Core Viewpoint - The article highlights the increasing pressure on China's economy due to the pandemic and geopolitical conflicts, leading to significant fiscal challenges, particularly at the county level, while emphasizing the government's efforts to ensure basic livelihood support through increased transfer payments from the central government [1][2]. Group 1: Fiscal Challenges and Responses - China's economy faces downward pressure this year, exacerbated by repeated pandemic outbreaks and international geopolitical conflicts [1]. - The central government has significantly increased transfer payments to local governments, reaching a record high of nearly 9.8 trillion yuan in 2022, with an increase of approximately 1.5 trillion yuan, marking an 18% growth from the previous year [1][2]. - The fiscal report indicates that the central government's transfer payments are crucial for maintaining basic livelihood support and ensuring the implementation of tax reductions and exemptions [2]. Group 2: Transfer Payment Mechanism - The central government allocated 1.2 trillion yuan in transfer payments specifically to support local governments in implementing tax cuts and ensuring basic livelihood needs [2]. - The transfer payment system is evolving, with a focus on enhancing the efficiency of fund utilization, particularly through a direct funding mechanism that allows for rapid disbursement to local levels [3][4]. - As of mid-year, approximately 3.992 trillion yuan of the 4 trillion yuan allocated for direct funding has been disbursed, achieving a 97.9% distribution rate [4]. Group 3: Impact on Local Governments - Local governments are also enhancing their financial support by coordinating central subsidies with their own resources, particularly focusing on financially weaker municipalities [2]. - The direct funding mechanism has proven effective in alleviating financial pressures at the grassroots level, ensuring that basic livelihood needs are prioritized in budget allocations [5]. - Direct financial support has reached approximately 3,500 billion yuan, benefiting around 680,000 businesses and a total of 2.56 million instances of support [4][5].