When it comes to attracting investment, one cannot ignore the fiscal "purse strings."

Local finance departments are well aware of this.

“When budget-spending units come knocking, sometimes we can’t provide the funds, so all we can do is maintain a positive attitude.”

said a finance department head from a development zone, his brow furrowed.

Raising funds at year-end to settle “bills” is the norm, with funding for some projects often approved the following year.

Every local finance director reviews thousands of funding applications each year.

When prioritized, the top three remain ensuring salaries, maintaining operations, and safeguarding people’s livelihoods.

Compared to previous years, there is now a greater emphasis on “increasing revenue and cutting costs.”

Beyond careful budgeting, the government must also demonstrate the decision-making and responsibility to “spend money wisely.”

When it comes to attracting investment, spending the “public purse” where it matters most is what truly adds value.

Only when industries cluster, supply chains extend, enterprises grow, and employment expands will fiscal revenue increase.

01 Under Fiscal Pressure, Expenditures Must Be Effective

Recently, Lan Fuan, Minister of Finance, made a statement.

In his remarks, he emphasized several key points:

For instance, he declared that not incurring new hidden debt is an “ironclad discipline.”

Another example is ensuring that precious fiscal funds are spent where they are most needed.

"Be frugal with small sums and generous with large ones" was listed as one of the six major principles of fiscal work.

Since localities began implementing fiscal budget performance management, it has become common to hear investment promotion departments say:

“It’s getting harder and harder to secure funding, and it’s getting harder and harder to spend it.”

The former refers to setting the goal that “every penny spent must be effective”; the latter refers to establishing a system where “ineffectiveness will be held accountable.”

Behind the challenges of “difficulty in securing funds” and “difficulty in spending them” lies a distortion and deviation that occurs during the process of policy transmission and implementation at various levels.

This is particularly true in investment promotion, where there is concern about deviating from the original intent of “spending funds where they are most needed.”

In fact, fiscal spending requires a clear distinction between what should and should not be done.

Looking back, typical cases driven by a desire for “image” and “face” are all too common.

Some prefectural-level cities or district and county governments, despite facing severe fiscal constraints, have managed to scrape together 1 billion yuan in capital for industrial investment funds, entrusting their management to investment firms.

In just a few short years, this money was invested in nearly 20 projects, and local governments even built new industrial parks specifically to accommodate the incoming enterprises. However, the development outcomes and tax contributions of most of these projects fell far short of the initial expectations and commitments.

In investment promotion, the “5 major platforms” and “8 major services” have become standard features. Online platforms have emerged, offering contactless approvals, cloud service halls, and digital government avatars.

On the surface, these initiatives appear to be cloaked in the guise of innovation and efficiency. In reality, however, businesses find that these high-end services are either unnecessary or fail to address their actual needs, yet significant funds have been poured into them.

This is a clear example of funds not being spent where they are needed, and there is absolutely no room for the waste and squandering associated with “formalism.”

In a county town in eastern China, a finance bureau official revealed:

“Every month, he takes the financial reports to the county magistrate’s office to report on the month’s revenue, mandatory expenditures, and other relevant matters.”

The key questions addressed include: how much funding is required for the “Three Guarantees,” which debts need to be repaid, and which funds are available…

At present, while “Three Guarantees” expenditures are rising and debt repayment burdens are heavy, local tax revenues and land sale proceeds are slowing down, making the contradiction between local revenue and expenditure even more pronounced.

When it comes to investment promotion, the key is to clearly distinguish between “necessary” and “unnecessary” expenditures and to truly grasp the deeper meaning of the principle: “Be frugal with small sums, but generous with large ones.”

On the one hand, “small expenditures” specifically refer to general administrative costs—such as “three public funds” (official travel, official vehicles, and official receptions), redundant expenses for meetings and forums, and inefficiently idle miscellaneous funds—which are non-essential and non-priority expenditures that must be curbed to prevent waste.

On the other hand, “major expenditures” correspond in part to strategic investments supporting the nation’s long-term development, with funding prioritized for investment promotion, industrial upgrading, and scientific research and development.

Crucially, funds must not be left idle in accounts out of fear of accountability, nor should they be scattered like “pepper” merely for the sake of spending.

02 The Government Knows How to Spend Money: How to Spend It Where It Matters Most

Fiscal spending is not about cutting costs at all costs; the key lies in striking a balance.

In particular, funds should be allocated to areas that “generate returns.”

When it comes to attracting investment, “knowing how to spend money” is also a reflection of the government’s governance capabilities.

“There are too many year-end evaluations, many of which are finance-related. For example, tax revenue figures, tax revenue share, debt issues, the performance of fiscal funds, and the promotion of industrial development.”

A director of an investment promotion bureau candidly told us that one of the tasks of the finance department in his prefecture-level city is to complete a series of performance evaluations.

In his region, there is an industrial development performance metric—a target allocated by the municipal government to lower-level departments, with each department having its own specific industrial development goals. Most importantly, there are also performance metrics specifically for investment promotion.

However, without exception, meeting these targets requires a certain level of expenditure.

In investment promotion, the willingness to spend money is a prerequisite for breaking through development deadlocks. In reality, some localities have fallen into the dilemma of “refusing to spend money for fear of accountability.”

They often equate the rigid requirement that “spending money must yield results” with the notion that “not spending money means no mistakes,” preferring to let local industrial development miss out on some opportunities.

Of course, there is also a group of governments that are “willing to spend” and “know how to spend” that are leading the way.

These localities have fully grasped the logic that “small sums require frugality, while large sums demand generosity”: they won’t spend a single penny on superficial, showy projects, but they are willing to invest real money in industrial research and project recruitment.

It is worth noting that the effectiveness of investment in investment promotion depends not only on the amount of capital invested, but even more so on the allocation of time and effort.

In the landscape of cooperation, many national-level development zones and high-tech zones have decisively invested funds to focus on industrial upgrading, development planning, and targeted investment promotion for their leading industries.

In some regions, guided by research and advice from the Guchuan Industrial Research Institute, authorities have not only produced highly specialized industrial research reports but also crafted tailored three-year master plans for industrial development.

Unlike generic, one-size-fits-all solutions, these plans are deeply aligned with the park’s resource endowments and developmental foundations. They combine professionalism with foresight, charting a clear “roadmap” for investment promotion.

While the funds spent on industrial research may appear to be “upfront investments,” they actually save significant trial-and-error costs in subsequent work.

In other regions, industrial parks face persistently high vacancy rates.

Throughout the park’s entire lifecycle, operational teams were not involved in any stage—from planning to construction.

Previously, I was involved in a lithium-ion battery project in Anhui that was considering expanding production in Southwest China.

The company’s equipment measures 77 meters in length, requiring space reserved at both ends, as well as provisions for elevator shafts and loading docks.

The statement that left the deepest impression during our first meeting was: “If the facility isn’t suitable, there’s no point in continuing the discussion.”

If operations had been involved earlier, they could have played an active role in industrial positioning and spatial design, ensuring that factory construction aligns with the company’s needs.

As for industrial parks, they should allocate a portion of their funds to provide support.

Whether in the initial planning phase or the subsequent implementation phase, we must fundamentally shift away from the mindset of “prioritizing construction over operations.”

In contrast, those regions that have long integrated spatial planning with investment promotion and operations have spent their money where it counts.

These regions have invested in partnering with GuChuan United to integrate into every stage of the process—from park planning and facility construction to project matching. By proactively identifying the core needs of target enterprises within their leading industries, we conduct on-site assessments and establish a permanent presence, thereby shortening the sales cycle and increasing tenant occupancy rates.

These practices demonstrate that by moving beyond the mindset of “no spending means no fault,” and making long-term decisions with a focus on “spending where it counts,”

03 To be an effective government, we must never hold back

While extravagant spending is strictly prohibited, this does not mean we should be timid and hesitant.

This statement encapsulates the dialectics of fiscal management, and the same applies to investment promotion.

While regions must eliminate wasteful spending on vanity projects and abandoned construction sites, an effective government must dare to take responsibility and act decisively in regional economic development.

In many places, there is a problem where “each administration has its own development strategy.”

Projects introduced and industries supported by previous leaders are often ignored by their successors, who instead focus on attracting new sectors. This results in earlier investments being abandoned midway, causing industrial development to suffer a “break in continuity.”

What is even more regrettable is that some high-quality projects in their incubation phase require 3 to 5 years of industrial support to get on track and generate returns.

However, due to shifts in policy direction following a change in government, these projects lose continued financial support and policy safeguards, ultimately forcing them to withdraw or cease operations, with the majority of funds going down the drain.

This not only constitutes a severe waste of financial resources but also undermines the local business environment and the government’s credibility, trapping subsequent investment promotion efforts in a vicious cycle where “companies dare not come and projects cannot be attracted.”

From the perspective of leadership transitions, some officials, in pursuit of so-called “achievements,” are eager to tear down and rebuild from scratch. To varying degrees, this leads to issues such as “new officials not addressing past commitments,” which can easily result in wasted resources, missed development opportunities, and hinder the sustainable economic development of a region.

The cultivation of regional industries and economic growth are never achieved overnight; they require long-term financial investment and patient nurturing. More crucially, they depend on the continuity and collaboration among successive leaders.

It is crucial to move beyond the extreme mindset of “either squandering money or not spending it at all,” firmly adhering to the fiscal principle of “being frugal with small sums and generous with large ones.” Limited funds should be directed toward areas that truly generate long-term benefits, such as industrial research, project attraction, and asset revitalization.

Only when the government “spends wisely” in attracting investment can the local area “make money,” ultimately ensuring that the fiscal “purse” grows ever fuller.

Under fiscal pressure, this not only tests the capabilities of local investment promotion efforts but also the wisdom and sense of responsibility of decision-makers in “spending wisely.”

From top to bottom, strictly prohibiting “extravagance” does not mean “paring back spending.” Only by clarifying the boundaries between “what should be spent” and “what should not be spent”—adhering to the principle of “being frugal with small sums” to safeguard the bottom line of funds, and “being generous with large sums” to unlock development potential—can we succeed.

From a long-term perspective, only a capable government that knows how to spend money wisely will become increasingly prosperous.

This “wealth” does not stem from short-term cost-cutting measures, but rather from targeted investments that generate returns, ultimately driving a dual leap forward in both fiscal revenue and regional development.