Summary of Key Points
In the first seven months of this year, the revenue from the national state-owned capital operation budget increased by 39.8% year-on-year (84.8% for the central government and 14.6% for local governments), far outpacing the other three types of financial budgets (5.8% for the general public budget, -21.1% for government funds, and 8.3% for social security funds), and significantly exceeding the annual forecast (which was a decrease of 6.8%). This is mainly due to central and some local state-owned enterprises increasing their profit contribution ratios, coupled with the continued growth in state-owned enterprise profits. Behind this trend is the intensifying contradiction between fiscal revenues and expenditures (weak or declining other sources of revenue, while rigid expenditures such as social welfare and debt are on the rise), necessitating a greater contribution from state-owned enterprises to fill the fiscal gap and ensure people's livelihoods.
Detailed Explanation
1. Revenue from the State-Owned Capital Operation Budget: Outpacing Expectations
The government has four main sources of revenue: the general public budget (mainly from taxes), government funds (from land sales, etc.), the state-owned capital operation budget (from profits contributed by state-owned enterprises), and social security funds. In the first seven months of this year, only the revenue from the state-owned capital operation budget outperformed all others, with a growth rate of 39.8%, more than four times that of the social security fund (8.3%) and far exceeding the declining government funds (-21.1%). Surprisingly, this growth rate also far exceeded the official forecast at the beginning of the year (a decrease of 6.8%), meaning that the expected increase was already achieved in just half a year.
2. Why Do State-Owned Enterprises Need to Contribute More?
Fiscal conditions have been challenging in recent years:
- Revenue Side: Slowing economic growth and a sluggish real estate market have led to a significant decrease in land sales revenue and declines in government funds. Tax cuts and fee reductions have also reduced revenue from the general public budget and government funds.
- Expenditure Side: Expenses for social welfare (education, healthcare, pension), debt interest, and infrastructure construction are essential and continue to rise.
To address this growing fiscal gap, state-owned enterprises, as the country's financial assets, are expected to play a larger role. The central government has explicitly called for a reasonable increase in the profit contribution ratio from state-owned enterprises, requiring them to contribute more of their profits to the state to close the gap.
3. Where Does the Additional Revenue Come From?
There are two main reasons for the increased revenue:
- Increase in Profit Contribution Ratios:
- At the central level, the profit contribution ratio for central state-owned enterprises, such as tobacco, PetroChina, Sinopec, and CNOOC, was increased from around 10% to 35% in 2025, contributing a substantial portion of the additional revenue.
- At the local level, provinces like Guangdong and Jiangxi have announced increases in the ratio, while Jiangsu is adjusting it dynamically, and Hainan has improved its classification system. Guangxi, Guizhou, and Hunan have also raised their ratios.
- Continued Growth in State-Owned Enterprise Profits: State-owned enterprises saw a 2.4% year-on-year increase in total profits in the first half of this year, resulting in higher contributions.
Local governments have also implemented innovative measures, such as Anhui's "Three Contributions Mechanism":
- Advance Payments: Enterprises with annual revenues over 50 million yuan are required to pay 50% in advance; in the first half of this year, 1.27 billion yuan was collected, resolving the issue of delayed payments.
- Interest on Arrears: Enterprises that fail to pay are required to pay interest to prevent default.
- Special Revenue: Enterprises with excess retained profits and sufficient cash flow are taxed once; in 2025, an additional 740 million yuan was collected, ensuring that all due payments are made.
4. Where Does the Additional Revenue Go?
The additional revenue is primarily used to fill the fiscal gap, with a focus on improving people's livelihoods. The expenditure from the state-owned capital operation budget grew only by 1.1% in the first seven months because most of the money is transferred to the general public budget. For example, the central government transferred 240 billion yuan to the general public budget last year to support areas such as education, healthcare, and social security, directly benefiting the public.
Conclusion
State-owned enterprises contributing more of their profits is essentially the government using its financial resources to alleviate fiscal pressure, with the ultimate goal of ensuring people's livelihoods and stabilizing the economy. As more local governments follow suit and raise the contribution ratios, the role of the state-owned capital operation budget in filling the fiscal gap will continue to strengthen. For ordinary people, this means better social welfare protections and more effective control of fiscal risks.