In the second half of the year, about 3 trillion local government bonds are waiting to be issued, and fiscal expenditures will increase to protect people's livelihood

Editor's note: The

game is in the middle of the game. The economic situation in the first half of this year will be announced soon.

Judging from the recently announced data for the first five months, the main indicators of my country's economy were better than expected, and the economy continued to recover steadily.

However, due to the ups and downs of the epidemic and increasing external uncertainties, growth pressure still exists, and structural problems have yet to be resolved.

How will the macro economy go in the second half of the year?

Given the subtle changes in the monetary policies of major economies in the world, how do my country’s monetary and fiscal policies set the tone?

CBN has set up a special topic of "China Economic Mid-Year Observation" to comprehensively interpret China's economic trends.

  As an important part of the macro policy combination, the fiscal policy trend in the second half of the year has attracted much attention from the market.

  Many fiscal and taxation experts analyzed by China Business News that in order to maintain the continuity and stability of the macro policy, the fiscal policy in the second half of the year will continue to maintain a "positive" orientation, but the intensity will be greater than that in the first half of the year.

This includes speeding up the issuance of new bonds by local governments. About 3 trillion yuan of bonds will be issued in the second half of the year to supplement local "ammunition" and increase investment in major livelihood projects such as infrastructure construction to stabilize the economy and make up for shortcomings.

The new policy of tax reduction and fee reduction of more than 550 billion yuan will also continue to be implemented to reduce the burden on market entities such as enterprises and stimulate market vitality.

Fiscal expenditures will also be increased to protect people's livelihood and implement major national strategic tasks.

Recovery growth of fiscal revenue

  Since the beginning of this year, fiscal revenue has shown a recovery growth, reflecting the remarkable results achieved in my country's economic recovery.

Proactive fiscal policies improve quality and efficiency, make them more sustainable, take both the current and long-term into consideration, and strengthen the protection of expenditures in key areas such as people's livelihood.

  According to data from the Ministry of Finance, the national general public budget revenue from January to May was 9645.4 billion yuan, a year-on-year increase of 24.2% and a year-on-year increase of 7.3%.

In terms of main tax revenue, domestic value-added tax, domestic consumption tax, corporate income tax, and personal income tax increased by 24%, 16.6%, 21.8% and 25.9% year-on-year respectively from January to May.

Benefiting from the continuous recovery of the economy, fiscal revenue has maintained rapid growth this year.

  Li Xuhong, director of the Institute of Finance and Taxation Policy and Application of Beijing National Accounting Institute, analyzed that in the first five months, various taxes such as value-added tax, consumption tax, and corporate income tax have increased significantly, on the one hand due to the impact of the lower income base in the same period last year. On the other hand, it also fully reflects the rapid recovery of the overall vitality of the Chinese market, the recovery of corporate business behavior, and the further release of people’s consumption.

At the same time, the year-on-year growth rate of import tariffs and export tax rebates has further expanded, reflecting the obvious recovery of my country's international trade.

  Since 2021, my country's tax reduction and fee reduction have continued to advance, but more attention has been paid to improving quality and efficiency.

While optimizing the economic structure and promoting economic development, it also takes into account fiscal sustainability.

  In the first half of this year, some of last year's tax and fee reduction policies were extended.

In March, the Ministry of Finance extended the implementation period for the 30 policy documents implemented last year to support epidemic prevention and control and corporate rescue. The extended policy focuses on supporting small and micro enterprises’ loan financing and technological innovation and development.

  The finance and taxation departments also introduced many major tax reduction and exemption policies in the first half of the year, such as raising the value-added tax threshold for small-scale taxpayers from monthly sales of 100,000 yuan to 150,000 yuan; annual tax payable to small and micro enterprises and individual industrial and commercial households For the income less than 1 million yuan, on the basis of the current preferential policies, the income tax will be halved; the policy of 75% of the deduction of enterprise research and development expenses will be continued, and the ratio of the deduction of manufacturing enterprises will be increased to 100%, etc. .

Relevant departments estimate that the newly introduced tax and fee reduction policies plus the tax incentives that have already been introduced will result in a new tax cut of more than 550 billion yuan throughout the year.

  Bai Jingming, a researcher at the Chinese Academy of Fiscal Sciences, said that the policy effect of tax reduction and fee reduction is very obvious. Tax reduction and fee reduction have expanded the profit space of enterprises, which is directly reflected in the relatively rapid growth of corporate income tax.

Tax cuts and fee reductions have increased the investment capacity of enterprises and also expanded employment.

  In the first half of the year, the Ministry of Finance also further implemented a normalized direct fiscal fund direct mechanism. The direct fund scale increased from 1.7 trillion yuan last year to 2.8 trillion yuan, focusing on the grassroots "three guarantees" and benefiting the enterprise and the people.

At present, direct funds from the central government have issued more than 90% of the 2.8 trillion fund.

  Bai Jingming said that the practice in the past year has shown that the direct fiscal funds mechanism has effectively supported the "six stability" and "six guarantees", and has achieved provincial-level allocations, audits, appropriations, and reconciliations, thereby ensuring that funds are released in a timely manner. The grassroots government finally makes the budget preparation and budget execution of related funds solidly connected.

At the same time, the transparency of the use of central transfer payment funds has been enhanced, and this has changed the situation in the past where the grassroots government did not know how much of the funds used came from the central government and how much came from the provincial government.

This shows that the direct mechanism of fiscal funds is an institutional innovation with long-term vitality and provides a replicable and popularized experience for the scientific management of transfer payment funds.

More than 15 trillion fiscal expenditures force

  The economy recovered steadily in the first half of this year, which drove the rapid growth of fiscal revenue. The main economic data also performed well. The pressure on proactive fiscal policies to maintain stable economic growth is relatively small. This also leaves room for fiscal force in the second half of the year to support economic stability. run.

  According to data from the Ministry of Finance, the national general public budget revenue in the first five months of this year was approximately 9.65 trillion yuan, a year-on-year increase of 24.2%.

The national general public budget expenditure is about 9.3 trillion yuan, a year-on-year increase of 3.6%.

  This means that fiscal expenditures in the first five months are lower than income, and the progress of fiscal expenditures has slowed down compared with previous years.

According to this year’s central and local budget reports, it is estimated that the national general public budget expenditure for the whole year will be about 25 trillion yuan, which means that the scale of fiscal expenditure from June to December this year will be as high as about 15.7 trillion yuan.

  Ji Fuxing, executive director of the China Government Debt Research Center of the National Finance and Development Laboratory, told CBN that due to the impact of the epidemic last year and the distribution of base numbers and other issues, this year’s economic growth has shown a "high before and low" trend, and the bottom line of economic growth this year is expected. It is 6%, and the optimistic estimate is expected to exceed 8%.

However, it cannot be ignored that there are still large uncertain factors, especially some market players are facing greater operating difficulties, some local fiscal balance contradictions are more prominent, and liquidity is in a tight state.

Therefore, fiscal expenditures need to be maintained at an appropriate level, and fiscal policies still need to focus on increasing efficiency and making them more sustainable.

  "The next step should be to optimize the investment structure, speed up the progress of fiscal expenditures, make good use of various government infrastructure investments, local government bond funds, etc., give full play to the leveraging role of government investment, and stimulate the vitality of private investment. Focus on complementing rural revitalization, ecological environmental protection, and people's livelihood security. Wait for shortcomings, speed up the construction of major projects such as'two new projects and one heavyweight'. In particular, we should do in-depth project preliminary work, accelerate the progress of local bond issuance and expenditure, and effectively reverse the problem of'funds and other projects'." Ji Fuxing said.

  Taking into account that the huge amount of local government bond funds last year will continue to exert its financial effect this year, and the pressure of stable growth in the first half of this year is relatively small, the progress of new local government bond issuance has slowed down significantly, and the growth rate of infrastructure investment has fallen short of market expectations.

  According to data from the Ministry of Finance, local governments issued 946.5 billion yuan in new bonds in the first five months of this year, a year-on-year decline of about 65%.

As of June 15 this year, new local government bond issuances amounted to 1,285 billion yuan, accounting for only 30% of the issued quota.

  According to the estimate of 4.47 trillion yuan in local government bonds for the whole year of this year, there will be about 3 trillion yuan in new local government bonds to be issued in the second half of the year, and these funds will be mainly invested in major infrastructure and people’s livelihood projects such as "two new projects and one heavy industry". .

  Luo Zhiheng, deputy dean of the Yuekai Securities Research Institute, told CBN that in the second half of the year, the issuance of new bonds by local governments will be accelerated, and infrastructure investment will be promoted to stabilize economic growth.

The focus is on ensuring people's livelihood and stable employment

  Luo Zhiheng believes that the current economy is mainly driven by exports and real estate. Consumption and manufacturing investment are relatively sluggish. At the same time, it is affected by repeated epidemics and rising prices of commodities. The youth unemployment rate is relatively high. This is a relatively prominent problem in current economic development. , It is also the focus of the next fiscal policy.

  He said that in order to maintain the stable operation of the economy, the proactive fiscal policy still has to deal with the balance between economic and social risks and fiscal risks.

Specifically, the proactive fiscal goal in the second half of the year is to boost consumption and manufacturing investment.

For this reason, it is recommended to continue to adhere to the direction of this year's expenditure structure to focus on people's livelihood and social security, and to increase residents' marginal propensity to consume.

Taking rural revitalization as the starting point, continue to promote the construction of rural infrastructure and promote the prosperity of industries and the prosperity of life.

And implement the policy of reducing taxes and fees for manufacturing industries.

  Ji Fuxing suggested that the next step is to increase taxation, social security, transfer payments and other adjustments to improve the income distribution pattern and increase the level of social consumption.

Continue to promote tax reduction and fee reduction, increase support for technological innovation and green development, and strengthen the relief of market entities and promote the transformation and upgrading of enterprises.

  Finance is taken from the people and used by the people, and it is an important function of finance to cover basic people's livelihood expenditures.

This year, the central government has implemented a direct fiscal fund mechanism with a total amount of up to 2.8 trillion yuan, basically realizing the full coverage of the central government’s subsidies for people’s livelihood.

  According to data from the Ministry of Finance, as early as late May this year, more than 90% of this huge amount of direct funds had been transferred to the grassroots level of cities and counties for the benefit of enterprises and the people.

This can hedge some of the phased policy "retreat" effects.

  Ji Fuxing said that it is necessary to further improve the direct mechanism of fiscal funds, appropriately strengthen the transfer payment and financial support to the grassroots, to ensure that the financial resources are really sinking to the grassroots, to secure the bottom line of the "three guarantees" at the grassroots, and to prevent fiscal and financial risks.

  In order to further reduce the burden on enterprises and support the development of manufacturing and small and micro enterprises, the State Council has introduced more than 550 billion yuan in tax and fee reduction policies this year. These policies have been implemented, and some will be implemented in the second half of the year.

  For example, the biggest tax reduction policy this year is to increase the percentage of additional deductions for manufacturing companies’ R&D expenses from 75% to 100%, which can reduce corporate income tax and encourage corporate innovation.

This policy is expected to reduce taxes by more than 80 billion yuan, and the state allows enterprises to enjoy additional deductions for half a year. Therefore, manufacturing enterprises can start to redeem this tax reduction red envelope in the second half of this year.

  Luo Zhiheng believes that when the epidemic is repeated and commodities are rising, we must focus on the survival of private enterprises and small and medium-sized enterprises and youth employment issues.

It is recommended to support the supply and price stability of bulk commodities, and to ensure that the price increase of bulk commodities is passed on to some daily necessities, and to provide assistance to the affected low- and middle-income groups and small and medium-sized enterprises.

Financial support for the employment of key groups of people, the current unemployment rate of 18-24 years old is relatively high, to ensure social stability.

  Yang Zhiyong, a researcher at the Institute of Financial and Economic Strategy of the Chinese Academy of Social Sciences, told China Business News that the fiscal policy will continue to maintain policy continuity in the second half of the year, support economic stability, especially to ensure employment, and not necessarily pursue economic growth too much.

The economy will face even greater challenges in the first quarter of next year, and fiscal policy needs to consider issues at different stages in a coordinated manner.

(Author: Chen Yikan? Zhu Yanran)