We’re county on you
Beijing wants county governments to prioritize spending on social services.
On Thursday, the finance ministry (MoF) updated the rules for its county-level government support fund.
- The fund is RMB 410.7 billion in 2023.
- The rules were last updated in 2019, before the pandemic dealt a huge blow to local government finances.
ICYDK: The fund makes annual transfer payments to over 2,000 county-level governments nationwide. The payments support spending on basic social services (like education and healthcare), government employee salaries, and government operations.
Two changes stand out:
- First, the new rules require counties to prioritize basic social services, in contrast to government salaries in the 2019 version.
- Second, they make it clear that provincial governments are on the hook for county-level government finances and should develop emergency plans for potential risks.
Get smart: The last thing Beijing wants is for localities to skimp on education and healthcare provision – which risks stoking social instability and hurts efforts to upgrade the economy.
Get smarter: Clarifying the responsibilities of provincial governments will incentivize them to better manage and support the governments under their jurisdiction.
- But that just means that provincial governments will have less to spend on their own priorities.