Who took away the 10 trillion yuan in fiscal transfer payments?

Ask AI · Why do transfer payments prioritize China’s central, western, and northeastern regions?

By | Kai Feng

A great power is playing a whole-board game.

01

A 100-trillion-yuan “big cake”—where did it go?

Recently, the authorities released the latest budget data: in 2026, the total amount of central-to-local transfer payments reached 10.42 trillion yuan, exceeding 10 trillion yuan for 4 consecutive years and setting a new high.

So-called transfer payments are, in essence, fiscal redistribution: take from developed provinces, use it in less developed regions, pool any surplus to make up for不足, to achieve regional balance and equalization of public services.

Because the 2026 budget has not yet been fully allocated to localities, use the 2025 final executed figures as the baseline.

Fiscal transfer payments mainly flow to the western, central, and northeastern regions, showing clear policy-tilting characteristics.

There are 10 provinces whose transfer-payment amounts exceed 400 billion yuan: Sichuan, Henan, Xinjiang (including the Production and Construction Corps), Hunan, Hubei, Hebei, Heilongjiang, Yunnan, Anhui, and Guangxi.

Sichuan and Henan are again ranked top two, with Sichuan at 684 billion yuan to remain in first place, and Henan also approaching 600 billion yuan, far ahead of other provinces.

By contrast, among the 6 eastern provinces such as Guangdong, Jiangsu, Shandong, Zhejiang, Beijing, and Shanghai, the total transfer payments they receive are only 1.2 trillion yuan—out of proportion to the scale of the taxes they remit.

The 2026 budget allocations are basically consistent with the 2025 final execution data; it still remains a “home game” for the central, western, and northeastern regions.

02

The places with the highest per-capita transfer payments are not Sichuan or Henan.

When measuring transfer payments, you cannot look only at the totals—you must take account of differences in provincial conditions, especially the huge gaps in population, which makes per-capita figures especially important.

In terms of per-capita transfer payments, the top 5 provinces are Tibet, Xinjiang, Qinghai, Ningxia, and Heilongjiang, respectively.

Among them, Tibet is the only province with per-capita transfer payments exceeding 70k yuan. With more than 2.7 trillion yuan in transfer payments going to more than 100k people, the intensity is evident.

By contrast, Sichuan and Henan—which are considered to have “cut away the biggest cake”—have per-capita figures only in the mid-range, far from as impressive as people imagine.

Sichuan’s per-capita transfer payments are 8,200 yuan, which is less than Yunnan, Guangxi, and Liaoning; Henan has only 6,100 yuan, even less than Beijing and Chongqing.

As for Guangdong, the largest economic province, its per-capita transfer payments are only 2,070 yuan, ranking last—clearly lower than the Yangtze River Delta regions such as Jiangsu, Zhejiang, and Shanghai.

03

“Splitting the cake” with fiscal transfer payments—why are some portions big and others small?

In general, the more people there are, the less developed the economy tends to be, the weaker a local area’s ability to fund itself, the more important its strategic position is—and the more transfer payments it receives.

The logic works the other way too. The more developed the economy is, the stronger local fiscal resources are, the higher the fiscal self-sufficiency rate, and the fewer transfer payments are received.

One major trend worth paying attention to is that fiscal transfer payments have continued to tilt toward key ecological functional zones, major producers of agricultural products, hardship areas, and less developed regions.

From this, it’s not hard to understand why the central, western, and northeastern regions can get such a large share of the cake.

Why Sichuan and Henan remain firmly among the top ranks is because they both rank among China’s TOP5 provinces by population size. Henan’s resident population is close to 100 million, and Sichuan’s is also over 83 million.

Henan and Sichuan are both major grain-producing regions. Sichuan’s natural environment is more complex, and with support from national-strategy positioning as a strategic hinterland, fiscal support there is even stronger.

So, when discussing transfer payments to the two provinces of Sichuan and Henan, you cannot ignore the dilution effect of their massive populations, and you also must not underestimate their outstanding contributions to labor mobility, grain, and energy security.

Similarly, Xinjiang and Tibet may be relatively less developed economically, but their strategic positions are highly prominent. Large volumes of transfer payments are provided for that reason—and it’s not without logic.

In fact, Tibet is not only the top province in per-capita transfer payments; average wages there also significantly surpass those in Guangdong, Jiangsu, and Zhejiang, ranking third nationwide.

In recent years, a series of major “super” projects and national policies have been tilted toward China’s southwest and northwest.

Projects with funding on the scale of tens of billions and trillions—such as the 1-trillion-yuan Yalong? hydropower station, the 4000-billion-yuan New Xinjiang–Tibet railway, and the 3000-billion-yuan Sichuan–Tibet railway—have already been launched.

In the past few years, adjustments to nationwide administrative divisions have basically been paused, but in Tibet, “dissolving counties and setting up cities,” and in Xinjiang, the establishment of three new counties in succession, are all expressions of strategic positioning.

Today, with the world facing changes in geopolitics, the importance of “govern the border first when governing the country” is even more prominent. This requires financial resources to back it up, so transfer payments cannot be easily weakened.

04

Fiscal transfer payments—who is the biggest net contributor?

Many people find that even developed regions like Guangdong, Jiangsu-Zhejiang-Shanghai, and Beijing are also receiving transfer payments.

This is related to the “tax-sharing system”: provinces first remit a certain proportion of taxes to the central government, and then the central government performs a second round of allocation based on financial strength and balance.

Although eastern coastal regions receive a certain amount of transfer payments, they remit more; after the two are offset, most end up as net contributors.

Based on local tax data, provinces such as Guangdong, Shanghai, Beijing, Jiangsu, Zhejiang, Shandong, Fujian, and Tianjin are net contributors.

Among them, Guangdong has remained the top net-contributor province for multiple consecutive years.

This year, Guangdong’s budget report states that in 2025, Guangdong contributed more than 1 trillion yuan to central government revenue, ranking first in the country.

With contributions exceeding 1 trillion yuan, the amount Guangdong receives back from transfer payments is only 266.1 billion yuan, meaning Guangdong’s net remitted contribution reaches 800 billion yuan.

The first place in net contribution from fiscal transfer payments—and the first place in net contribution from pension fund adjustments—together can be seen as Guangdong’s most “gold content” embodiment as China’s largest province.

Don’t forget: a great power is playing a whole-board game.

The eastern regions shoulder the big responsibilities for the economy, employment, and fiscal support; the central and western regions, along with the northeast, are the biggest contributors of labor, grain, and energy.

West-to-East power transmission, West-to-East gas delivery, North-to-South coal transport, North-to-South grain shifting—all are typical examples.

No place can go it alone. Every province contributes, but it also benefits at the same time from the contributions of other regions.