In accordance with the Measures on the Management of PAF from the Central Budget，priority shall be given to the poor Key Working Counties（KWCs）to reduce poverty and there are also explicit provisions on the use of funds. Strict regulations greatly restrain the distribution of funds and as a result，funds are mainly allocated to the KWCs with a defined utilization structure，indicating that the basic pattern of poverty alleviation allocation is still county-targeting.

6.1 County-targeting of Fiscal Poverty Alleviation Funds

6.1.1 County-targeting of Fiscal Poverty Alleviation Funds at Central Government

The allocation of Poverty Alleviation Funds（PAF）from central finance still follows the pattern of county-targeting with the poor Key Working Counties（KWCs）as the basic unit，and at the same time importance is also given to regional differences. On the whole，such targeting mechanism is still the pattern of promoting regional development. Table 6-1 and 6-2 illustrates the distribution of the PAF from the central budget in KWCs and non-KWCs and in the central and western parts of China.

With such a targeting mechanism，the proportion of FDG funds，FFW and subsidized loans in 2002～2003 was 59%，65% and 54% respectively in KWCs while the proportion in the central and western parts was 36.6% and 63.4% respectively. In the 592 KWCs listed in the national poverty alleviation program，the poor population accounted to 62.1% of the total poor population in China.

Table 6-1 Allocation of poverty alleviation funds from the Central in KWCs and non-KWCs

Table 6-2 Allocation of FPAF in KWCs of west and central of China in 2001

In accordance with the Measures on the Management of PAF from the Central Budget，which was revised in 2002，it is stipulated that the