2021 National Ledger: How to solve the contradiction between income and expenditure?

How to spend about 44 trillion yuan?

  The high-scoring hit drama "Mountain and Sea" is based on the background of "suffering and barren in the world" Xihaigu, Ningxia, telling the story of the people here getting rid of poverty.

In the play, the scene of a village teacher "squatting on the ground and using branches to teach students to read" is moving.

  Now, thanks to the efforts of the central and local governments, Xihaigu Rural School has not only ended the history of heating stoves and sports classes on the ground playground, but also connected to broadband networks and equipped classes with digital teaching equipment.

  For the basic education of the country's major projects, the central government has continued to invest in sparing no effort.

  This year is the beginning of the "14th Five-Year Plan" (2021-2025), and a new journey of building a modern socialist country has also begun. The government has a lot to do, and this is inseparable from financial support.

  On March 10, the National People's Congress deputies group meeting will deliberate on four draft resolutions including the annual budget.

The report on the implementation of the central and local budgets in 2020 and the draft central and local budgets in 2021 (hereinafter referred to as the "budget report") has been made public, and national accounts have attracted much attention.

  According to the budget report, excluding the double-counting part, the total government expenditure on the "four accounts" is about 44 trillion yuan.

Due to the relatively low increase in the total amount of actual available financial resources and the continued pressure of rigid expenditure growth, the budget report pointed out that this year's fiscal revenue and expenditure situation is very severe, and the difficulty of budget balance is further increased.

So, how to resolve the contradiction between fiscal revenue and expenditure this year?

What are the characteristics of fiscal policy?

Where is the total fiscal expenditure of about 44 trillion yuan spent?

Raising debts, moving stocks, and living tightly to promote balance of payments

  There are "four accounts" for government revenue and expenditure budgets, which are the general public budget, government fund budget, state-owned capital operating budget, and social insurance fund budget.

  At present, fiscal revenue is mainly based on the previous two accounts. In order to maintain the necessary support for the economy after the epidemic, fiscal policy this year will still maintain a certain expenditure scale, and revenue is limited. In order to maintain a balance of payments, the government adopts appropriate borrowing and transfer of funds. And use the carryover and surplus funds to reduce unnecessary expenditures to solve the problem.

  As China's economy will gradually return to normal this year, and the economic growth rate is expected to exceed 6%, general public budget revenues will bid farewell to the decline of last year and show restorative growth.

The budget report shows that the national general public budget revenue this year is expected to be 19.77 trillion yuan, a year-on-year increase of 8.1%.

In order to maintain a certain expenditure intensity, this year's national general public budget expenditure is about 25 trillion yuan, a year-on-year increase of 1.8%.

The gap in revenue and expenditure is very obvious.

  In order to make up for the general public budget revenue and expenditure gap, the government transferred a certain amount of funds from the state-owned capital operating budget, and activated the fiscal stock funds and used the carryover and surplus funds. The total amount of the two was about 1.68 trillion yuan.

The remaining funding gap was made up by the issuance of 3.57 trillion yuan in government bonds.

  Also in the governmental fund account, the gap in revenue and expenditure was made up by issuing 3.65 trillion yuan of local government special bonds.

  Therefore, the total scale of local government debts this year reached 7.22 trillion yuan, a decrease of 1.2 trillion yuan from last year. This is mainly reflected in the no longer issuing anti-epidemic special treasury bonds this year, and the size of the deficit and the scale of local government special bonds are slightly lower than last year. .

  Minister of Finance Liu Kun said in an interview a few days ago that this year’s fiscal policy puts more emphasis on sustainability, which is reflected in the characteristics of the budget arrangement, which is to maintain basic stability, not to make a sharp turn, and to do a good job of linking up with fiscal policies in the coming years, and set aside space.

  Professor Shi Wenwen from China University of Political Science and Law analyzed China Business News that the economy has recovered steadily after the epidemic. Therefore, the stimulus of the proactive fiscal policy should be reduced and normalized.

The decline in the scale of government borrowing reflects the fact that the government does not engage in strong stimulus of "flooding flooding", and focuses on the long-term, stable and long-term actions.

However, it is still difficult for enterprises after the epidemic, and the fiscal support policy cannot make a sharp turn. This can also be reflected in the maintenance of a certain increase in fiscal expenditure.

Therefore, this year's proactive fiscal policy considers both the present and the long-term. It is practical and feasible to balance stable growth and prevent risks.

  Luo Zhiheng, deputy dean of the Yuekai Securities Research Institute, told CBN that this year's deficit and the scale of local government special bonds have declined, based on actual needs, which is conducive to fiscal sustainability.

At the same time, deficits and special debts are still relatively large, and fiscal policies are still active.

This year's fiscal policy has been more pragmatic and has been adapted to the needs of the economic situation, without flooding, and focusing on high-quality development.

  In order to alleviate the contradiction between income and expenditure, and invest more funds in the grassroots and people's livelihood, governments at all levels still insisted on living tight this year, vigorously reducing general expenditures and non-urgent non-rigid expenditures.

  According to the budget report, this year's central government expenditures are about 3.5 trillion yuan, down 0.2% year-on-year.

Among them, general public service expenditure fell by 14.1% year-on-year.

This is the second consecutive year of negative growth in central government spending.

  The central government will reduce fiscal funds mainly through transfer payments to local governments to support grassroots finances in implementing policies in areas such as education, pensions, and medical insurance, strengthen financial security capabilities in difficult areas, and promote the equalization of basic public services.

  Wang Zecai, a researcher at the Chinese Academy of Fiscal Sciences, told CBN that the negative growth of central government expenditures for two consecutive years has not been seen since the reform and opening up, and that the government has implemented the government's tight life requirements.

At the same time, the central government has expanded the scale of transfer payments to local governments, realizing a "tight life" for the central government and a "stable life" for the local governments.

Fiscal funds are mainly invested in people's livelihood and other fields

  According to the budget report, excluding the double-counting part, the government’s total fiscal expenditure for the “four accounts” is approximately 44 trillion yuan, an increase from the previous year.

The market is very concerned, where is this huge amount of financial funds spent?

  Among the "four accounts", the general public budget expenditures nationwide are about 25 trillion yuan, accounting for more than half.

Many fiscal and taxation experts told China Business News that fiscal expenditures are derived from civilian use. From this year's budget report, fiscal funds are still primarily invested in people's livelihoods. This is reflected in that expenditures on education, social security, and employment have maintained a certain degree of intensity.

  Luo Zhiheng said that from the perspective of the key tasks of fiscal expenditures in the budget report, they mainly focus on stabilizing the economy (expanding domestic demand), technological innovation, protecting people's livelihood, ensuring the operation of grassroots fiscal operations, defusing risks, pollution prevention, and rural revitalization, all of which point to new development. pattern.

  According to the budget report, this year will promote the high-quality development of education.

Among them, 66 billion yuan was allocated for student financial assistance, an increase of 16.3%.

The allocation of subsidies for urban and rural compulsory education was 177 billion yuan, an increase of 4.3%, to consolidate and improve the guarantee mechanism for compulsory education funding that is unified between urban and rural areas and focuses on rural areas.

While increasing transfer payments to local governments, the central government also urges local governments to increase investment in education and implement the requirement that national fiscal expenditures for education should generally not be less than 4% of GDP.

  This year, the level of social security will be further improved, and the basic pension for retirees will continue to be increased.

Intensify investment in public health, among which the per capita financial subsidy standard for resident medical insurance has been increased by 30 yuan to reach 580 yuan per person per year.

The per capita financial subsidy standard for basic public health services was raised by 5 yuan to 79 yuan per person per year.

  In addition, major engineering projects such as transportation, municipal administration, and new infrastructure are still the key areas for fiscal funds to be invested this year.

  For example, this year's 3.65 trillion yuan of local government special bonds will still focus on the construction of major infrastructure projects such as railways, toll roads and other transportation infrastructure, agriculture, forestry and water conservancy, municipal and industrial parks.

Funding focuses on major national regional development strategies such as 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.

  This year's fiscal funds will also focus on promoting innovative development and industrial upgrading.

For example, this year increased investment in basic research, the central government's basic research expenditure increased by 10.6%, focusing on the National Natural Science Foundation, and supporting basic research in scientific research institutes, scientific and technological innovation bases, scientific research talents, etc.

  In addition, financial funds also focus on supporting rural revitalization, pollution prevention, and ecological construction.

For example, the central government has allocated 156.1 billion yuan to promote rural revitalization subsidy funds (formerly the central government's special poverty alleviation funds), an increase of 10 billion yuan, and the focus is on consolidating and expanding areas where poverty alleviation results are heavy and the rural revitalization foundation is poor.

  Luo Zhiheng said that the strategy of expanding domestic demand will be implemented this year, and the central infrastructure investment and local government bond investment will focus on the areas of "two new and one heavy" that make up for shortcomings, strong and weak areas. At the same time, through rural revitalization, agricultural and rural modernization, and the protection of people's livelihoods The standard of living is conducive to narrowing the income distribution gap, stimulating consumption potential, and building a domestic demand system.

  "The adjustment of the fiscal scale and direction of expenditure reflects that the fiscal policy is more focused on the financial security of the country's major strategy when the fiscal balance is tight. It not only plays the role of total adjustment of fiscal counter-cyclical adjustment, but also plays the role of structural reform." Luo Zhiheng said.

(Author: Chen Yi-Journal)