cities and counties, it has not fundamentally changed the situation of "small horses pulling large carts." Nationwide, Shandong Province is one of the provinces that pay more attention to the horizontal and vertical equalization of fiscal levels. After several rounds of institutional reforms, fiscal resources have been tilted to cities and counties to the greatest extent. However, we cannot ignore the existence of the contradiction between expenditure responsibilities and financial capacity, which is most directly reflected in government debt, with municipal governments having the highest debt. For example, in 2014, the debts for which the provincial, municipal, county, and township governments were responsible for repayment were 6.089 billion yuan, 242.051 billion yuan, 181.576 billion yuan, and 20.197 billion yuan, respectively, with municipal governments borrowing far more than other governments, but this is not matched by their financial capacity. According to the "China Statistical Yearbook 2020" and the Guangfa Fixed Income "2020 City Investment Handbook," Shandong Province ranked 6th in debt ratio in 2019. Although it showed a downward trend from 2014 to 2016, the debt ratio began to rise in 2017, with a significant fluctuation in the growth rate of the debt ratio in 2018, increasing by about 22 percentage points compared to the previous year, reaching 37.05% in 2019, ranking 6th nationwide. For Shandong Province, the debt ratio is much higher than that of provinces with similar economic development levels, and the issue of government debt is prominent, posing significant challenges to achieving fiscal sustainability.
 

1. General Transfer Payment System Needs Improvement
 

Due to the low proportion of transfer payments, there is insufficient funding for county-level finances to be autonomously allocated and coordinated. To address this issue, Shandong Province has begun to explore the implementation of a special transfer payment system in recent years, utilizing its advantages and employing the "factor method" for fund allocation, thereby forming a system conducive to concentrating efforts on major tasks. In 2021, the general transfer payments from Shandong Province to cities and counties amounted to 210.526 billion yuan, with public safety and other general transfer payments, as well as transfer payments for shared fiscal responsibilities in medical and health care, and social security and employment, ranking among the top three in general transfer payments. However, due to the unchanged perception of power regarding departmental funding allocation, when special funds are allocated, various departments still implement special funds according to the prescribed "task list," thereby restricting the autonomy of local fiscal coordination.

2. Inadequate Design of Special Transfer Payment System

First, the allocation of special funds is unreasonable. On one hand, some special transfer payment projects cover a wide range of fields and are numerous, almost encompassing the entire budget. On the other hand, although the total amount of transfer payment funds is large, they are concentrated in one place without a prominent focus, which can easily lead to poor effectiveness in the use and regulation of fiscal funds. Second, the project management and decision-making mechanism is not sound. Since special funds are controlled by higher-level governments and often adopt a "one-size-fits-all" approach, grassroots governments must go through multiple approvals to obtain funding, resulting in low efficiency.

The theoretical construction of intergovernmental powers and expenditure responsibilities needs to be guaranteed by law for its implementation, which can promote the development of practice. Whether it is the definition or division of the scope of powers and expenditure responsibilities, or their operation, it is necessary to determine them in the form of a system from the perspective of fiscal law to ensure their authority and effectiveness.

From the perspective of legislative form, the division of powers and expenditure responsibilities at the central, provincial, municipal, and county levels is essentially the foundation of the national fiscal and tax system, and the mutual configuration of these responsibilities is also the foundation of the national fiscal system, which should be determined through legislation. In order to comply with the requirements of deepening fiscal and tax system reform in the Third Plenary Session of the 18th Central Committee, the division of powers must shift from an administrative-led model to a rule of law-led model. Therefore, implementing fiscal legality and promoting fiscal reform should be a unified process of systematic design and coordinated parallelism.
 

First, incorporate the provisions for the division of expenditure responsibilities into the constitution. The "Basic Law of Germany" has three chapters closely related to the division of fiscal revenues and expenditures, and this practice of making detailed provisions for the division of government revenues and expenditures in legislation is worth our reference. By defining government functions, we can determine the power relations between different levels of government, establish the powers and expenditure responsibilities of the government, thereby ensuring the scientific and rational nature of government decision-making. Second, formulate laws regarding the scope of intergovernmental powers. In accordance with the requirements of the constitution, clear laws on intergovernmental powers and expenditure responsibilities should be formulated, explicitly stating the special powers, shared powers, and delegated powers of the central and local governments, and legally clarifying the specific powers and expenditure responsibilities undertaken by governments at all levels.

The positioning of government functions is fundamental to the division of administrative powers, so how to scientifically define it is particularly important. In the early stages of reform, we focused on economic development and improving people's lives, which led to a rapid expansion of government size. However, under the conditions of a socialist market economy, the government must simplify administrative powers, reduce its size, and be service-oriented, fully utilizing market and social functions. A service-oriented government refers to a government that, guided by the concepts of citizen-centeredness, social-centeredness, and rights-centeredness, operates within the framework of overall social order, established through legal procedures according to the will of citizens, and is dedicated to serving the people and fulfilling its service responsibilities. In the fiscal field, a service-oriented government should provide public goods and services that it cannot provide itself to the market and society without overstepping or neglecting its duties.
 

First, from a systemic perspective, to achieve a service-oriented government, it is necessary to establish a clear list of administrative powers and place it within a legal framework. At the institutional level, the implementation of a service-oriented government requires the formulation of a clear list of government powers, exercising power within the legal framework. The power list can be combined with a negative list to regulate government powers from both positive and negative aspects, clarifying the relationship between the government and the market. First, cancel some government powers to minimize management functions over micro affairs and gradually withdraw from competitive areas; second, delegate some government powers to qualified organizations that can handle them independently; third, emphasize and strengthen government powers in areas concerning national security, military diplomacy, public services, market regulation, environmental protection, and other fields that are of significant interest to the entire nation.

Second, further clarify the expenditure responsibilities of each level of government for the powers they undertake and the shared expenditure responsibilities. Given the heavy expenditure pressure on lower-level governments and the large amount of provincial powers they bear, it is recommended to appropriately shift government expenditure responsibilities upward. Provincial governments should not only undertake the powers of equalization of basic public services but also bear the corresponding expenditure responsibilities. We can draw on foreign experiences, including those from Japan, to standardize and clarify intergovernmental powers and expenditure responsibilities. The central government should bear more responsibilities for higher education expenditures, while provincial governments should take on more responsibilities for special education, vocational education, general secondary education, provincial public infrastructure, and healthcare powers and expenditure responsibilities. Municipal and lower-level governments should bear more responsibilities for primary education, preschool education, municipal construction, police, social assistance, fire protection, and other local public services.

To clarify the income distribution among governments at all levels, it is necessary to match "powers" with "money" to ensure that the fiscal functions of all levels play a greater role. In addition to improving the fiscal transfer payment system, it is essential to establish a sound local tax system based on the improvement of local taxation. First, ensure the relative independence of local taxes; second, define the subjects of local taxes; third, further standardize local tax categories, implement "fee-to-tax" reforms, and clarify local fiscal revenues through "tax and fee positioning" to consolidate local fiscal resources; finally, promote the reform of provincial fiscal systems, facilitate the reform of "provincial direct management of counties," reduce fiscal levels, and provide solid financial support for provincial finances.
 

Practice shows that the unreasonable distribution of local fiscal revenues and the imperfection of the fiscal transfer payment system are important factors contributing to the difficulties faced by local finances in China. In cases of fiscal surplus, for the excess portion, transfer payments should be implemented according to different coefficients, considering various factors comprehensively. The main purpose of fiscal transfer payments is to promote the equalization of basic public services within regions, which aligns with the goals pursued by the current government functions and expenditure responsibility system in China. Some provisions in the "Budget Law" relate to the basic principles of transfer payments, but there are still gaps in aspects such as the positioning of legal subjects, rights allocation, application, and disbursement. Therefore, it should be included in the legislative agenda as soon as possible to accelerate its formulation process.
 

Based on the main ideas of the division of powers and expenditure responsibilities, the future direction of reform should be to strengthen the powers and expenditure responsibilities of provincial finances, reduce intervention in the powers and expenditure items of municipal and lower-level governments, and clarify the scope of powers and expenditure responsibilities at all levels of government. The future direction of reform should be to strengthen the powers and expenditure responsibilities of provincial finances, expand the proportion of general transfer payments, clean up, integrate, and standardize special transfer payments, and no longer arrange special transfer payments for issues within the scope of provincial finances and expenditure responsibilities. For issues within the scope of municipal powers and expenditure responsibilities, general transfer payments should be arranged in principle, enhancing the autonomy of municipalities and counties, and provincial finances should no longer intervene through special transfer payments.