On December 22, 2025, China’s national legislature, the NPC Standing Committee (NPCSC), heard the first-ever report on the “recording and review of fiscal and budgetary matters” [财政预算事项备案审查] from its Budgetary Affairs Commission (BAC) [预算工作委员会], a ministerial-level professional body that supports legislative oversight over public finances, including budgets, state-owned assets, and government debt.
Regular readers may be more familiar with “recording and review” (R&R) [备案审查] as the NPCSC’s mechanism for overseeing the legislative rules issued by major central and local state institutions—or the “legislative R&R” process. But the legislature also receives numerous other filings, many of which concern budgetary matters and tax policy. Under the Budget Law [预算法], the State Council must annually file consolidated local budgets and final accounts with the NPCSC and submit specific rules governing the central government’s transfer payments to localities (see arts. 23, 29). Other statutory authorities impose filing obligations as well. For example, while all tax statutes authorize the State Council to adopt tax incentives, they also require it to file those incentives with the NPCSC.
Legislative R&R cannot address these filings of “fiscal and budgetary matters” for several reasons. Some matters, such as consolidated local budgets, are not considered legislation and therefore fall outside the scope of legislative R&R. Others, though legislative in nature, are not formally subject to direct NPCSC oversight under legislative R&R because they are issued by State Council departments rather than by the State Council itself. Finally, the NPCSC Legislative Affairs Commission, the body that administers legislative R&R in practice, probably lacks the substantive expertise needed to review fiscal issues.
Likely for these reasons, and in light of several recent developments—the institutionalized reporting on legislative R&R since 2017, the continued enactment of tax statutes, and new filing obligations relating to local government debt—the NPCSC leadership decided to establish a parallel R&R process for budgetary matters and tax policy. In February 2025, the Council of Chairpersons adopted a set of internal rules governing such a “fiscal R&R” process, which seem to require the BAC to submit an annual report.
Compared to the average R&R report by the Legislative Affairs Commission, the BAC’s inaugural report is quite short. It is nonetheless significant in at least two ways. First, it makes clear—beyond the relevant statutory text—that filings are subject to review. Indeed, the report adopts one of legislative R&R’s core principles that “any filing must be reviewed” [有备必审]. Second, the greater visibility of the process could induce the relevant agencies to better comply with the scope of their delegated authorities, even though BAC review does not appear rigorous so far.
The report has five sections. The first explains the importance of strengthening fiscal R&R. The next two briefly recount, respectively, the matters filed in 2025 and the BAC’s review. The report then introduces the BAC’s efforts to improve the institutional framework and capacity of fiscal R&R and concludes with proposed next steps. We summarize the report below.
2025 Filings
The NPCSC received 20 filings of “fiscal and budgetary matters” in 2025. The BAC’s report helpfully groups them into four categories:
- Tax incentives. As mentioned earlier, the State Council enjoys broad discretion under various tax laws to grant tax cuts or exemptions (although, in practice, such policy appears to mainly take the form of departmental documents). Four of the 12 tax-policy documents filed in 2025 concerned the Hainan Free Trade Port, which began full operation on December 18, 2025, including an income-tax cut for “high-end and in-demand talents” working there. The other eight involved miscellaneous matters, including income tax exemptions for the new childcare subsidies (RMB 3,600 per eligible child per year).
- Local budgets and final accounts. As required by the Budget Law, the State Council filed consolidated local budgets for 2025 and consolidated local final accounts for 2024.
- Transfer payment programs. In 2025, the State Council filed the measures governing four transfer-payment programs, which provide local governments with central funding for, respectively, developing clean energy, providing public cultural services, paying for the childcare subsidies, and supporting preschool education.
- Early approvals of local borrowing. In October 2023, the NPCSC adopted a decision authorizing the State Council to approve additional local borrowing before the NPC sets the local debt ceilings for each year from 2024 to 2028. As required by that decision, the State Council filed its early approvals for 2025 local bond issuance with the NPCSC.
The BAC found all filings consistent with “the Party Central Committee’s decisions and plans” and with the relevant statutory requirements. In vague terms, though, it also disclosed that it had offered “suggestions” for each category of filings, indicating that it identified actual or potential issues with implementation. For the transfer payment programs, for example, the BAC recommended more rigorous vetting of recipients’ eligibility, more standardized disbursement of funds, and closer monitoring and evaluation of how the funds are used.
Other Highlights
Beyond receiving filings and conducting review, the BAC in 2025 also devoted substantial effort to building the institution of fiscal R&R itself. It implemented a detailed workflow—acceptance of filing, formal review, registration, distribution, substantive review, and archival—based on the rules adopted by the NPCSC leadership. It visited the Ministry of Finance and other relevant departments “to build consensus and improve coordination mechanisms.” It also consulted the NPCSC General Office and the Legislative Affairs Commission on their experience with administering legislative R&R.
The report concludes with a brief list of objectives for 2026. The BAC vowed to make filings more standardized and timelier, suggesting they are not yet either. It also pledged to further improve and refine the standards of review and coordinate fiscal R&R with other aspects of its work—oversight over budgets, state-owned assets, and government debt, as well as fiscal and tax legislation—so that they “are organically linked and mutually reinforce each other.” Finally, it plans work with local people’s congresses to establish parallel fiscal R&R mechanisms at local levels—an endeavor that already began in 2025.
With contribution from Chentuo Zhu