Fiscal efforts to stabilize the economy! Where will the "money bag" focus on in the second half of the year for consumption | finance | economy
The report has deployed the next five key fiscal tasks. Among them, "strengthening efficiency and implementing positive fiscal policies" ranks first. In recent years, the national financial and tax policies have been persistently implemented and coordinated with consumption promotion policies. At the end of August, the country has introduced measures to increase the amount of special additional deductions for personal income tax. These measures can effectively improve people's livelihoods and actively promote consumption, which is also the focus of fiscal work in the second half of the year.
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Under the pressure of stable growth, the direction of the "money bag" is increasingly attracting attention. On August 30th, the Ministry of Finance released the "Report on the Implementation of China's Fiscal Policies in the First Half of 2023". Through this half of the annual report, the market can understand the focus of fiscal policy implementation in the second half of the year.
It is not easy to achieve the various economic indicators set in the government work report this year, and we are facing many challenges brought about by the complex and severe international environment and the arduous domestic reform, development, and stability tasks. However, the overall financial operation was stable in the first half of the year, and the budget execution was relatively good.
Li Xuhong, Director of the Academic Committee of the National Institute of Accounting in Beijing, said that by opening the report, active fiscal policies have been strengthened to improve efficiency, and the accuracy and effectiveness of tax and fee support policies have been effectively improved. The structure of fiscal expenditure and the efficiency of fund utilization have been optimized.
In her view, in the first half of the year, with the support of fiscal policies, China's business entities have become more dynamic, domestic demand has steadily increased, industrial development has gradually moved towards modernization, and people's well-being has continuously improved. This has laid a solid foundation for the sustained recovery and high-quality development of the national economy throughout the year.
Basic livelihood and other aspects have been effectively guaranteed
In the first half of the year, the national general public budget revenue was 11920.3 billion yuan, a year-on-year increase of 13.3%, and the revenue of 31 provinces achieved positive growth year-on-year. The national general public budget expenditure was 13389.3 billion yuan, a year-on-year increase of 3.9%. The report emphasizes the achievements on the expenditure side - the expenditure structure is continuously optimized, and expenditures in key areas such as basic livelihood, rural revitalization, regional major strategies, education, and scientific and technological breakthroughs are effectively guaranteed.
For example, in order to support the healthy development of business entities, in the first half of the year, we strengthened the supply of financial and tax policies, continued and optimized some tax and fee policies, and added a total of 927.9 billion yuan in tax reduction, fee reduction, and deferred tax refunds nationwide, effectively supporting the development of business entities, especially small and micro enterprises and individual businesses, to alleviate difficulties.
At the same time, we will guide and drive government financing guarantee institutions at all levels to increase their support for financing and credit enhancement for small and micro enterprises, as well as "agriculture, rural areas, and farmers" entities. As of the end of June, the National Financing Guarantee Fund has added 796.5 billion yuan in re guarantee cooperation business, a year-on-year increase of 33.6%.
Ensuring people's livelihoods is also a key focus of fiscal efforts in the first half of the year. The report shows that in the first half of the year, the government raised the per capita financial subsidy standard for basic public health services to 89 yuan, and the per capita financial subsidy standard for basic medical insurance for urban and rural residents reached 640 yuan per person per year; We will prudently implement the national pooling of basic pension insurance for enterprise employees, timely allocate 154.7 billion yuan in assistance and subsidies for disadvantaged groups, and further strengthen social security.
Play a countercyclical regulatory role
Understand the story behind fiscal figures: first, look at the status of income and expenditure, second, look at income and expenditure policies, and third, look at the direction and structure of income and expenditure.
The core of actively implementing fiscal policies is to maintain a certain level of fiscal expenditure, support people's livelihoods, expand government investment, and leverage the countercyclical regulatory role of fiscal policies.
In fact, from the financial data of the first half of the year, the intensity of fiscal expansion has weakened compared to the same period last year. In the first half of this year, the national general public budget expenditure was 13389.3 billion yuan, a year-on-year increase of 3.9%, a decrease of 1.9 percentage points from the first five months. In June, the growth rate of national general public budget expenditure turned negative. The national government fund budget expenditure was 4322.2 billion yuan, a year-on-year decrease of 21.2%, an increase of 8.5 percentage points from the previous five months. Among them, the expenditure in June decreased by 42.7% year-on-year.
On the one hand, this is due to the impact of the epidemic last year, which accelerated and advanced related expenditures, resulting in a relatively high base for the same period last year; On the other hand, due to weak income growth, under the principle of "revenue determines expenditure" in finance, the progress of fiscal expenditure is affected.
In the first half of this year, the general public budget revenue in China increased by 13.3% year-on-year, with the most core tax revenue increasing by 16.5% year-on-year. On the surface, income growth appears strong, but this is mainly due to the large scale of tax deductions and refunds in the second quarter of last year, as well as the low base caused by the impact of the epidemic.
According to Gao Ruidong, Chief Macro Economist of Everbright Securities, in terms of revenue rhythm, the proportion of general public budget revenue in June to the beginning of the year budget was 9.0%, significantly lower than the average of the same period in the past five years. Although tax revenue continues to increase year-on-year at a low base, the two-year compound growth rate is still weak. From the perspective of the two-year compound growth rate of tax classification, corporate income tax, tariffs, and vehicle purchase tax have all dragged down a lot, while real estate related taxes have rebounded.
Compared to the national general public budget revenue, which still maintains growth, the revenue from government funds declined significantly in the first half of the year. According to data from the Ministry of Finance, the revenue from the transfer of state-owned land use rights, which accounts for nearly 80% of the national government fund revenue, decreased by 20.9% year-on-year.
Although China's economy has recovered to some extent, consumption is weak and private investment is sluggish, requiring active fiscal policies to continue. Therefore, there is no doubt that the government will accelerate expenditure in the second half of the year.
Li Xuhong sighed that the sustained recovery of China's economy is not easy to come by, so the difficulties and challenges faced in future economic operation should be viewed correctly. Looking at the world, the global economic growth momentum is insufficient, and core inflation in major developed economies is at a relatively high level; Economic globalization is facing a backlash, and the growth rate of the world economy and trade has slowed down. The increasing uncertainty of the external environment has put significant downward pressure on China's foreign trade exports.
Focusing on China, first, affected by the COVID-19, residents' precautionary savings propensity has improved, and there is still room for improvement in the endogenous power of consumption growth; Secondly, the profitability of enterprises still needs to be improved, and the vitality of business entities needs to be further unleashed. Therefore, as an important means of macroeconomic regulation, proactive fiscal policies in the second half of the year still need to be strengthened and improved to achieve the expected economic development goals with a stable foundation and increased momentum.
In response to the current economic development situation, Li Xuhong suggests that fiscal and tax policies should be fully utilized to stimulate consumption, help cultivate new growth drivers, and increase efforts to ensure people's livelihoods. A comprehensive debt reduction plan should be formulated and implemented.
Taking consumption as an example, currently, although both supply and demand continue to recover, the overall recovery of supply is earlier than demand. In addition, the world economy is in a downturn, so expanding domestic demand is crucial.
"The key to the stable and healthy operation of the national economy lies in the dynamic balance between supply and demand." Li Xuhong said that active fiscal and tax policies can work together from both supply and demand sides. On the one hand, we should continue, optimize, improve and implement tax and fee reduction policies, and continue to promote innovative policies that benefit enterprises such as R&D expenses and deductions. We should deepen the reform of the mechanism for allocating and using scientific and technological funds to help enterprises upgrade product and service quality and meet consumer needs. On the other hand, it is necessary to further improve the tax preferential system, enhance its pertinence and effectiveness, reduce consumption costs, positively guide consumption, and make good use of policies such as social insurance subsidies, vocational training subsidies, entrepreneurship guarantee loans, and interest subsidies to secure the basic bottom line and expand residents' consumption expectations.
Boosting efficiency is key
The report has deployed the next five key fiscal tasks, which can be summarized as five key words: first, promoting policies; second, promoting entities; third, safeguarding people's livelihoods; fourth, preventing risks; and fifth, enforcing strict discipline. Among them, "strengthening efficiency and implementing positive fiscal policies" ranks first.
Wang Huayu, Deputy Director of the Finance and Taxation Law Research Center at Shanghai Jiao Tong University, stated that due to the comprehensive influence of domestic and foreign economic factors, proactive fiscal policies need to be strengthened and improved, which has been the main axis of fiscal policies in recent years. The uniqueness of this year is that it is the first economic recovery year after the epidemic. On the one hand, the economy gradually recovers after the elimination of epidemic factors, and on the other hand, comprehensive structural factors have led to difficulties in achieving comprehensive economic recovery. Therefore, it is necessary to closely monitor the operation of the social economy, accurately arrange fiscal support policies and expenditure of fiscal funds based on specific indicators of economic and fiscal factors, and closely coordinate with monetary policy.
In this regard, the report requires a reasonable acceleration of fiscal expenditure progress and a comprehensive improvement of fund payment efficiency. Specifically, the main focus is to continue, optimize, improve, and implement tax and fee reduction policies effectively; Solve the problem of government arrears of corporate accounts; Accelerate the issuance and use of local government special bonds, research and expand investment areas and the scope of project capital, continuously strengthen the reserve and post investment management of special bond projects, improve the efficiency of special bond fund utilization, and guide and drive social investment.
Especially special bonds, they are currently an important policy tool for expanding government investment and stabilizing the macroeconomic situation. The scale of newly added special bonds this year is 3.8 trillion yuan, an increase of 150 billion yuan from last year. The Ministry of Finance requires that the newly added special bonds this year strive to be basically issued by the end of September, and the funds for special bonds used for project construction strive to be used up by the end of October.
At present, the newly added special bond funds are used in key areas such as transportation, municipal and industrial parks, energy, agriculture, forestry and water conservancy, ecological protection, social undertakings, warehousing and logistics, national major strategic projects, affordable housing projects, new energy projects, and new infrastructure. The scope of special bonds as capital has also expanded to 13, with new energy projects, coal reserve facilities, and national industrial park infrastructure added last year.
In addition, the top priority of economic and social development is the real economy, especially in promoting the development of innovation driven and specialized small and medium-sized enterprises. The report shows that fiscal and tax policies will continue to be implemented in the second half of the year, encouraging and reducing burdens, and increasing the sustained operational capacity and market competitiveness of the real economy.
Ensuring and improving people's livelihoods is the main goal of economic development. Wang Huayu said that in recent years, the national financial and tax policies have been persistently implemented and coordinated with policies to promote consumption. At the end of August, the country has introduced measures to increase the amount of special additional deductions for personal income tax. These measures can effectively improve people's livelihoods and actively promote consumption, which is also the focus of fiscal work in the second half of the year.
Since the Politburo meeting of the Central Committee of the Communist Party of China proposed to effectively prevent and resolve local debt risks, and formulated and implemented a comprehensive debt reduction plan, the resolution of local government debt risks has attracted market attention.
The report also made relevant arrangements for this: further consolidating local and departmental responsibilities, strictly implementing the requirement that "the province bears overall responsibility, and local party committees and governments at all levels bear their respective responsibilities". Urge local governments to coordinate various funds, assets, resources, and supportive policy measures, closely monitor cities and counties, increase work efforts, properly resolve existing implicit debts, optimize term structure, reduce interest burden, and gradually mitigate debt risks
The issue of local debt is a long-term issue, which has become particularly prominent in recent years when local fiscal revenue has been greatly affected. Wang Huayu told China Youth Daily and China Youth Network reporters that the main guiding ideology for local debt work in recent years is to dissolve existing stocks and curb incremental growth. The focus of work in the second half of this year is still to clarify local responsibilities, concentrate efforts on resolving existing debts, especially implicit debts, and put forward higher requirements for the effective resolution of local debts through multiple channels.
On this basis, financial discipline will be further strengthened in the second half of the year. Wang Huayu said that this is more important in the current financial operation situation, and increasing financial and accounting supervision is conducive to ensuring that money is spent on the cutting edge, avoiding extravagance and waste, and controlling improper fiscal expenditures.
In this regard, the report emphasizes the need to severely crack down on all types of violations of financial discipline, strengthen reporting and accountability, and handle penalties, so that discipline can truly become a "high-voltage line" with electricity.
Reporter Zhang Junbin from China Youth Daily and China Youth Network
