Sound financial policy is crucial to the nation’s continuing economic development. Now with a year in office as the Minister of Finance, Jin Renqing talks with People’s Daily reporter Li Jianxing about his experiences and plans for the future.

 

People’s Daily (PD): Minister Jin, how do you feel about your past year in office as China’s finance minister?

 

Jin Renqing (JRQ): I worked in the Finance Ministry from 1991 to 1995, but my work in this position is more challenging. Things are changing, needs are changing. We’ve encountered many contradictions in dealing with relations between the state, enterprises and individuals. This is a tough job. I feel strongly that every penny of government money comes from the people’s hard work. “What is taken from the people is to be used in the interests of the people.” I keep this slogan in mind and scrutinize my work when I exert my authority, which is endowed by the Party and the people.

 

PD: Financial policy is a major tool for our country’s macro-adjustment and control. Would you tell us about your newest concepts for this policy?

 

JRQ: In order to meet the central government’s requirements we’ve conducted wide-ranging investigations and listened to ideas from people in a variety of areas. The Finance Ministry’s basic concept is to “make a big pie.” This means we will make every effort to boost our economy and enhance our government revenue. We plan to make better use of treasury bonds and the grain risk fund; pave the way for reform of the taxation system, particularly tax fees in rural areas; and manage the budget. In addition, we are going to step up work in property allocation, social security, education and public health.

 

PD: Most people think of the government’s role as slicing the pie, but your focus is to make the pie bigger. Why is this?

 

JRQ: You can’t spend money that you don’t have. Our primary role is to maintain healthy economic growth. Setting up public financial revenue is not contradictory to supporting the economy. We have to consider both economic and political problems together in order to harmonize financial policy and reform, as well as development and stability. We also have to deal with problems like timing, profit and structure. Development is the top priority for our financial policy.

 

PD: In what ways do you expect to make the pie bigger?

 

JRQ: First of all, further reform of “revenue supports economy” methods. Supporting economic development – that is, making the pie bigger – doesn’t mean returning to the old-fashioned planned economy. Investing in state-owned enterprises doesn’t mean favoring individual enterprises as it did in the old days. We should learn to use economic levers like taxation, treasury bonds and government subsidies to help state-owned enterprises, cultivate various markets and create a fair, open and relaxed financial environment.

 

Second, to improve our management we encourage all levels of government to contribute to expansion of the pie. We insist that they adhere to the principle of “maintain public innovation, activate both central and local government.” A key to this lies in separating taxation systems: further clarifying the duties of central and local governments, granting more tax collection rights to local governments, reducing administrative taxation and improving the collection mechanism.

 

PD: How will you make better use of treasury bonds and the grain risk fund?

 

JRQ: We have decided to adjust the scale of long-term treasury bonds, and change their structure and use. As our economy grows, both public and private investment are rising rapidly. We are going to integrate the domestic construction bond and basic construction budget, gradually increase infrastructure investment, reduce direct investment in competitive and operative fields, and enhance public service and products.

 

As for the grain risk fund, we are changing the original indirect allowance to distribution entities to a direct allowance to the farmers themselves. From 2004, all farmers in major grain-production areas may receive a direct subsidy from the grain risk fund. Subsidies to the farmers will use half of the grain risk fund in two years, meaning an increase in the direct allowance to 15 billion yuan a year. At the same time, we’ll continue relaxing price controls in the grain market and exert tighter controls over distribution.

 

PD: What are your key points for future reforms?

 

JRQ: As for taxation reform, first, we will transfer from a production-based value-added tax to a consumption-based one. We will begin trials of this in northeast China this year. We will also unify tax policies for domestic and foreign-invested enterprises. Other plans include: reforming overall budget management; increasing and improving regulated government procurement projects; conducting research on a system for evaluating effects of the budget; and maximizing the effects of the budget. Within a few years, all these reforms will be implemented and by then, a mature public budget planning and administrative system will have been established.

 

PD: Why are you now emphasizing work in property allocation, social security, education and public health?

 

JRQ: First of all, these four areas are crucial to the socialist market economy. Balanced property allocation is the government’s responsibility. The other three are matters of public welfare that can be benefited greatly from financial policy. In addition, support of these four areas may increase consumption, boost domestic demand, improve the balance between investment and consumption, and maintain a sustainable economy.

 

PD: What is your ultimate goal in your financial policy?

 

JRQ: Generally speaking, we have to implement the central government’s scientific concept of development; to reform further; and to keep overall, harmonious and sustainable development for finance, the economy and society.

 

(China.org.cn, translated by Li Liangdu, February 19, 2004)