2014-04-20

China Unleashes Treasury Deposits in March Emergency Spending Push

The national treasury saw outflows of 1.7 trillion yuan in January and February, then spent 1.3 trillion yuan in March. Over 90% of the money was spent by local governments. Treasury deposits were up 422 billion for the year at the end of February, but that fell to 95 billion by the end of March. The drop was part of the spending push in March.

This was possibly not official policy: the Ministry of Finance has often been on the opposite side of the PBOC. This may be a sign that everyone is not on board with reform plans.

3月份支出1.3万亿:财政紧急“花钱”背后 (March spending 1.3 trillion: The background on the MoF Emergency "spending")
Chinese treasury long-term observation data may be on March 10 and April 15 the two time node, noticed an interesting phenomenon.

China's central bank's monthly financial statistics report shows that: the end of February, China's treasury in fiscal deposits added 422.2 billion, new deposits at the end of a quarter plummeted to 95 billion. Throughout March, financial ends meet, running low.

Financial data also confirms this: spending the first two months totaled 1.7 trillion, March spending nearly 1.3 trillion a month. This 1.3 trillion, more than 90% by the local government spending.

At this point is not the end of the "surprise money" season, March fiscal Why the sudden money? By Liu's words, is to be paid out of the Treasury to hurried.

SMS

Liu is a prefecture-level city in East China's fiscal Secretary, last month, his city, spending expanded by nearly 5% more than originally planned. "March came about several projects, not enough manpower, but also in accordance with the requirements of the province's progress, but spending finally finished." In retrospect, he felt very fortunate.

Liu said, "provincial requirements", in fact, he received a text message superiors provincial Department of Finance. SMS content is a "verbal notice" issued by the Ministry of Finance, Department of Finance asked the provinces, Finance Bureau in March to speed up the progress of expenditure, the Ministry of Finance will report to the State Council expenditure topic after the first quarter.

Around immediately take the hint. A local finance bureau chief of Agricultural Sciences, said the bulk of the agricultural class-related expenditures are generally in a year in May, after six months, but after receiving an instruction to accelerate spending, they will be temporarily stored in project funding from the state treasury to the financial accounts using this approach to accelerate the progress of expenditure. "Will only be the case." The chief said.

The same experience as well as a capital city finance bureau of the Northeast. The first two months of this year, the city had just froze all infrastructure investments, waiting for the policy center, but after receiving verbal notification Treasury, Bureau of Finance had to speed up the progress of investment projects expenditures.

Liu thought, experienced a decline in economic growth in the first quarter, the central guide investment may introduce some policy direction, thereby to determine the future direction of the local financial investment, it has been waiting to see the money in hand are also very tight card . Unexpectedly, the Treasury quickly passed in early March to accelerate spending requirements, a time he was confused.

Before receiving financial messages sent to superiors, Liu has been that the first two months of fiscal expenditure schedule is a problem.

Treasury data show that by 2014 two months, forestry and water spending grew only 2.8%, social security and employment expenditure grew only 3.7 percent, housing and transportation expenditures security expenditure even fell by 6.8% and 1.4% . Total expenditure for the entire 1.7 trillion, revenue was much higher, the first two months to produce a surplus of more than 7800 million.

This is the February fiscal deposits suddenly out of more than 4000 million reasons.

Surplus

Chinese Academy of Social Sciences researcher at the Institute for Financial Strategy EQUAL that the end of government deposits increased by 2 million over 4000, there is a problem is spending, primarily the eight regulations and other policies, the balance of funds carried forward from previous years as well as local precipitation brought by the economic downturn now Government watching, especially watching the direction of future investment, so spending slowed progress.

Liu heard a western provinces in arranging a water conservancy funds when the budget is 30 million arrangement in accordance with the results of a 360 million year suddenly down special funds, the province only this big money to settle down first, because no suitable project expenditures.

"Provinces and districts to report the following items that are not active, resulting in a lot of money spending slow progress." Above the local finance bureau chief of Agriculture says the following counties they also say that if it does not report the project will After reducing the county district funding agricultural projects, like this, did not allow counties to increase commitment to the project report, "We are now only first transfer of funds to the financial accounts department, of course, doing some irregularities, but did not Measures. "

The reason why the project is not reported, the idea of ​​the local financial sector is very simple, little bear responsibility. These local finance bureau chief of agriculture, said the province is now investigated for spending projects are very strict, he is responsible for the county's project below, many places are afraid to lead, not to do it.

"I do not do the project, do not do something, you can also go to retire, there Excellencies spend with, why do those risky things." Above agriculture chief said.

He said that close to the provincial capital of a class project financial losses, a director of the section of the financial system was caught up in his handling of the project, each signed by the leaders, he was just a performer, but finally found itself no economic problems. Later in the ocean fishery class also produced such a situation, brought about a chain reaction is, "No one dares to stand project, dare, funds will not be spending."

The chief admitted that in agriculture projects, the financial capital mainly supporting and guiding role, and the project has some risks, especially agricultural projects, financial resources if not complete, even if there is a 50% chance to generate benefits Investors are not going to invest. The financial sector can do is to guide private investment funds will finance it, and site visits to each project, to ensure that each project is true and reliable, but can not guarantee the success of each project.

Blow out

However, by March, the beginning of fiscal spending blowout.

First quarter of fiscal latest data show that from January to February 2014, the national fiscal expenditure 1.7 trillion, March monthly expenditure is nearly 1.3 trillion; including local fiscal expenditure 1.4 trillion January-February, March monthly spending close to 1.2 trillion respectively.

Sub-project, the first two months of this year, accounting for the largest proportion of forestry and water spending, spending only about two months before the 150 billion, March monthly spending nearly 120 billion, an increase of 2.8% year on year in the past two months, the rapid increased to 12%.

Transport, transport and housing security expenditure, in the first two months of negative growth year on year, to the end of the first quarter, all "positive", were down 1.4% and 6.9% from a year, into an increase of 3.8% and 12%. Transportation spending the first two months was 62.1 billion, to the March spending totaled 149.7 billion in March spending over 80 billion monthly housing security spending is roughly similar.

Liu is also the city where the expanded spending, higher than 5 percentage points higher than originally planned, mainly for infrastructure investment. Although the Financial Department of the People's University of China, Lu Bing Yang believes that China is a large-scale investment in infrastructure does not appear, but the financial system is a grassroots who say they are currently active in research PPP public-private partnership model, the purpose is to attract social capital into the future infrastructure.

"That's money in the hands of the government for a new round of infrastructure investment is powerless to change things." Grass-roots financial system these people said. But he also acknowledged that fiscal spending in March is indeed one is bigger than spending in February, but most of them are funding the project down.

With the progress of project funds to finance expenditures sprint is justified. A prefecture-level city in Henan Finance Bureau said that now each and Finance Bureau has its own parallel institutions to understand a list, listed above himself much money, how many items waiting to spending much money on items left, This is a game process and financial system. But now I can not, there are various projects, the department must have the financial resources to accelerate the progress of expenditure.

"Ministry of Finance requires higher funding two years to complete the project, as long as this level is no spending nine months, the funds will be fully recovered." He said.

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