In 2024, the 20th Central Committee’s Third Plenary Session convened successfully, stating firmly, “We must continue to push reforms forward.” This emphasis on reform resonates as a crucial need for China, positioning reform to play a more prominent role in governance.
One key aspect of this effort is breaking the rigid patterns of fiscal spending and ensuring that funds are allocated effectively. In Anhui, a significant reform initiative has emerged, centered around zero-based budgeting.
The initiative targets ineffective fiscal expenditures, leading to some surprising revelations during a policy assessment. Li Qiuhui, a staff member from the Anhui Provincial Government Office, shared, “After compiling the policy information, we were shocked by the sheer volume; it far exceeded our expectations.” Zuo Zhi, the Deputy Director of the Anhui Provincial Finance Department, noted, “For instance, the 28.5 million yuan allocated for small town construction is based on an old policy from the 1990s. With 104 counties, it’s hard to see any real impact from distributing such a small amount.”
Wu Jinsong, the Secretary of the Anhui Provincial Science and Technology Department, added, “One project can be reported to multiple departments under various names. Some researchers spend more time chasing project approvals than actually conducting research. Although money is being spent, the underlying issues remain unresolved.” The scale of overlapping policies—328 provincial-level policies—proved startling, with many suffering from redundancy and outdated practices.
To combat the dissipation of precious fiscal resources in low-efficiency policies, Anhui began its reformation in 2023. “We had to change our thinking,” emphasized Zuo. “Initially, there wasn’t a complete understanding of the necessity for reform, and that lack of clarity stunted progress.”
However, through various academic workshops and statewide discussions, there was a unification of understanding. The phrase “We don’t need 800 million anymore” was a decisive moment, signaling a critical step toward reform. This led to a large-scale policy cleanup, with Zuo explaining, “Policies without life lead to projects with no benefits, resulting in waste. Funds supporting small towns had to be reclaimed.”
The result was a comprehensive list of policy adjustments: 25 policies were rescinded, 35 reduced, 40 extended, 43 consolidated, and 42 strengthened, reorienting Anhui’s 2023 provincial budget by freeing up 8.58 billion yuan. The old paradigms were being dismantled as Anhui reorganized its strategy, shifting from a scattergun approach to concentrated efforts on major initiatives.
“How do we prioritize? Who decides what’s critical?” The answer wasn’t limited to a specific department; instead, it emerged from sectors like industry, technology, and public welfare—addressing the most urgent needs. This led to the formation of a focused support policy list comprising over 70 items across 14 major categories for 2023.
Li Qiuhui elaborated, “Key initiatives from the provincial government, like supporting the construction of the ‘Silicon Valley’ of technology or major platforms for innovation, represent individual policies.” A dedicated task force was established, moving away from a fragmented approach to a more strategic one, where the emphasis shifted from just seeking funding to seeking viable projects.
The procedural refinements became essential for departmental approvals. He Yi, a project applicant from Anhui’s grain department, indicated, “If our documentation isn’t complete or necessary explanations aren’t satisfactory, our proposal could be rejected.” Zuo further explained, “It’s about avoiding last-minute funding at year-end; by planning ahead, we can allocate money more effectively.”
This proactive planning means that government departments are now compelled to plan projects well in advance. “We’ve transitioned from a reactive state to an actively planned approach,” noted Wu Jinsong.
Reforms have begun to yield visible results. In Bengbu, the long-standing challenge of funding for rural waste management has been addressed through these changes. “Reform does come with a cost,” said Xue Yachao, head of the fiscal bureau in Anhui’s Bengbu Economic Development Zone. “There are no easy tasks, only tasks we choose to tackle.”
Transitioning from disparate efforts to a cohesive strategy, the initial effects of reform are beginning to show. In Hefei, reward funds increased dramatically, transforming recognition into substantial support. “This level of assistance has been immensely beneficial for us,” commented Gao Yuanfeng, the Public Affairs Director at Hefei Visionox Technology Co., Ltd.
The reforms are enhancing funding efficiency. With a focus on major initiatives, the transformation spurred investments, with every 500 billion yuan leveraged resulting in 1.5 trillion yuan for industrial growth. “Funding that was once used for simple subsidies is now blended with private capital for industry investment,” explained Du Rongsheng, Director of the State-Owned Financial Capital Supervision Department of Anhui.
Anhui’s zero-based budgeting reform is showing promising results, as Finance Minister Gu Jianfeng articulates, “Our reform is not merely about splitting a single unit of funding; it aims to stretch every yuan to accomplish tenfold efficiency.”
Long-term planning is vital, as fiscal system reform has always been about systemic reconstruction rather than immediate fixes. Anhui’s zero-based budgeting reform addresses today’s needs while setting sights on future efficacy.
This complex reform touches multiple aspects of government governance, and while the path ahead may be challenging, it highlights the vital role reform and innovation play in driving progress. Only those willing to face challenges head-on, understanding the intricacies of change, will carve out a new path towards high-quality development. As this transformative process unfolds, we eagerly anticipate its outcomes.
So, what exactly is zero-based budgeting reform? Simply put, it involves changing the manner in which fiscal resources are allocated. Traditionally, if a department’s budget from the previous year was 10 million yuan, the new budget would likely increase based on that figure. However, with this reform, that baseline is eliminated. Departments must now justify their budget requests by aligning them with the central government’s priorities and their potential to stimulate industry growth. The finance department will draft budgets according to actual needs, fiscal conditions, and urgency. It’s clear that this reform is sweeping and will disrupt the established power dynamics surrounding budget allocations.
