Summary of Key Points
Recently, the Ministry of Finance has been vigorously promoting the performance evaluation of key fiscal projects. In 2026, 55 projects will be selected (covering areas such as consumption, technology, and people's livelihoods, as well as various types of budgets) for evaluation. The aim is to ensure that fiscal funds are used more efficiently—reducing unnecessary expenditures, restraining local governments from engaging in vanity projects, and preventing the increase of hidden debts. At the same time, it has been clarified where the money should be invested (in areas such as technological innovation, people's livelihoods, and six key infrastructure networks). Additionally, measures have been put in place to ensure that the evaluation is effective (e.g., submitting evaluation reports to the National People’s Congress for review and enforcing strict accountability), with the ultimate goal of ensuring that every dollar is used to support high-quality development and improve people's lives.
Detailed Explanation
1. Why evaluate the effectiveness of fiscal spending? — The core purpose of performance evaluation
In simple terms, it’s to ensure that fiscal funds are not wasted. In the past, some local governments may have spent money recklessly: on vanity projects that were visually impressive but useless, or on inefficient projects with no real benefits, or even secretly borrowed money. The new performance evaluation system is designed to cut these unnecessary expenditures and direct funds towards more productive uses.
- Background: In April this year, the State Council issued guidelines calling for the establishment of a performance evaluation system that aligns with high-quality development goals, aiming to make fiscal funds have a greater impact (by attracting additional social investment).
- Benefits: This helps optimize resource allocation (shifting funds from ineffective projects to those that are useful), restrains wasteful spending (local governments are less likely to embark on vanity projects), and prevents the accumulation of hidden debts.
2. Where should the money be invested? — Clear priorities have been set
Not all projects will receive fiscal funding; only those with high evaluation scores will be prioritized:
- Technological innovation and new drivers of growth: Research and development in critical technologies (such as semiconductors, AI), major scientific facilities, and emerging industries (new energy, biomedicine).
- People’s livelihoods: Education, healthcare, social security, and housing assistance, which directly affect the lives of ordinary citizens.
- Basic safety and stability: Ensuring minimum living standards, salaries for public servants and teachers, and the smooth operation of government services to prevent risks.
- Six key infrastructure networks: Water supply systems (irrigation projects), smart grids, data centers, next-generation communication networks (5G/6G), urban underground infrastructure (drainage/gas), and logistics systems (courier services/freight transportation). These areas are crucial for both economic development and improving people’s lives and are the focus of future fiscal investments.
On the contrary, vanity projects (such as empty industrial parks built solely for show) will not receive funding and may even face penalties.
3. How to ensure that the evaluation is more than just a formality? — Systems and regulations provide support
Performance evaluation is not just a nominal exercise; it comes with strict constraints:
- Evaluation reports submitted to the National People’s Congress: The Ministry of Finance will submit the evaluation reports for key projects to the Standing Committee of the National People’s Congress, along with the annual fiscal accounts. This means that the evaluation results are subject to the supervision of the highest authority, enhancing their seriousness.
- Results are used for decision-making: The outcomes of the evaluations will be considered in future planning and investment decisions. For example, if a project performs poorly, it may not receive funding in the future.
- Strict accountability: It is clear who approves and oversees the projects; those who engage in political gimmicks or violate high-quality development goals may face disciplinary action (up to expulsion from the party) or criminal penalties. These measures serve as a deterrent.
4. How is the evaluation conducted? — From cutting budgets to identifying underlying issues
Performance evaluation is not just about reducing funding; it involves a more professional approach:
- 2025’s achievements: National fiscal review institutions evaluated 3.45 trillion yuan in funds and reduced many unnecessary expenditures (e.g., by correcting overestimated project budgets).
- Moving towards research-based evaluations: The focus is not only on whether projects are completed but also on analyzing the underlying issues—such as why they were unsuccessful. This helps identify and address systemic flaws, leading to more informed budget decisions and reducing wasteful spending.
Conclusion
The core of fiscal performance evaluation is to ensure that funds are used effectively. By clarifying investment priorities, strengthening regulatory mechanisms, and conducting in-depth analyses, unnecessary expenditures can be eliminated, and every fiscal dollar can contribute to high-quality development and improving people’s lives. For the public, this means that government spending becomes more transparent and beneficial, ultimately benefiting all of us.