Active fiscal policy effectively hedges the epidemic and derivative risks——
Fiscal policy focuses on stabilizing expectations
Our reporter Li Hualin
Recently, the "Fiscal Blue Book: China's Fiscal Policy Report (2021)" jointly released by the Chinese Academy of Fiscal Sciences and the Social Sciences Literature Press shows that a more proactive fiscal policy in 2020 has effectively hedged the impact of the epidemic and its derivative risks, and stabilized Staying on the basic economic market and the basic livelihood of the people.
As the national economy continues to recover stably, the fiscal policy in 2021 will focus on stabilizing expectations and reducing the uncertainty of economic operations.
Since the beginning of this year, all regions and departments have conscientiously implemented the decisions and arrangements of the Party Central Committee and the State Council, effectively implemented macro policies, and the national economy has maintained a stable recovery.
At the same time, the current global epidemic is still evolving, and the external environment has become more complex and severe. The spread of domestic epidemics and natural disasters have affected the economy of some regions, and various derivative risks still cannot be ignored.
The Blue Book stated that in the face of new uncertainties, the instability of expectations is the focus of current macroeconomic policies.
As the foundation and important pillar of national governance, finance plays an indispensable role in stabilizing economic operation and promoting high-quality economic development. It maintains the continuity, stability and sustainability of fiscal policy, and does not make a sharp turn in policy. Fang's expectations are crucial.
“At present, my country’s economic recovery is still unstable and uneven. The next fiscal policy needs to focus on promoting stable economic recovery growth and improving expectations, taking into account the guidance of long-term expectations and short-term expectations, focusing on grasping the intensity and pace of policy implementation, and addressing different groups. , Different entities implement targeted anticipatory management measures and pay attention to policy forward-looking." said Liu Shangxi, president of the Chinese Academy of Fiscal Sciences.
In this regard, the Blue Book puts forward suggestions for stabilizing expectations from three aspects.
The first is to stabilize the expectations of market entities, including optimizing tax and fee reduction policies, focusing on small and micro enterprises and individual industrial and commercial households; maintaining the necessary support for economic recovery; promoting effective demand expansion and guiding the formation of effective supply.
The second is to stabilize the expectations of residents and other subjects, mainly to optimize the allocation of financial funds to ensure basic people's livelihood needs such as education, health care, and culture; support the implementation of employment priority policies and promote the improvement of employment status; deepen the reform of the social security system and steadily increase the level of social security; The role of fiscal and taxation policies in regulating income distribution, deepening the reform of the income distribution system, and adjusting the income distribution structure.
Fiscal revenue is the "barometer" of the economic development situation. In the first seven months of this year, the national fiscal revenue has achieved rapid growth. The national general public budget revenue increased by 20% year-on-year and 9.6% year-on-year.
At the same time, governments at all levels continue to reduce non-urgent and non-rigid expenditures, and implement a normalized fiscal direct mechanism to ensure that expenditures in key areas such as the "three guarantees" are effectively guaranteed.
The Blue Book predicts that under the background of sustained and steady economic recovery, the growth rate of general public budget revenue in 2021 will increase significantly, and the growth rate of fiscal expenditure will also pick up. Expenditures in key areas such as medical care, social security, science and technology will achieve rapid growth. The expenditure structure is expected to be optimized, and the efficiency of capital use is expected to increase.
At the same time, fiscal revenue and expenditure pressure still exists.
“Currently, my country’s fiscal policy space is facing greater pressure. In terms of revenue, although this year’s revenue growth is good, fiscal revenue growth will return to the normal trend line in the long run. In terms of expenditure, the production cost of enterprises is increasing. The demand for higher-level public services is growing, and economic transformation and development also need to increase investment in some new types of infrastructure." Zhao Min, senior economist at the World Bank’s Global Governance Practice Bureau, believes that the pressure on fiscal revenue and expenditure will be eased in the future. The focus of the policy is also to improve quality and efficiency and establish comprehensive budget performance management.
The Blue Book suggests that we can start with making good use of idle and deposited fiscal funds to alleviate the government's financial constraints and ensure the smooth implementation of fiscal policies.
At the same time, improving the management efficiency of public financial funds will also help promote the reform of the fiscal budget system.
In addition, it is possible to open up fiscal space by speeding up the transfer of state-owned capital to pension funds, increasing the transfer ratio, and speeding up the construction of a local fiscal sharing mechanism.
While consolidating the results of economic recovery, the current fiscal policy also focuses on taking into account the risk prevention and control under the state of fiscal tight balance, especially the risk of local government debt.
The Blue Book pointed out that the greatest debt risk of local governments is contingent debt risk.
At present, explicit debts have been included in budget management, open and transparent, and debt repayment arrangements are deterministic and generally controllable.
Hidden debts are contingent debts, and the government will only perform the repayment responsibilities when a contingent event occurs, so there is greater uncertainty.
How to achieve sustainability of local government debt?
The blue book puts forward four suggestions: one is to reform the performance appraisal method of local governments; the second is to improve the fiscal relationship between the central and local governments to avoid the rise of local government debt risks; the third is to establish a debt performance management system to reduce debt risks and public risks; Establish a fiscal and financial coordination mechanism to reduce the risk of debt default.