In December 2004, UNDP/China, in partnership with the Chinese Ministry of Finance (MOF), the State Administration of Taxation (SAT), the Ministry of Commerce, started a programme on Capacity Building to support Pro-poor Fiscal Reform in China. Jointly financed by UNDP, UK's Department of International Development (DFID), the MOF, and the SAT with a fund of US$10 million(UNDP inputs USD1,000,000, DFID inputs USD5,000,000 and Chinese government contribution 4,000,000)，this four-year programme seeks to support the government in the widened implementation of on-going fiscal reforms as well as to address emerging policy development and other capacity needs in this area, with a particular emphasis on poverty reduction issues. It will also help the government to addresses capacity constraints in implementing fiscal reforms at sub-national levels, especially in less-developed regions, such as on budget planning and management as well as tax administration. The programme will also support, as a separate TA component, the development of pro-poor fiscal policy initiatives.

　 China's transition to a socialist market system and deepening the reform put new demands on fiscal management. To support China in addressing the growing disparities between regions and between rural and urban areas, this programme will promote pro-poor fiscal reform in China to enable a more equitable distribution of fiscal resources across the country, such as on education and on health care. Pro-poor fiscal policies and sound fiscal management are indispensable tools to attain government's overarching goal to build a well off Xiao Kang society and reach the Millennium Development Goals (MDGs).