(Economic Observation) China's government debt hedge against economic downturn shows off

　　China News Service, Beijing, December 21st (Reporter Zhao Jianhua) In 2020, the national government bond funds will reach 8.51 trillion yuan (RMB, the same below), an increase of 36,000 over last year by increasing the deficit rate, increasing government investment, reducing taxes and fees. 100 million yuan, China’s proactive fiscal policy is outstanding.

According to expert analysis, government bonds are indispensable in fighting the epidemic and promoting economic and social development.

　　Special measures are taken during special periods.

China has increased its deficit rate from 2.8% to over 3.6%, and its fiscal deficit has increased by 1 trillion yuan over last year.

According to Zhao Quanhou, director of the Financial Research Center of the Chinese Academy of Fiscal Sciences, it has hedged the impact of reduced revenue and increased expenditure caused by the epidemic, stabilized and boosted market confidence.

　　In order to hedge the downward pressure on the economy, China will increase government investment in 2020.

Arrange for local governments to add 3.75 trillion yuan in special bonds, an increase of 1.6 trillion yuan from last year, mainly for transportation infrastructure, energy, agriculture, forestry and water conservancy, ecological and environmental protection, people's livelihood services, cold chain logistics facilities, municipal and industrial park infrastructure, etc. Seven major areas, focusing on supporting the coordinated development of Beijing-Tianjin-Hebei, the construction of the “Belt and Road”, the development of the Yangtze River Economic Belt, the construction of the Guangdong-Hong Kong-Macao Greater Bay Area and the Hainan Free Trade Port and other major national regional development strategies.

At the same time, the issuance of anti-epidemic special treasury bonds of 1 trillion yuan, not only for infrastructure construction projects with a certain income guarantee, but also for anti-epidemic related expenditures, local "three guarantees" (guaranteeing basic people’s livelihood, guaranteeing wages, and guaranteeing operations) Recurrent expenditure and flood prevention and disaster relief expenditure.

　　Zhao Quanhou said that while local government special bonds made up for shortcomings in infrastructure construction, they also strengthened counter-cyclical adjustments and made important contributions to economic growth.

The anti-epidemic special national debt has played an important role in overcoming the epidemic and building an emergency prevention system.

With the collective efforts of various policies, China has become the only major economy in the world that has achieved positive economic growth.

　　Including local government special bonds, as of the end of November, China has issued a total of 6.260.2 billion yuan in local government bonds (hereinafter referred to as local bonds) this year.

Among them, new bonds were 4,454.5 billion yuan, and refinancing bonds were 1,765.7 billion yuan.

Among the new bonds, general bond issuance was 947.9 billion yuan, and special bond issuance was 3.5466 billion yuan.

　　It is a foregone conclusion to complete 100% of the annual issuance task by the end of the year.

According to Feng Beilin, deputy director of the Financial Research Center of the Chinese Academy of Fiscal Sciences, local bonds show the general characteristics of extended issuance periods and lower issuance interest rates.

The scale of government bonds is large, and it is not easy to complete the issuance task on schedule.

This fully reflects the more active policy orientation of the proactive fiscal policy, with governments at all levels and financial institutions working together to fight the impact of the epidemic.

　　Feng Beilin said that for a long time, China's cities and counties have faced greater pressure on the fiscal authority and expenditure responsibilities at the grassroots level.

In some cities and counties, fiscal revenues and expenditures are contradictory, and the pressure of the "three guarantees" is great, and it is more difficult to guarantee funds for development and construction.

The large-scale issuance of local government bonds this year has provided strong support for local governments to reduce taxes and fees, reduce burdens for companies in need, help market players tide over difficulties, and raise local construction funds.

　　At the same time, in some economically developed provinces, local special debts are tilted towards the construction of "new infrastructure" and "new urbanization", guiding social capital to increase investment in 5G infrastructure, intercity high-speed railways and urban rail transit, new energy vehicle charging piles, Investment in big data centers, artificial intelligence, industrial Internet and other fields.

Feng Beilin said that this has had a positive effect on promoting the upgrading of local infrastructure and enhancing the endogenous power of economic development.

　　Looking forward to the coming year, Li Xuhong, director of the Institute of Finance and Taxation Policy and Application of Beijing National Accounting Institute, believes that the negative impact of the new crown pneumonia epidemic will not be fully digested in the short term and it will take time for the economy to fully recover.

Next year, we should continue to implement a proactive fiscal policy and maintain a moderate expenditure intensity to stimulate investment, drive consumption, improve expectations, and promote economic growth.

At the same time, we must ensure fiscal sustainability and effectively manage the scale of debt.

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