China will make the most of government bonds to expand effective investment, as part of efforts to shore up weak links, enhance the momentum of development and promote steady economic growth, according to a decision made at the State Council's executive meeting chaired by Premier Li Keqiang on Tuesday.
The meeting noted the growing complexities in the international landscape, new challenges facing domestic development and increasing downward pressure on the economy. When formulating this year's macro policies, various changes both in and outside of China have already been taken into account in a forward-looking way.
Keeping the economy running stably in the first quarter and the first half of the year is crucial to achieving the target set for the whole year. It's imperative to swiftly implement the decisions and plans of the Party Central Committee and the policy steps laid out in the government work report.
The task of ensuring stable growth needs to occupy an even more prominent position. Coordinated moves will be taken to keep growth stable, promote structural adjustment, and carry out reform.
Policies for keeping the economy stable should be introduced whenever possible, and no policy that adversely affects market expectations will be introduced. Contingency plans to cope with greater uncertainty will be drafted.
"Relevant policy measures must be implemented swiftly. Tax refund policies should be fully delivered as planned, and businesses will be supported to tide over difficulties and stabilize and increase jobs," Li said.
The meeting noted that, under the principle of keeping the macro leverage ratio generally stable, 3.65 trillion yuan of special-purpose bonds for local governments will be newly allocated for this year. In a bid to strengthen cross-cyclical adjustment, an advance quota worth 1.46 trillion yuan had been disbursed at the end of last year pursuant to law.
Going forward, efforts will be made to deliver the remaining local government debt quota at a faster pace, prioritizing regions with a strong position for debt service and sufficient candidate projects.
"The advance debt quota allocated last year shall all be issued by the end of May, and the quota set for this year shall all be issued by the end of September," Li said. "We must ensure that investment funds stay with projects they are allocated to. The launch and construction of projects will be expedited to generate more economic activities as quickly as possible.
The efficacy of government bonds will be better brought out. With both immediate and long-term benefits in mind, investment in improving people's livelihood and strengthening areas of weakness will be scaled up, and construction of new infrastructure and other high-level projects that will enhance development sustainability supported.
The usage of special-purpose bonds will be widened as appropriate. With priority given to projects involving transportation, energy, ecological protection, government-subsidized housing and other areas, public service projects that can generate certain returns will also be supported.
Reform-oriented measures and market-based approaches will be applied to leverage the catalytic role of special-purpose bonds in attracting more investment from the private sector and supporting investment from private business.
Treasury bonds and local government bonds will be issued in a well-coordinated way to maintain an appropriate scale of treasury funds and ensure the fiscal resources needed for primary-level governments to implement tax refunds and tax and fee cuts and improve people's livelihood.
Purchase of treasury bonds by overseas medium- and long-term funds will be encouraged, and relevant preferential tax policies will be well implemented. The financial system should strengthen collaboration to ensure the orderly issuance of government bonds and support financing for project construction.
"Fund management should be strengthened to forestall debt risks and prevent the idleness of funds. The construction of new government buildings in violation of regulations must be strictly prohibited and no vanity projects will be tolerated," Li said.
