SCIO briefing on 'high-quality achievements during the 14th Five-Year Plan period': Fiscal reform and development

Shou Xiaoli:

Thank you, Mr. Lan. The floor is now open for questions. Please identify the media outlet you represent before asking your questions. Please raise your hand to ask questions.

CCTV:

Mr. Lan just introduced the many new breakthroughs China's fiscal macroeconomic regulation system has achieved during the 14th Five-Year Plan period. Could you provide more details on what new characteristics fiscal macroeconomic regulation has demonstrated in recent years, and what considerations are there moving forward? Thank you.

Lan Fo'an:

Thank you for your questions.

Fiscal policy, as the primary means of macroeconomic regulation, offers the dual advantages of expanding aggregate demand and facilitating targeted structural adjustments. Since the start of the 14th Five-Year Plan, China's fiscal policy has maintained a consistently proactive orientation. It has actively responded to short-term economic fluctuations and strengthened countercyclical adjustments, while keeping anchored to the central task of advancing Chinese modernization and enhancing medium- and long-term development momentum. It has maintained policy continuity and stability while making timely adjustments based on changing macroeconomic conditions, carefully calibrating the strength and pace of interventions, and has become an important force in promoting steady and healthy economic development. It can be generally summarized into the following four characteristics:

First, the intensity has been significantly enhanced. Since the beginning of the 14th Five-Year Plan period, the deficit ratio has increased from 2.7% to 3.8%, and this year it has further risen to 4%. An additional 19.4 trillion yuan has been allocated for local government special bonds. The amount of new tax cuts, fee reductions, tax refunds, and deferred tax payments has exceeded 10 trillion yuan, further expanding the fiscal policy space.

Second, our toolkit has become more diversified. We have comprehensively employed tools such as government bonds, taxes, fiscal subsidies, and special funds to strengthen coordination with other macroeconomic policies and amplify the policy multiplier effect. For example, we have issued and utilized ultra-long-term special treasury bonds for implementing major national strategies, strengthening security capacity in key areas, and supporting large-scale equipment renewals and trade-in programs for old consumer goods. These efforts have supported the comprehensive expansion of domestic demand.

Third, our efforts have become more targeted. We have focused on addressing the bottlenecks and difficulties in economic development, taking measures with far-reaching implications to smooth the economic cycle. For example, we raised the debt ceiling of local governments by 6 trillion yuan to replace existing implicit debts, significantly reducing the debt repayment pressure on local governments. This freed up financial resources for livelihood improvement and development promotion, accomplishing several objectives simultaneously.

Fourth, our timing has become more flexible. We always seize the window of opportunity and implement policies as early as possible. Once we are certain of a policy, we decisively act with ample force to ensure swift execution and early results.

In this process, our understanding of the patterns and principles governing fiscal macroeconomic regulation has gradually deepened. For example, fiscal macroeconomic regulation should maintain overall stability, but when conditions change significantly, we must also adjust promptly and enhance targeted flexibility. For instance, we have placed greater emphasis on promoting microeconomic circulation by supporting local governments in refinancing existing implicit debts, and issuing special bonds to support land reserves and purchase existing commercial housing for conversion into affordable housing. These efforts have smoothed financing channels for local governments and enterprises and removed bottlenecks in economic circulation. Additionally, we have strengthened the coordination of fiscal and monetary policies to achieve policy synergy. This year, a dedicated issuance of 500 billion yuan in special treasury bonds was made to inject capital into large commercial banks, which can be leveraged to add about 6 trillion yuan in credit issuance.

Regarding the second question you raised, I would like to say that our fiscal policies balance risk prevention and development promotion, leaving room for maneuver, so that we will be able to roll out effective fiscal policies in the future. First, the long-term positive trajectory of China's economy remains unchanged, ensuring that the fundamental basis of fiscal operations stays firm and secure. Second, we have gained growing experience in macroeconomic regulation over the years, continuously enriched our policy toolkit, and significantly strengthened our capacity for counter-cyclical and cross-cyclical adjustment. Third, with the further improvement of the institutional mechanism for risk prevention in key areas and the gradual defusion of existing risks, the fiscal response to future challenges will be more firmly grounded and composed. These are the sources of both our confidence and our strengths in conducting fiscal work effectively.

Moving forward, fiscal departments will maintain policy continuity and stability, enhance flexibility and foresight, strengthen forward-looking assessments of economic conditions, prepare policy reserves, take proactive actions, and contribute fiscal strength to high-quality socioeconomic development.

Thank you.