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Speakers:

Xu Hongcai, vice minister of finance

Wang Lujin, deputy auditor general of the National Audit Office

Wang Daoshu, vice minister of the State Taxation Administration

Chairperson:

Shou Xiaoli, spokesperson of the Publicity Department of the Central Committee of the Communist Party of China (CPC)

Date:

May 17, 2022

Shou Xiaoli:

Ladies and gentlemen, good morning. Welcome to this press conference held by the Publicity Department of the CPC Central Committee. This is the fourth press conference under the theme of "China in the past decade." Today, we are joined by Mr. Xu Hongcai, vice minister of finance; Mr. Wang Lujin, deputy auditor general of the National Audit Office; and Mr. Wang Daoshu, vice minister of the State Taxation Administration. They will first brief you on China's fiscal and taxation reforms and development and then take your questions.

Now, I'll give the floor to Mr. Xu Hongcai.

Xu Hongcai:

Ladies and gentlemen, friends from the media, good morning. It's my pleasure to attend today's press conference and introduce the reforms and development of China's fiscal and taxation sector. First, on behalf of the Ministry of Finance (MOF), I would like to express my heartfelt gratitude to friends from the media for their ongoing interest in and support for China's fiscal and taxation sector.

The CPC has always attached great importance to its leadership of China's fiscal sector and is continuously working to reinforce it. The third plenary session of the 18th CPC Central Committee stipulated that public finance is the foundation and an important pillar of governance. This has chartered a new historical course for public finance in China. Over the past decade, the MOF has worked under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core, followed the guiding principles of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era and implemented the new development philosophy. The MOF has been earnestly implementing proactive fiscal policies and continuously improving macro regulation. It strengthens financial support and policy measures for projects concerning the country's most fundamental interests, promotes reforms of fiscal and taxation systems and gives full play to its roles as the "driving force" and "pioneer" of the country's deepening reforms. It has also worked to keep the major economic indicators within the appropriate range and contribute to the country's high-quality development.

The capacity of China's fiscal sector kept improving in the past decade. With the steady and sound growth of the Chinese economy, the country's fiscal revenue maintained a rapid growth rate, and the fiscal "cake" has also grown larger. Revenue under the national general public budget grew from 11.73 trillion yuan in 2012 to 20.25 trillion yuan in 2021, with an average annual growth rate of 6.9%. The total amount in the past decade reached 163.05 trillion yuan, which has provided solid funding support for China to realize its first centenary goal. Fiscal spending also increased every year. Expenditure under the national general public budget increased from 12.6 trillion yuan in 2012 to 24.63 trillion yuan in 2021, with an average annual growth rate of 8.5%. The total amount in the past decade amounted to 193.64 trillion yuan, which has effectively promoted the comprehensive development of China's economy and society.

Macro regulation through fiscal policy continued to be optimized in the past decade. General Secretary Xi Jinping stressed that macro regulation must adapt to the features of development at certain stages and to changes in the economy, and that tailored efforts should be made to expand demand or adjust supply where necessary. From 2012 to 2021, the MOF has followed the decisions made by the CPC Central Committee and the State Council, continued implementing proactive fiscal policies and made timely and appropriate adjustments. These efforts have effectively mitigated the impact of periodic economic fluctuations and provided strong support for high-quality economic and social development. The MOF has maintained the growth rate of mandatory government expenditures to support the implementation of the country's major strategic tasks. The MOF has carried out targeted tax and fee cuts. It has reduced the burden on businesses to the value of 8.8 trillion yuan from 2013 to 2021, with market vitality continuing to improve. The MOF rearranged public debt in a science-based manner. From 2015 to 2021, a total 12.2 trillion yuan of local government special-purpose bonds were added, and efforts have been made to expand effective investment. The MOF has also followed the requirement of living on a tight budget and strictly controlled general expenditures in a bid to allocate more fiscal resources to key sectors and weak areas. The MOF has established and regularly implemented a mechanism to directly allocate budgetary funds to prefecture- and county-level governments, guided the flow of financial resources toward lower levels of government, and supported the sound and long-term economic and social development.

Fiscal support became more targeted and effective in the past decade. Promoting the development of the Party's undertaking requires sufficient funding. Following the view of better serving the central task of economic development and the overall interests of the country, the MOF has strengthened financial support, allocated fiscal capacity to major tasks and boosted self-reliance in terms of sci-tech. It also strengthened support for people's basic livelihoods, promoted regional coordination between urban and rural areas, helped secure victory in the battle against poverty, fought against pollution, dealt with imbalanced and inadequate development, and worked to establish a new development paradigm and realize high-quality development. Sci-tech expenditure in the general public budget amounted to 7.1 trillion yuan in the past decade. Government spending on education from 2012 to 2020 was 28.88 trillion yuan, with statistics for 2021 yet to be published. Government spending on social security and employment totaled 23.11 trillion yuan.

Reforms to China's fiscal and taxation system were carried out in the past decade. General Secretary Xi Jinping underscored that good fiscal and taxation systems are the institutional guarantee for optimizing resource allocation, maintaining market unity, promoting social equity and realizing lasting peace and stability. Focusing on building a modern public finance system, the MOF has expedited reforms in key fields. It has deepened reform of the budget management system and introduced a performance-based budget management system covering the whole budget process. It has released reform plans defining the respective fiscal powers and expenditure responsibilities of central and local governments for major sectors. The MOF continued carrying out reforms of value added tax (VAT) and corporate income tax. It took initial steps to establish an individual income tax system based on both adjusted gross income and specific types of income. It also steadily improved local tax systems and promoted reforms of state capital, state-owned enterprises (SOEs) and finance. The MOF has strengthened supervision of financial accounting and tightened fiscal disciplines. As a result, fiscal governance capacity has seen steady improvement.

Financial cooperation was implemented in the past decade. General Secretary Xi Jinping noted that we need to hold high the banners of peace, development, cooperation and mutual benefit, forge a new form of international relations, and promote the building of a community with a shared future for mankind. The MOF has carried out pragmatic cooperation in the financial sector and strengthened multilateral communication using such platforms as the Group of Twenty (G20), BRICS, "1+6" Round Table Dialogue and Asia-Pacific Economic Cooperation (APEC). The MOF proposed establishing the Asian Infrastructure Investment Bank (AIIB), worked to establish the New Development Bank (NDB), and prepared to establish the Multilateral Development Finance Cooperation Center, in a bid to implement the Belt and Road Initiative (BRI). The MOF has taken the initiative and lowered China's overall tariff from 9.8% in 2010 to 7.4%. It also proactively supported the building of high-standard pilot free trade zone (FTZ) networks and worked to introduce a new system of open economy with higher standards.

Ladies and gentlemen, friends from the press, this year is of special significance in the new journey and new era of China as our Party will convene its 20th national congress this year. The MOF will more closely rally around the CPC Central Committee with Comrade Xi Jinping at its core; acquire a deep understanding of the decisive significance of the establishment of both Comrade Xi Jinping's core position on the Party Central Committee and in the Party as a whole and the guiding role of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era; boost our consciousness of the need to maintain political integrity, think in big-picture terms, follow the leadership core, and keep in alignment with the central Party leadership; stay confident in the path, the theory, the system, and the culture of socialism with Chinese characteristics; firmly uphold Comrade Xi Jinping's core position on the Party Central Committee and in the Party as a whole, and uphold the Central Committee's authority and its centralized, unified leadership. Bearing in mind the country's most fundamental interests, we will give better play to the fundament and pivotal role of finance in state governance, and continue to implement the proactive fiscal policy under the principle of pursuing progress while ensuring stability in order to serve the overall cause of the Party and the country and set the stage for the 20th CPC National Congress with concrete actions.

Thank you.