Fiscal Policies Driving Economic Recovery and Debt Risk Resolution
Reporter Li Yuan
Since the beginning of this year, proactive fiscal policies have been intensified to improve efficiency, focusing on tax reductions and fee reductions, expansion of expenditures to increase efficiency, and the issuance of local bonds to promote the overall recovery of the economy.
Tax cuts and fee reductions will better benefit business entities
Reducing taxes and fees is an important measure to stabilize enterprises, maintain employment, and support the relief and development of operating entities. It is an important part of this year’s efforts to increase efficiency and implement proactive fiscal policies. The latest statistics from the State Administration of Taxation show that in the first 10 months of this year, new tax cuts, fee reductions, tax rebates, and fee deferrals across the country amounted to 1.6607 billion yuan. Among them, private economic taxpayers are the main beneficiaries of preferential tax policies, accounting for nearly 75% of the total. Manufacturing and related wholesale and retail industries are the industries that enjoy the largest proportion of preferential policies and benefit most obviously.
With the implementation of a series of preferential tax and fee policies, the vitality of business entities has been effectively stimulated and the momentum of innovative development has been enhanced. Minister of Finance Lan Fo’an said that in the next step, the Ministry of Finance will work with relevant departments to promote the continuous implementation of the policies that have been introduced, so that various tax and fee incentives can be accurately delivered and the effects are fully released, so as to better benefit business entities and help enterprises to carry out operations with ease. Promote continued economic recovery and improvement.
Fiscal expenditures are invested in multiple areas at a reasonable pace
A major feature of this year’s proactive fiscal policy is to reasonably accelerate the pace of fiscal expenditures. According to data from the Ministry of Finance, in the first 10 months, the national general public budget expenditure was approximately 21.57 trillion yuan, a year-on-year increase of 4.6%. At the same time, the focus of fiscal expenditures is tilted towards areas such as people’s livelihood. The central government has made it clear that it will issue an additional 1 trillion yuan in treasury bonds in the fourth quarter and transfer all of them to local governments, increasing the previous annual growth rate of local general public budget expenditures from 5.2% to 7.4%.
Accelerate the prevention and resolution of local government debt risks
In order to resolve local debt risks, the central government has reopened the pilot program to resolve hidden debt risks. Data show that since October, local governments have intensively issued more than 1 trillion yuan of special refinancing bonds to replace the implicit debt that the government has the responsibility to repay, extend the period, and cut interest rates to mitigate risks. Experts generally believe that in the future, proactive finance will increase central coordination in government debt financing, which will also significantly improve the sustainability of our country’s finances.
The Central Financial Work Conference called for optimizing the debt structure of central and local governments, conveying the central government’s determination to prevent and resolve local debt risks in a sustained, institutionalized, and systematic manner. Subsequent government debt management may need to be more refined and focus on improving the ‘debt-asset’ ratio. ‘Conversion efficiency may increase the proportion of central debt. “This conveys the central government’s determination to prevent and resolve local debt risks in a sustained, institutionalized, and systematic manner. Subsequent government debt management may need to be more refined and focus on improving the ‘debt-asset’ ratio. ‘Conversion efficiency may increase the proportion of central debt.
Overall, the proactive fiscal policies implemented this year are contributing to economic recovery and improvements in various sectors while also addressing debt risks at the local government level. As we head into the next year, the continuation and optimization of these policies will be critical for sustaining the ongoing economic recovery.