Maxi-transfer of funds from the center to the periphery. In the first four months of 2021, Chinese local authorities were disbursed 435.5 billion dollars, equal to 2.8 trillion yuan, 1.1 more than last year. So far 1 trillion has already been committed to dealing with the care of the elderly, education, to promote new employment and basic medical care as well as access to homes by the most needy. These items have already absorbed 70% of the total. Transfers through the direct channel are children of the Covide-19 emergency.
The maxi-plan to support the local economy
The system used also this year was born during the pandemic in May 2020 when, in full health emergency, the funds were transferred in just one week from the center to the periphery, inaugurating a new method for managing public finances. This year the transfers also include those aimed at supporting tax cuts and aim to support the income of the Chinese attacked by rising inflation.
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The direct channel was included in Prime Minister Li Keqiang’s Work Report in March and also impacts the stabilization measures decided in the meantime to keep the economy stable.
The importance of the mechanism was also reiterated by the premier on 21 April at a high-level meeting of the Council of State.
The change of pace in audit management
Beijing cannot allow local government debt to be fed by these new funds in an endless spiral.