(Observation of the Two Sessions) The deficit rate has dropped, why has China's available financial resources increased significantly?
China News Service, Beijing, March 9 (Liu Wenwen and Wang Enbo) With the deficit rate falling to 2.8% this year, China's fiscal expenditure is still increasing, with an increase of more than 2 trillion yuan (RMB, the same below) compared with last year.
The government work report says "available financial resources have increased significantly" this year, so where does the money come from?
According to official information, this year's fiscal deficit rate has decreased, the scale of expenditure has increased significantly, and the available financial resources have increased significantly, mainly due to the profits that certain state-owned financial institutions have turned over in recent years in accordance with the law.
The funding was not used the year before and last year, leaving policy space for this year.
It is a common practice in China to arrange for specific state-owned financial institutions and specialized institutions to turn over profits, and it is also an important means of coordinating financial resources and adjusting funds across the year, including China National Tobacco Corporation, China Investment Corporation, etc. The People's Bank of China is also one of the turning over units.
The People's Bank of China has announced that it will hand over the balance of profits to the central government in accordance with the law this year, with a total amount of more than 1 trillion yuan, which will be mainly used for tax refunds and increased transfer payments to local governments.
The balance of profit mainly comes from the operating income of foreign exchange reserves in the past few years, and it will not increase the burden of taxation or economic entities, nor is it a fiscal deficit.
The People's Bank of China shall hand over the balance of profits to the central finance in accordance with the law, which will not cause the finance to overdraft to the central bank.
Data map: Pedestrians walk past the People's Bank of China.
Photo by China News Agency reporter Zhang Xinglong
It is understood that since the outbreak of the epidemic in the 20th century, in order to cope with possible risks and challenges, China has always reserved policy space for fiscal policy measures.
One of the measures reserved for policy space is to suspend the surrender of profits to certain state-owned financial institutions and specialized institutions to meet emergency needs.
Therefore, the relevant institutions have formed some surplus profits to be turned over, and these surplus profits should be turned over.
China's Ministry of Finance stated that considering the current and long-term perspectives, under the circumstance of implementing a new combined tax and fee support policy this year, upon approval in accordance with procedures, certain state-owned financial institutions and franchised institutions will be arranged to hand over part of the surplus profits formed before 2021 this year.
These funding arrangements are used to significantly increase transfer payments to local governments, helping local finance, especially county and district finance, to ease the pressure of revenue reduction.
Bai Jingming, a researcher at the Chinese Academy of Fiscal Sciences, said in an interview with a reporter from China News Agency that the deficit rate was relatively high last year, and there is a certain space for bond issuance, and there is no need to use the balance of profits for the time being.
The growth rate of general public budget expenditure this year is much higher than that of last year. Under the circumstance that the expenditure intensity has increased significantly, it is even more necessary to broaden the channels for raising funds.
Experts also analyzed that it is easy to misjudge the fiscal strength of this year just by looking at the deficit rate, and it is necessary to focus on the available financial resources.
Bai Jingming pointed out that the deficit is one of the means to expand financing channels, but considering the need to repay the debt, the deficit rate this year was reduced by 0.4 percentage points.
In this case, to ensure the growth rate of expenditure, it is necessary to "walk on multiple legs", so it is possible to consider using the balance of the past years to ensure the intensity of expenditure, "this is a discretionary decision."
In addition, although China plans to arrange 3.65 trillion yuan of local government special bonds this year, which is the same as last year, the National Development and Reform Commission has previously stated that a larger proportion of special bonds in 2021 will be issued in the second half of the year, and a considerable part of them will be issued in the first quarter of 2022. It can form a superposition effect with the special bonds issued and used this year, and provide strong support for the expansion of effective investment.
Zhang Yu, chief macro analyst at Huachuang Securities, pointed out that as far as the central finance is concerned, certain state-owned financial institutions and specialized institutions may play a key role in the transfer of government funds this year, revitalizing the trillion-yuan scale of the central general budget. The stock of funds, together with last year's overpayment balance, make this year's finances "seemly small, but in fact not small."
In this regard, China's Minister of Finance Liu Kun calculated an account: this year's deficit rate is planned to be around 2.8%, 0.4 percentage points lower than last year's budget, and the scale of funds will be reduced by 200 billion yuan; however, through inter-annual adjustment, only the central level The amount of funds transferred into the general budget by the government amounted to 1.267 trillion yuan, which is equivalent to raising the deficit rate by 1 percentage point.
He stressed that the intensity of fiscal spending is guaranteed.
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