GuShiio.com Lan Fo ‘an, Secretary of the Party Leadership Group and Minister of the Ministry of Finance, mentioned in an article published in the People’s Daily that we should comprehensively grasp the connotation requirements of more active fiscal policies. We must grasp the general trend, strengthen our confidence, and take positive actions, fully implement the decisions and arrangements of the Party Central Committee, implement more proactive fiscal policies, continue to work hard and be more forceful, play a good “combination punch” of policies, and strive to transform positive factors in all aspects into Development performance.
Implement more proactive fiscal policies to promote continued economic recovery and improvement
The Central Economic Work Conference made it clear that a more proactive fiscal policy must be implemented in 2025. This is a major decision and deployment made by the Party Central Committee with Comrade Xi Jinping as the core from a strategic and overall perspective, assessing the situation and comprehensively considering it. It points out the direction and provides fundamental guidelines for doing a good job in fiscal work in 2025. The financial department will effectively unify its thoughts and actions with the Party Central Committee’s scientific judgment on the economic situation, accurately grasp the overall requirements, policy orientations and key tasks of this year’s economic work, implement more proactive fiscal policies, increase countercyclical adjustment efforts, and continue to Work hard and be more powerful to promote economic and social development to maintain a good momentum.
Proactive fiscal policy promotes economic stability and improvement
In 2024, financial departments at all levels will resolutely implement the decisions and arrangements of the Party Central Committee and the State Council, solidly implement proactive fiscal policies, intensify the implementation of existing and incremental fiscal policies, and effectively promote the completion of economic and social development goals and tasks throughout the year. The national general public budget expenditure exceeded 28 trillion yuan throughout the year, and expenditures in key areas such as social protection, employment, and education were strongly guaranteed. Issue 1 trillion yuan of ultra-long-term special treasury bonds to support the “two major” construction and “two new” work. Accelerate the issuance and use of special bonds by local governments, expand the areas of investment and the scope of use as project capital, and support more than 40,000 projects. We will effectively do a good job in people’s livelihood, raise the national minimum standard for basic pensions for urban and rural residents, and issue one-time living subsidies to more than 11 million people in need before National Day. The central government’s transfer payments to local governments continue to exceed 10 trillion yuan, promoting local governments to sink financial resources and strengthening grassroots “three guarantees” work. Increase support for localized debt. On the basis of policies such as arranging 800 billion yuan in new special bonds for five consecutive years, a one-time debt limit of 6 trillion yuan will be arranged to replace existing hidden debt. Preliminary statistics show that the average cost of debt replacement in various places has generally been reduced by more than 2 percentage points, freeing up more resources and policy space to support investment, consumption, scientific and technological innovation, etc. Deepen the reform of the fiscal and taxation system and fiscal management supervision, take the lead in carrying out zero-based budget reform pilots in 16 central departments, and study and establish transfer payment incentive and restraint mechanisms to promote high-quality development.
The proactive fiscal policy is effectively and effectively implemented, and it works in concert with monetary, industrial and other policies to promote the smooth completion of the main development goals throughout the year, solidly advance high-quality development, the foundation for “stability” is more solid, and the momentum for “progress” is continuously enhanced. China’s modernization has taken new solid steps.
Comprehensively grasp the connotation requirements of more proactive fiscal policy
2025 is the year when the “14th Five-Year Plan” ends. At present, the adverse impact of changes in the external environment is deepening, and my country’s economic operation still faces many difficulties and challenges. However, it should be noted that my country’s economic advantages of strong resilience, sufficient potential, and large room for maneuver are still obvious, and the supporting conditions and basic trends for long-term improvement have not changed. We must grasp the general trend, strengthen our confidence, and take positive actions, fully implement the decisions and arrangements of the Party Central Committee, implement more proactive fiscal policies, continue to work hard and be more forceful, play a good “combination punch” of policies, and strive to transform positive factors in all aspects into Development performance. Continued efforts means doing a good job in policy coherence, not only allowing the policies that have been introduced to maximize their effectiveness, but also introducing new and powerful policies in a timely manner to be consistent and continuous. To be more effective, we should make good use of policy space, strengthen counter-cyclical regulation, improve the forward-looking, targeted and effective macro-control, so that policies will be stronger, the effects will be better, and all aspects will have a greater sense of gain.
The first is to increase the fiscal deficit ratio, increase expenditure intensity, and accelerate expenditure progress. The deficit ratio is an important indicator of macro policies. According to cyclical macroeconomic changes, it is a common practice in countries around the world to strengthen counter-cyclical adjustment by increasing the deficit ratio. This year, we will take into account the needs of macro-control, increase the fiscal deficit ratio, further increase the scale of total fiscal expenditure, and inject more impetus into economic development. At the same time, fiscal policy takes the initiative to speed up the disbursement of various funds and form actual expenditures as soon as possible.
The second is to arrange larger-scale government bonds to provide more support for stabilizing growth and adjusting the structure. From an international comparison, my country’s government debt ratio is significantly lower than that of major economies and emerging market countries, and there is still large room for borrowing. This year, we will increase the issuance of ultra-long-term special treasury bonds to further support the “double” construction and “two new” work; increase the scale of new local government special bonds, expand the areas of investment and the scope of use as project capital; moderately increase the scale of investment within the central budget., rationally arrange investment and priorities.
The third is to vigorously optimize the expenditure structure, strengthen precise investment, and pay more attention to benefiting people’s livelihood, promoting consumption, and increasing stamina. Adhere to management to tap potential, spend money to seek results, insist that party and government organs live a tight life without wavering, and concentrate financial resources to do big things well. Focus on increasing support for stabilizing employment and promoting the resolution of structural employment contradictions and employment problems for key groups. Increase support for boosting consumption, promote increased residents ‘income, improve the social security system, and improve consumption conditions. Increase support for educational talents, scientific and technological research, rural revitalization, green and low-carbon fields, enhance policy synergy, and accelerate the development of new productive forces.
Fourth, continue to make efforts to prevent and resolve risks in key areas and promote smooth fiscal operation and sustainable development. Development is the foundation and security is the bottom line. We must strengthen bottom-line thinking and promote the positive interaction between high-quality development and high-level security. This year, we will continue to promote the implementation of the policy of replacing existing hidden debt with local government debt limits in accordance with a package of debt conversion policies. Allowing local government special bonds to recover idle existing land and purchase existing commercial housing for affordable housing to promote the stabilization of the real estate market. New special treasury bonds were issued to supplement the core tier-1 capital of large state-owned banks and enhance their ability to serve the real economy.
The fifth is to further increase transfer payments to local governments, enhance local financial resources, and secure the bottom line of “three guarantees”. The central government’s transfer payments to local governments have exceeded 10 trillion yuan for two consecutive years, strengthening the financial guarantee of “three guarantees” at the grassroots level and promoting the equalization of basic public services. This year, the central government will maintain growth in transfer payments to local governments, further increase balanced transfer payments, county-level basic financial security mechanism reward and subsidy funds, and strengthen local financial security. At the same time, increase the arrangement of incentive funds to promote high-quality development, encourage local governments to actively develop the economy and expand the income “cake”.
Make every effort to implement the 2025 financial work tasks
One point of deployment and nine points of implementation. We will adhere to the guidance of Xi Jinping Thought on Socialism with China Characteristics for a New Era, fully implement the spirit of the Central Economic Work Conference, actively play the role of finance, and use truth-seeking, pragmatic, solid and powerful work measures to ensure that the decisions and arrangements of the Party Central Committee and the State Council are fully implemented and effective, providing a strong guarantee for completing the goals and tasks of the “14th Five-Year Plan” and achieving a good start to the “15th Five-Year Plan”.
Coordinate consumption and investment to support the expansion of domestic demand. Vigorously boost consumption, give full play to the role of fiscal and taxation policies, and promote the implementation of special actions to boost consumption. Increase efforts to protect people’s livelihood, increase residents ‘income through multiple channels, and better benefit people’s livelihood and promote consumption. Increase support for the replacement of old consumer goods with new ones, expand policy coverage, optimize the subsidy declaration process, improve the recycling system, and leverage more bulk consumption. Promote service consumption to improve the quality and benefit the people, and continue to support the creation of new consumption products, new scenarios and new hotspots. Promote the implementation of the national comprehensive freight hub chain replenishment and strengthening chain improvement actions to reduce logistics costs for the whole society. Actively expand effective investment, coordinate the use of various government investment funds, rationally arrange bond issuance, and promote the formation of more physical workload as soon as possible. Strengthen the cooperation between finance and finance, better leverage the multiplier effect and leverage of fiscal funds, and effectively drive more social investment with government investment.
Efforts will be made to ensure and improve people’s livelihood and promote the resolution of urgent, difficult and anxious problems of the people. Highlight the priority orientation of employment, coordinate and make good use of policies such as tax exemptions, employment subsidies, and job stabilization, and support employment and entrepreneurship among key groups such as college graduates. Support the construction of a strong education country, accelerate the high-quality and balanced development of compulsory education, and improve postgraduate academic scholarships and national scholarship standards for secondary vocational education and general high schools. Improve the population development support policy system. Improve the medical insurance financing mechanism for urban and rural residents, increase the financial subsidy standards for medical insurance for urban and rural residents, and promote the development of health undertakings. We will build a tight social protection network, steadily advance the gradual reform of extending the legal retirement age, thoroughly implement the national coordination of pension insurance, appropriately increase the basic pension for retirees, and increase the basic pension for urban and rural residents.
Solidly promote the comprehensive revitalization of rural areas and promote the integrated development of urban and rural areas. Support the construction of high-standard farmland, water conservancy infrastructure, etc., coordinate the establishment of an inter-provincial horizontal benefit compensation mechanism for grain production and marketing areas, accelerate the revitalization of the seed industry, and ensure a stable supply of grain and important agricultural products. Continue to consolidate and expand the results of poverty alleviation and increase support for key groups such as monitoring targets to prevent return to poverty. Promote rural development and construction in an orderly manner and vigorously promote new urbanization. Implement and improve regional fiscal and taxation policies, increase the implementation of regional strategies, and promote the accelerated development of old revolutionary base areas, border areas, and resource-exhausted areas.
Actively support the construction of ecological civilization and coordinate the promotion of carbon reduction, pollution reduction and green growth. Deepen the construction of horizontal ecological protection compensation mechanisms, and study and improve systems such as the paid use and trading of emission rights and the management of compensation funds for ecological and environmental damage. Strengthen ecological protection and restoration, continue to support the battle to defend blue sky, clear water, and pure land, and support the landmark battle of the “Three Norths” Project. Steadily promote carbon peak and carbon neutrality, strengthen support for the research and development and promotion and application of green and low-carbon advanced technologies, promote green and low-carbon transformation in key industry areas, vigorously support the development of renewable energy, and continue to promote new energy vehicles.
Vigorously promote scientific financial management and improve the efficiency of fiscal governance. Implement the decisions and arrangements of the Third Plenary Session of the 20th Central Committee of the Communist Party of China on deepening the reform of the fiscal and taxation system, formulate opinions on improving the modern budget system, further promote the zero-based budget reform, promote the relocation and decentralization of some items of consumption tax collection links, and optimize value-added tax retention tax refund policy. Further straighten out the fiscal relationship between the central and local governments. Implement a detailed package of debt-reduction policies, accelerate the reform and transformation of local government financing platforms, and effectively prevent and resolve local government debt risks. Increase financial supervision and seriously investigate and deal with outstanding violations of financial disciplines.
(The author is Party Secretary and Minister of the Ministry of Finance)
