Proactive Fiscal Policy Needs to be Enhanced and Effective (Authoritative Interview)
——Interview with Minister of Finance Liu Kun
Our reporter Qu Zhehan
"People's Daily" (Version 02, January 4, 2023)
The Central Economic Work Conference requires that in 2023, we must adhere to the word stability and seek progress while maintaining stability, continue to implement a proactive fiscal policy and a prudent monetary policy, increase macro-policy regulation, strengthen coordination and cooperation of various policies, and form a joint promotion of high-quality Develop synergy.
To maintain the stable operation of the economy and continuously improve people's livelihood and well-being, how to better play the role of fiscal functions?
To better coordinate development and security, effectively prevent and defuse major risks, how to achieve fiscal sustainability and controllable local government debt risks?
The reporter interviewed Liu Kun, Minister of Finance.
Moderately increase fiscal policy expansion to improve policy effectiveness
Reporter: According to the deployment of the Central Economic Work Conference, the proactive fiscal policy in 2023 should be stepped up to improve efficiency.
May I ask what considerations this is based on?
From what aspects will "afterburner" be added?
From what aspects will "efficiency improvement" tap efficiency?
Liu Kun: The proactive fiscal policy increases efforts to improve efficiency, embodies the general tone of the work of seeking progress while maintaining stability, and takes into account needs and possibilities, current and long-term, development and security.
At present, the foundation of my country's economic recovery is not yet solid, the triple pressure of demand contraction, supply shock, and weakening expectations is still relatively large, and the external environment is turbulent.
To deal with these risks and challenges, we are required to strengthen fiscal macro-control, optimize the combination of policy tools, and ensure fiscal sustainability and controllable local government debt risks while effectively supporting high-quality development.
"Adding strength" is to moderately increase the expansion of fiscal policy.
How to add?
I understand that there are three aspects: one is to increase the intensity of fiscal expenditure.
Coordinate policy tools such as fiscal revenue, fiscal deficit, and interest discounts, and moderately expand the scale of fiscal expenditures.
The second is to increase the promotion of special bond investment.
Reasonably arrange the scale of local government special bonds, appropriately expand the areas of investment and the scope of capital funds, and continue to form a driving force for investment.
The third is to make more efforts to promote the sinking of financial resources.
Continue to increase the transfer payments from the central government to local governments, and give preference to difficult and underdeveloped regions, so as to firmly strengthen the bottom line of "three guarantees" at the grassroots level.
"Efficiency improvement" means to improve policy effectiveness.
On the one hand, improve tax and fee preferential policies, enhance precision and pertinence, and focus on helping companies bail out.
On the other hand, optimize the structure of fiscal expenditures, make better use of the role of fiscal funds in "four or two diversions", effectively drive the expansion of investment in the whole society, and promote consumption.
At the same time, strengthen coordination and cooperation with monetary, industrial, technological, and social policies to form policy synergy and promote the overall improvement of economic operation.
Reporter: In recent years, local government special bonds have played an important role in supporting economic and social development and stabilizing investment.
May I ask how the special bonds will be used in 2022?
In 2023, what are your considerations in promoting the solution to the problem of "money and other projects" and improving the efficiency of capital use?
Liu Kun: Local government special bonds are an important means to promote the expansion of effective investment and stabilize the macro economy.
Since 2018, we have arranged a total of 14.6 trillion yuan of new local government special bonds.
Among them, as of the end of November in 2022, 4 trillion yuan of new local government special bonds have been issued, and the actual expenditure of project units has totaled 3,429.8 billion yuan, supporting the construction of nearly 30,000 key projects, focusing on making up for shortcomings, increasing stamina, and benefiting people's livelihood.
In 2023, we will moderately expand the scope of investment and use of special bond funds as capital, continue to form physical workload and investment driving force, and promote the overall improvement of economic operation.
We attach great importance to the issue of "money and other projects". We will further consolidate the main responsibility of local governments, strengthen supervision and guidance, and promote the resolution of problems such as insufficient project reserves and low quality.
The first is to strictly implement the principle of "funds follow the project", rather than lacking in excess, and resolutely not "sprinkling pepper noodles".
The second is to guide local governments to do a good job in the reserve and preliminary work of special bond projects, further improve the quality of project reserves, and give priority to supporting projects with high maturity and projects under construction.
The third is to strengthen the tracking of project implementation progress. If the special bond funds have not been actually spent one year after they are issued to the project unit, they will be adjusted for other projects or recovered to form a physical workload as soon as possible.
Accurately implement policies to help enterprises reduce burdens and increase capacity, support and guarantee the bottom line of people's livelihood
Reporter: The Central Economic Work Conference pointed out that it is necessary to focus on implementing policies around the needs of market players and vigorously boost market confidence.
What are the specific arrangements for the fiscal policy in 2023?
Liu Kun: The Central Economic Work Conference emphasized that we must start with improving social psychological expectations and boosting development confidence, and do a good job.
my country's economy is in a critical period of "climbing through hurdles".
In the face of difficulties, it is particularly critical to stabilize expectations and boost confidence.
Enterprises are an important carrier to promote high-quality development, and boosting the confidence of enterprises in development is of great significance to stabilizing growth and employment.
In recent years, we have implemented a series of tax and fee reduction policies, and government revenue has been reduced to make it easier for enterprises to enter the battle and enhance their vitality, effectively improving the expectations of market players.
According to statistics, the proportion of my country's tax revenue in GDP has dropped from 17.4% in 2018 to 15% in 2021, which is at a relatively low level among the world's major economies.
In particular, in 2022, a large-scale value-added tax refund will be implemented, and the annual new tax cuts and fee reductions and tax refunds and tax deferrals will exceed 4 trillion yuan, helping companies tide over difficulties and retain green hills.
In 2023, the financial department will focus on the needs of market entities and implement precise policies to help enterprises reduce their burdens and increase their capacity for better development.
One is to help companies bail out.
According to the actual situation, the continuation and optimization of the current tax reduction and fee reduction, tax refund and tax deferment measures should be continued.
At the same time, continue to rectify the charges related to enterprises that violate regulations.
The second is to stimulate vitality.
Resolutely implement the "two unwavering" principles, and treat all types of market entities equally and equally in terms of financial subsidies, tax concessions, government procurement, etc., and optimize the environment for enterprise development.
The third is to support employment.
Coordinate the use of fiscal policy tools, support job stabilization and expansion through multiple channels, and help key groups such as college graduates, migrant workers, and people out of poverty find employment and start businesses.
Reporter: At present, my country's economy is facing new downward pressure. Coupled with the implementation of tax cuts, tax refunds and tax deferrals, the pressure on fiscal revenue and expenditure has further increased.
May I ask how the Ministry of Finance will support and guarantee the bottom line of people's livelihood?
Liu Kun: General Secretary Xi Jinping pointed out that improving people's livelihood and well-being is the fundamental purpose of development.
The financial department must always adhere to the people-centered development idea, spend every penny on the key points of the national economy and the people's livelihood, and effectively protect and improve people's livelihood.
Since the 18th National Congress of the Communist Party of China, financial investment in people's livelihood has increased year by year.
From 2012 to 2021, the national financial education funds have invested about 33 trillion yuan in total, the national general public budget health expenditures have been 13.6 trillion yuan, and housing security expenditures have been 6 trillion yuan. The results of reform and development will benefit the people more and more equitably.
In 2023, the contradiction between fiscal revenue and expenditure will still be prominent, but we will not regress in spending on people's livelihood. We will maintain an appropriate spending intensity, continue to improve people's livelihood and well-being, and strive to make the people have more sense of gain, happiness, and security.
The first is to support the construction of a high-quality education system.
Continue to increase the scale of transfer payments for local education.
Research and improve the guarantee mechanism for compulsory education funds.
Support local governments to increase the supply of inclusive preschool education resources, improve the conditions for running ordinary high schools, and implement student aid policies.
The second is to improve the capacity of medical and health services.
Increase efforts to support the improvement of the public health system and ensure the funds needed for epidemic prevention and control.
Appropriately increase the financial subsidy standard for residents' medical insurance.
Deepen public welfare-oriented reform of public hospitals.
The third is to improve the social security system.
In-depth implementation of the national overall planning of the basic pension insurance for enterprise employees, and actively promote the construction of a multi-level and multi-pillar pension insurance system to ensure the basic lives of special groups such as the poor due to epidemics and disasters, the elderly, the weak, the sick, and the disabled.
Fourth, continue to improve the quality of the ecological environment.
Accelerate the implementation of integrated protection and restoration projects for mountains, rivers, forests, fields, lakes, grass and sand, and actively promote the construction of national parks.
Continue to support the battle to defend the blue sky, clear water, and pure land, promote the green transformation of the development model, and conserve green water and green mountains.
The fifth is to resolutely hold the bottom line of the "three guarantees" at the grassroots level.
We will increase transfer payments to local governments, giving preference to the central and western regions, and to grassroots counties and townships.
Urge local governments to strengthen budget management, free up funds to give priority to guaranteeing "three guarantees" expenditures, and promote the smooth operation of grassroots finances.
Standardize the management of local government financing platform companies to prevent local government debt risks
Reporter: The Central Economic Work Conference requires that fiscal sustainability and local government debt risks be controlled while effectively supporting high-quality development.
At present, all walks of life are paying close attention to the issue of local government financing platforms.
May I ask how the Ministry of Finance will strengthen the management of local financing platforms in the next step to ensure that risks are controllable?
Liu Kun: The Central Economic Work Conference clearly requires that we better coordinate development and security, and effectively prevent and resolve major risks.
The financial department adheres to the sense of responsibility of "always rest assured", strengthens government debt management, opens the "front door" and blocks the "back door", and firmly guards the bottom line of preventing systemic risks.
As of now, the national government debt balance as a percentage of GDP, commonly known as the debt ratio, is lower than the internationally accepted warning line of 60%, and it is also lower than the levels of major market economies and emerging market countries. Risks are generally controllable.
Regulating the management of local government financing platform companies is an important part of preventing local government debt risks.
The Ministry of Finance attaches great importance to this and has mainly done three aspects of work:
The first is to continue to standardize financing management and strictly prohibit the establishment of new financing platform companies.
The second is to standardize the disclosure of financing information and strictly prohibit linking with local government credit.
The third is to properly handle the debts and assets of financing platform companies, divest their government financing functions, and prevent local state-owned enterprises and institutions from "platforming".
In the next step, we will further break the government's bottom-line expectations, promote the market-oriented transformation of financing platform companies by category, promote the formation of a benign mechanism with clear boundaries between the government and enterprises, clear responsibilities, and controllable risks, and promote sustainable financial development.