Chen Wenjun:

Thank you, Mr. Liu. Now the floor is open for questions. Please identify yourself before asking questions.

CCTV:

Recently, the United Nations and multiple other institutions have raised China's economic growth forecast for 2023, believing that China has sufficient fiscal space to support stable economic growth. The Central Economic Work Conference also noted that, in 2023, the proactive fiscal policy should be stepped up with greater intensity and effectiveness to boost market expectations. In what areas will China increase its proactive fiscal policy with greater intensity this year? How can the policy's effectiveness be further improved? Thank you.

Liu Kun:

Thank you for your questions. The Central Economic Work Conference held at the end of last year put forward specific requirements for the direction and arrangement of fiscal policy. General Secretary Xi Jinping pointed out that we need to prioritize economic stability and pursue steady progress while ensuring economic stability. We also need to continue implementing the proactive fiscal policy and prudent monetary policy and see that the proactive fiscal policy is stepped up with greater intensity and effectiveness.

Enhancing the intensity and effectiveness of the proactive fiscal policy reflects the general principle of pursuing progress while ensuring stability. The move also pays equal attention to actual and possible needs, present and long-term situations, development, and security. The foundation of domestic economic recovery is not yet solid and the triple pressures of shrinking demand, disrupted supply and weakening expectations are still mounting. Moreover, the external environment is in turmoil. These risks and challenges require us to strengthen macro-regulation through fiscal policy and employ a combination of policy tools to maintain fiscal sustainability and ensure that local government debt is kept under control as we effectively support high-quality development.

Regarding policy intensity, we will work to moderately expand fiscal policies in the following three aspects. First, we will intensify our efforts on fiscal spending. Expenditure on the national general public budget reached 22.06 trillion yuan in 2022. Based on this, we will coordinate policy tools involving fiscal revenue, fiscal deficit, and loan interest subsidies while appropriately expanding fiscal spending. Second, we will intensify efforts to boost investment in special-purpose bonds. We will budge the scale of special-purpose bonds issued by local governments in a reasonable manner. We will also moderately expand both investment areas and the scope of special bonds that can be used as project capital to continuously boost investment. Third, we will intensify efforts to channel fiscal funds to local levels of government. We will keep increasing central government transfer payments to local governments and direct spending toward poor and underdeveloped areas to ensure livelihoods, salaries and operations at the primary level.

We also need to improve the effectiveness of policies. We will work to improve preferential tax and fee policies, make sure they are more targeted, and strive to ease the difficulties facing businesses. We will also optimize the structure of fiscal spending and give full play to the leveraging role of government funds in expanding investment and boosting consumption. Meanwhile, we will strengthen coordination between monetary, industrial, technological and social policies and create a synergistic effect for an overall economic upturn.

Enhancing the intensity and effectiveness of the proactive fiscal policy covers many issues. Here, I would like to emphasize the following five aspects.

First, we will improve supportive tax-and-fee policies and ease businesses' difficulties. Considering both the need to help businesses and the fiscal affordability, we will further improve preferential tax-and-fee policies and prioritize the support for micro-, small- and medium-sized enterprises (MSMEs), self-employed individuals, and sectors in serious trouble, to further lower the corporate burden and generate strong growth momentum.

Second, we will strengthen coordination on fiscal resources and maintain the necessary level of spending intensity. We will pool resources to complete key national undertakings and optimize the combination of policy tools. We will scale up investment in sectors that help reinforce the foundation for the country's long-term development, strengthen areas of weakness, and optimize the development structure, in a bid to ensure funding support for the nation's key strategic tasks.

Third, we will ramp up efforts to improve the mix of spending and continue increasing efficiency in this regard. Party and government bodies will keep their belts tightened, avoid spending money on unnecessary matters, and keep spending low to benefit the people. We will proactively support key fields involving sci-tech breakthroughs, rural revitalization, education and green development. We will also improve the mechanism to directly allocate budgetary funds to prefecture- and county-level governments and see that fiscal funds are used efficiently following relevant regulations.

Fourth, we will balance the fiscal capacity among different regions and equalize their access to basic public services. We will keep increasing central government transfer payments to local governments and improve their ability to provide fiscal support. We will reform the fiscal systems below the provincial level and improve the mechanism to ensure long-term funding for county-level governments. We will promote the development of a system of standards for ensuring basic public services.

Fifth, we will tighten financial discipline and effectively guard against fiscal risks. We will strictly regulate fiscal revenue and expenditure management and improve oversight and monitoring mechanisms to tighten financial discipline. We will resolutely deter borrowing in violation of laws and regulations, curb the growth of hidden debts, prudently address existing ones, and ensure no systemic risks arise. Thank you.