China's finance ministry to increase fiscal spending to boost real economy

2024-01-04 13:56:15Global Times Editor : Li Yan ECNS App Download

Chinese financial authorities vowed to strengthen policy support and funding to boost the real economy's revival and improve people's livelihood.

Lan Fo'an, the finance minister, stressed in an interview published on the People's Daily on Thursday that a "cautious and reasonable fiscal deficit" approach can facilitate expanded government expenditure, which could remain within a reasonable adjustment range to hedge against market risks.

In order to support China's post-disaster reconstruction and enhance resilience against future extreme weather events, the central government announced in October 2023 the issuance of an additional 1 trillion yuan ($137 billion) in special treasury bonds, which lifted the nation's fiscal deficit ratio from 3 to 3.8 percent of the country's GDP, Lan said.

"However, the government's debt ratio remains in an appropriate range despite an increased fiscal deficit ratio. Public budget expenditures are being maintained at a relatively high level in recent years by properly adjusting the deficit ratio, and securing the implementation of a national development strategy and welfare programs," said the minister.

Policies for cutting taxes and fees should be optimized to support the development of the real economy, especially for qualified manufacturing enterprises and research and development companies involved in integrated circuit and industrial mainframes, Lan noted, adding that special bonds should play an important role in government-led financing activities to leverage larger scale of social investment.

The annual Central Economic Work Conference held in December emphasized the need to introduce more polices to promote quality growth across the economy.

Lan said that the introduction of multiple policy tools including special government bonds, cutting taxes and fees, financing assurance and others will expand the expenditure scale and stabilize market expectations. He pledged to conduct standardized financial management in accordance with rule of law, to ensure that policy outcomes met designed goals.

From January to November 2023, China's general public budget revenue crossed the 20 trillion yuan milestone, up 7.9 percent year-on-year, which met expectations and was in line with the country's economic growth, said Lan.

Amid global headwinds including high inflation, rising interest rates and sluggish growth rate, China realized a steady economic recovery in 2023 which remains as a major engine for global economy growth, the minister noted.

China's finance ministry will further promote consumer spending, investment and stabilize foreign trade. Public services such as education, employment and public health will receive more financial support, Lan added.


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