Sharpening the Blade Against the Red Wall: From Hong Kong to Handong

In late July 2014, the atmosphere in the conference room of the Ministry of Finance was serious. Zhou Jin convened a work meeting of the departments under her supervision. The heads of the Budget Department, Treasury Department, International Financial Cooperation Department, and Financial Risk Prevention and Control Department were all present. Thick reports on the implementation of the fiscal budget and risk assessment materials were spread out on the table.

"Comrades, I've gathered you all here today not to talk about achievements, but only about problems." Zhou Jin got straight to the point, tapping the documents on the table with his finger. "Based on the implementation data from the first half of the year, there are two prominent problems with the use of our fiscal funds—funds lying idle in accounts and funds being dispersed. Some project funds have been allocated for months and are still lying dormant in accounts; some funds for people's livelihood have been scattered like 'pepper,' seemingly covering a wide area, but in reality, the effect is minimal."

The Director of the Budget Department responded first: "Minister Zhou, the problems you mentioned do exist. The main issues are insufficient preparation for grassroots projects, cumbersome approval processes, and some localities being afraid to take responsibility and thus hesitant to spend money boldly; in addition, some localities blindly apply for projects in order to secure funding, resulting in dispersed investment and difficulty in forming a cohesive force."

"The root of the problem lies in the 'emphasis on allocation and neglect of effectiveness'," Zhou Jin pointed out incisively. "When we were providing industrial support in Yanshi, we implemented a model of 'precise allocation + performance-based incentives'—funds followed projects, and projects followed effectiveness. We set performance targets first, then allocated funds. If the year-end assessment did not meet the targets, not only would the remaining funds be recovered, but the applicant would also be disqualified from applying for the following year."

He paused, his gaze sweeping across the room: "I suggest that, starting in the second half of the year, we pilot the 'budget performance integration' reform in the areas under our supervision. First, establish a pre-project performance evaluation mechanism, resolutely excluding immature projects from the budget; second, implement a 'progress-linked' funding allocation system, allocating funds in batches based on project progress; third, strengthen post-project performance evaluation, directly linking the evaluation results to the budget allocation for the following year."

Before he could finish speaking, the Director of the Financial Risk Prevention and Control Department added: "Minister Zhou, the risk of hidden debt of local governments should not be ignored, especially in economically strong provinces like Handong Province. Some cities and counties are borrowing money in disguise through financing platforms, and the project revenue cannot cover the principal and interest of the debt, which poses a potential systemic risk."

"I'm following the situation in Handong Province." Zhou Jin nodded, her tone grave. "As a major economic center in the east, Handong's fiscal operations serve as a model for the whole country, but it's also prone to a tendency to prioritize development over risk. We need to strictly control new debt while also resolving existing debt. We can learn from Yancheng's experience by classifying and cleaning up financing platforms, ensuring that public welfare projects are backed by the government, and pushing commercial projects to the market. At the same time, we should establish a debt risk early warning mechanism and implement hard budget constraints for high-risk areas."

Halfway through the meeting, Zhou Jin changed the subject, her tone becoming increasingly solemn: "Besides the issue of efficient use of funds, we must emphasize integrity and public service. The nationwide anti-corruption campaign is currently in full swing, and the Ministry of Finance, as the department in charge of money, is of paramount importance in building a clean government. Every penny we hold is the hard-earned money of the people, and we cannot tolerate the slightest corruption or waste."

He made clear demands: "Each department in charge must immediately conduct self-examination and self-correction, focusing on identifying corruption risks in areas such as fund allocation, project approval, and policy formulation; cadres and staff must strengthen their ideological defenses and ensure that they 'walk by the river without getting their shoes wet,' achieving results while avoiding any mishaps."

His words resonated deeply, and the department heads present nodded in agreement, indicating that they would strictly implement them.

After the meeting, Zhou Jin went straight to Minister Sima Yue's office.

"Minister Sima, I just finished a meeting with the departments under my supervision, and I have some thoughts I'd like to share with you." After sitting down, Zhou Jin elaborated on the "budget performance integration" reform approach and the local debt risk mitigation plan proposed at the meeting.

Sima Yue listened attentively, nodding occasionally: "Your approach is very pragmatic. The 'precise allocation + performance-based' model precisely addresses the current pain points in the use of fiscal funds. Yan City's experience is very valuable and can be implemented first in Handong Province and some pilot provinces, and then promoted nationwide after it has matured."

"There's one more thing I'd like to ask you about," Zhou Jin said, changing the subject. "I've worked in the Northwest for eight years, and my understanding of the fiscal operations of developed inland provinces like Handong, as well as the two economically strong provinces in the East and Central regions, is limited to news reports, internal discussions, and publicly available data. I lack on-site research. I'd like to apply to lead a team to these three provinces to conduct research, focusing on Handong's fiscal reform practices. We want to learn from their advanced experiences and also understand the practical difficulties currently faced by grassroots finances, especially prominent issues such as hidden debt and the efficiency of fund utilization, so as to provide a basis for subsequent policy formulation."

"This is an excellent suggestion." Sima Yue immediately agreed. "What you learn from books is never enough; you must put it into practice to truly understand. As a major economic province, Handong has a huge financial burden and faces more representative problems. Your research will allow you to obtain firsthand information, which will greatly benefit your work. I will have the General Office coordinate the relevant provinces to work together."

Zhou Jin stood up and said sincerely, "I have one last suggestion. Anti-corruption is the main theme right now, and the Ministry of Finance, as a core department, should take the initiative. I suggest that the Party Group of the Ministry take the lead, in conjunction with the dispatched disciplinary inspection team, to conduct a comprehensive self-examination and self-correction campaign on integrity within the Ministry and its directly affiliated units. Self-examination and self-correction will not only proactively purify the ranks but also demonstrate our determination to the Central Committee, which aligns with the current work spirit."

A hint of approval flashed in Sima Yue's eyes. He stood up and patted Zhou Jin on the shoulder: "This suggestion hits the nail on the head. The Ministry of Finance holds financial power and must turn the knife inward and carry out self-revolution. Your idea is excellent. I will convene a Party group meeting as soon as possible to study it and establish a special self-inspection team, with you in charge of this work."

"Please rest assured, Minister, I will definitely carry out this work thoroughly and meticulously, and I will never go through the motions," Zhou Jin solemnly stated.

As he stepped out of the minister's office, sunlight streamed through the corridor windows, falling on Zhou Jin's shoulders. He looked up at the sky outside; the Kyoto sky was a clear, deep blue.

From the Loess Plateau in Northwest China to the Ministry of Finance in Kyoto, his position and identity have changed, but his original aspiration to work diligently and his bottom line of integrity have never wavered. He knows that his upcoming trip to Handong will not only be a research trip, but also a tough battle to confront problems and confront contradictions—and this is precisely his consistent style.