The central government has done a great job maintaining a national fiscal balance and bridging regional disparity, a top finance official said yesterday.

The authorities have increased central transfer payments, money allotted from central coffers for local use, by a large margin since their inception in 1994, Finance Minister Jin Renqing said in a report subjected to the supervision of the National People's Congress Standing Committee.

The transfer payments are designed to subsidize poor areas to mitigate regional fiscal gaps and fund special projects to improve public services like in education, medical and social securities at local level.

The payments can be in various forms including tax rebates and direct allocation.

Jin said central transfer payments reached 914.4 billion yuan (US$120 billion) last year, nearly 19 times that of 1994.

Jin said adoption of the transfer payments policy was an "improvement" compared with the original "one-to-one" negotiations that took place between the central and local governments.

The sum of payments to each province is determined by such factors as regional population and gross domestic product.

"The distribution system and methods are improving during their implementation and are being recognized by more and more local governments," Jin said, adding several large transfer payments earmarked for projects related to improving the quality of life for "common people".

In education, the government waived tuition for 52 million students in west and middle China last year and gave free textbooks and living allowances to millions of poor students.

Transfer payments also supported pension reform in northeast China and funded the relocation of residents affected by the construction of large water works. However, yesterday, Auditor-General Li Jinhua said some problems were found during an inspection in five provinces.

(China Daily June 28, 2007)