The "Sleeping" and "Awakening" of Financial Resources: A Comprehensive Review of Local Fiscal Assets
Hello, friends. I'm your financial observer.
Today's topic might sound a bit technical—how should we manage the financial assets of local governments?
Recently, many provinces have released their audit reports for 2025. If we compare local finances to a family's ledger, these reports are like a thorough cleaning. The results are both surprising and thought-provoking: on one hand, there's a significant mismatch between local revenues and expenditures, with not enough money to cover expenses; on the other hand, a large amount of money is sitting idle in accounts, or revenues that should have been collected have not been paid, and state-owned assets that need to be managed have not been included in the overall budget.
In simple terms, it's like going from having food in hand but feeling secure, to having food in hand but forgetting to eat it.
To help you understand the details, I've broken down the news into five key points and explained them in plain language:
Where has the money gone? Why hasn't it been spent? How can it be saved? Who is taking the lead in these efforts? What will the future hold?
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1. Why Can't Unspent Money Just Be Saved? – Understanding the Dilemma of "Carried-over and Surplus Funds"
First, let's clarify two terms mentioned in the news: carried-over funds and surplus funds.
- Carried-over funds: Imagine you planned to buy a computer at the beginning of the year with a budget of 5,000 yuan. By the end of the year, you haven't bought it, maybe due to certain reasons. Those 5,000 yuan still need to be used to buy the computer next year; this is what's meant by "carried-over."
- Surplus funds: If the old computer still works, or the project ends early, and you don't need to buy a new one, the remaining 5,000 yuan is a surplus.
The question is: Why can't this money just stay in the account?
The state has long made it clear that fiscal funds belong to the public, not to a particular department.
- Surplus funds (which are completely unused) and carried-over funds that haven't been spent for two years must be reclaimed and reallocated by the finance department to support more urgent needs.
- Carried-over funds that haven't been spent for less than two years should either be spent quickly or, if no longer needed for their original purpose, be used for other urgent areas.
The reality is: Much of the money in various places is like being locked away in departmental drawers.
- In Hubei, 7 counties have 1.215 billion yuan in funds sitting in special fiscal accounts or managed accounts, not included in the overall budget.
- In Sichuan, 11 units have 177 million yuan in surplus funds from non-fiscal appropriations that haven't been used.
- In Gansu, 70 units have 23.7374 million yuan in unused funds that haven't been cleared.
In plain language: It's like the company boss saying, "If the petty cash you have at the end of the year isn't used up, it needs to be returned to the headquarters because there's a big project that needs funding urgently." Some departments respond, "This money was meant for buying printing paper, and even though we didn't use it all this year, we want to keep it for next year." But in reality, many departments either can't return the money or forget to do so, resulting in idle funds and low efficiency.
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2. Revenues That Should Be Collected Aren't Being Paid: The Missing Revenue from Non-tax Sources
Another serious issue is the failure to collect revenues that should be paid.
The news mentions that in many places, non-tax revenues are either not collected or not paid into the treasury in a timely manner. What are non-tax revenues? Simply put, they are revenues generated by the government through administrative powers or state-owned assets, such as:
- Fees for using urban infrastructure
- Revenue from the sale of land
- Rent from leased offices and parking lots
- Even fees for vaccination services and profits from poverty alleviation projects
The audit findings are alarming:
- In Jilin, 17 counties have 201 million yuan in unpaid infrastructure fees and land sale revenues; 8 counties have 57.6481 million yuan in unpaid state-owned asset disposal revenues.
- In Guangdong, one city underreported 540 million yuan in vaccination service fees; another city failed to collect 189 million yuan in poverty alleviation project revenues.
- In Hubei, 16 counties have 1.464 billion yuan in unpaid asset rental and disposal revenues.
In plain language: It's like a supermarket where the cashier undercounts the money or keeps it instead of turning it over to the headquarters. The 540 million yuan in underreported vaccination service fees could be due to statistical discrepancies or poor enforcement. The 1.464 billion yuan in unpaid rental revenues means that the government's income from properties and land isn't being used, remaining with the local units.
If these revenues were collected, they could be used for essential needs such as public welfare and infrastructure. Instead, they're sitting idle, affecting fiscal planning and potentially leading to corruption or poor management.
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3. State-Owned Enterprises' "Private Money" Not Included in the Budget: The Blind Spot in State Capital Management
The third issue involves state-owned enterprises (SOEs).
The news indicates that some SOEs are not included in the state capital management budget, or the government doesn't receive the revenues they generate.
What is state capital management budgeting? Simply put, it's the dividends or profits that the government, as the major shareholder, receives from SOEs, which should be allocated for SOE reforms and development.
Where's the problem?
- In Guangdong, 54 provincial-owned enterprises were not included in the 2025 state capital management budget, involving assets worth 1.465 billion yuan.
- In Gansu, the provincial government didn't receive 732 million yuan in revenues from two provincial-owned enterprises.
In plain language: It's like a family business where the parent (the government) is the chairman, and the subsidiaries (SOEs) should distribute profits to the chairman for the family's overall development. Some subsidiaries say, "We didn't make a profit this year, so we'll keep it for expansion," or new subsidiaries are not included in the profit distribution. These amounts, totaling 732 million and 1.465 billion yuan, represent significant potential revenue that could support national strategies and public welfare if included in the budget.
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4. Who Is Taking the Lead in Improving Fiscal Management? Innovative Approaches from Different Regions
Fortunately, many places are taking serious action. Here are some inspiring examples:
1. **Chongqing**: Creating a Unified Financial Ledger
- Action: The Chongqing Finance Bureau established a unified financial ledger that includes administrative, institutional, corporate, financial, natural resource, debt, and policy-related assets.
- Highlights: They set up a mechanism to clean up carried-over and surplus funds, using technology to monitor account balances, identify inefficient and idle funds, and recover them.
- Results: By 2026, they had recovered 17.3 billion yuan.
- In plain language: Chongqing put a "GPS" on all the funds; if money doesn't move for a long time, the system alerts the finance department, which then recovers it.
2. **Anhui**: A Five-Step Approach to Revitalize State Assets (Nearly 300 Billion Yuan)
- Action: They implemented a five-step approach to manage state assets: clearing, unifying, ensuring coverage, investing, and strengthening supervision.
- Results: Since 2025, they have revitalized nearly 300 billion yuan in state assets.
- In plain language: Anhui sorted through all the government-owned assets (buildings, land, shares, etc.), selling or leasing those that could be sold or invested to turn them into usable funds.
3. **Jiangsu**: Activating Housing Fund Revenues (33.6 Billion Yuan)
- Action: They were the first in the country to standardize the allocation of housing fund risk reserves.
- Results: They have revitalized about 33.6 billion yuan in housing fund revenues to support local finances.
- In plain language: Housing fund accounts contain surplus funds, including interest and investment returns. By standardizing the allocation of risk reserves, they have freed up this money for local use.
4. **Jilin**: Shortening the Carry-over Period and Improving Efficiency
- Action: They reduced the carry-over period for provincial funds from two years to one year, forcing departments to spend the money within one year. They also revitalized 345 government-owned properties, saving 120 million yuan in rental fees, and increased non-fiscal appropriations by 1.5% (4.51 billion yuan), with a 65.9% increase in carried-over surplus funds.
- Results: Over two years, they have recovered 2.72 billion yuan.
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5. Future Trends: Moving from Fragmented Management to National Coordination
At the end of August, the Ministry of Finance held a seminar in Hefei, Anhui, focusing on scientific financial management. The core idea is to strengthen coordination.
This means that future local financial management will no longer be fragmented but will be coordinated on a national level.
Key measures include:
1. Strengthening budget coordination: All revenues and expenditures must be included in the budget to eliminate off-book accounts.
2. Optimizing the use of existing resources: Revitalizing idle assets and funds to increase available financial resources.
3. Coordinating various policies: Integrating fiscal, financial, and industrial policies to work together.
The goal is clear: to strengthen support for national strategic initiatives and basic public welfare.
In plain language: Previously, local finances were often decentralized, with each department or county having its own funds, leading to inefficiency and waste. In the future, financial management will be more scientific, precise, and digital. This will allow the government to better understand its financial situation, allocate funds more effectively, and direct more resources towards education, healthcare, elderly care, and infrastructure.
In summary: This comprehensive review aims to address idle funds, uncollected revenues, and neglected assets, with the goal of maximizing the use of every resource for national development and public welfare. It's not just an upgrade in financial technology but also an improvement in governance.
I hope this analysis helps you understand the significance of these fiscal reforms.