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

Yicai:

During the 14th Five-Year Plan period, finance departments have introduced a series of fiscal and tax policies to expand domestic demand. How has the progress been so far? And what are your considerations for the next stage? Thank you.

Lan Fo'an:

Thank you for your questions.

Strengths unique to large economies are domestic demand-driven growth and capacity for internal circulation. During the 14th Five-Year Plan period, we have earnestly implemented the strategy of expanding domestic demand, taking coordinated actions from both the supply and demand sides and introducing a package of policy measures to promote positive interaction between consumption and investment. These efforts have helped domestic demand play a stronger role as the main driving force and stabilizing anchor of the economy, thereby enhancing the internal momentum for high-quality development. I will now introduce four key aspects of these efforts.

First, strengthening the foundation by expanding consumption demand through ensuring and improving people's livelihoods. We have focused on boosting incomes through employment to enhance consumption capacity. We have implemented a series of policies, including wage subsidies for job retention and employment subsidies. During the 14th Five-Year Plan period, the central government allocated 318.6 billion yuan in employment subsidy funds, an increase of 29% compared with the 13th Five-Year Plan period, and urban areas have seen a cumulative net increase of more than 50 million jobs. We have improved the social security system enhance the support for pension, health care and social assistance, alleviating people's worries and booting their confidence in spending.

Second, tapping into potential by offering substantial financial support to boost consumption. We have strongly supported product trade-ins, and by the end of August this year, the central government had allocated approximately 420 billion yuan, driving sales of various goods to more than 2.9 trillion yuan. Special funds have been arranged to support county-level commercial development and release of rural consumption potential. Since the 14th Five-Year Plan period, retail sales of consumer goods in rural areas have increased by 24%. We have introduced direct subsidies, including child care subsidies and elderly care service subsidies, and provided interest subsidies for personal consumer loans in key areas as well as loans to businesses in related industries, ensuring an efficient allocation of resources to boost consumer spending. Policies on duty-free shops has been improved to encourage more domestic products and trendy brands to expand into global market. Tax-refund policies have been optimized by further lowering the minimum threshold for refunds and increasing the amount of cash refunds, thereby promoting expanded inbound consumption.

Third, addressing bottlenecks by guiding high-quality demand with high-quality supply. We have leveraged special funds to accelerate breakthroughs in core technologies and facilitate the transformation and upgrading of key industries. During the 14th Five-Year Plan period, we supported the market application of more than 30,000 sets of major technical equipment and 190 types of innovative material products. We have stepped up efforts to advance the pilot program for building a modern commercial circulation system, supporting the build of national comprehensive freight hubs in 37 cities. This has boosted resilience and security of logistics supply chains. We have also supported new forms, models and scenarios of consumption to improve convenience for consumers.

Fourth, boosting momentum through multiple measures to expand effective investment. Over the past two years, we have allocated 1.5 trillion yuan in ultra-long-term special treasury bonds to advance major national strategies and building up of security capacity in key areas. Over the past five years, 19.4 trillion yuan of special-purpose bonds for local governments was issued, which supported 150,000 projects. And 3.33 trillion yuan was allocated from the central government budget for investment, which supported the development of infrastructure such as water conservancy and transportation. Government investment has effectively leveraged social investment, helping to improve weak links and enhance the momentum for future development.

China is the world's fastest-growing mega-sized market. The promotion of new industrialization is being accelerated and urbanization is steadily advancing, generating substantial investment demand, while domestic demand holds enormous potential for growth.

Going forward, we will follow the decisions and arrangements of the CPC Central Committee and the State Council, and make full use of fiscal and tax policy tools to stimulate potential consumption, expand productive investment, tap into the enormous potential of domestic demand, and leverage its driving force to fuel high-quality development with renewed impetus and vitality.

Thank you.