.

Read in Chinese

Speakers:

Liu Kun, minister of finance

Yu Weiping, vice minister of finance

Xu Hongcai, vice minister of finance

Chairperson:

Chen Wenjun, director general of the Press Bureau of the State Council Information Office (SCIO) and spokesperson of the SCIO

Date: 

Feb. 22, 2022

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Chen Wenjun:

Ladies and gentlemen, good morning. Welcome to this press conference held by the State Council Information Office (SCIO). Today, we are delighted to be joined by Mr. Liu Kun, minister of finance, who will introduce China's fiscal reform and development, and answer your questions. Also present at the press conference today are Mr. Yu Weiping and Mr. Xu Hongcai, both vice ministers of finance.

Now, I will give the floor to Mr. Liu.

Liu Kun:

Ladies and gentlemen, friends from the media, good morning. I am glad to meet you ahead of the "two sessions." On behalf of the Ministry of Finance (MOF), I would like to express my heartfelt gratitude to friends from the media for your constant interest and support regarding China's fiscal development. Now, I will introduce the fiscal work in 2021.

2021 was a landmark year in the history of our Party and our country. Faced with complex and severe domestic and international contexts, as well as multiple risks and challenges, the Communist Party of China (CPC) Central Committee with Comrade Xi Jinping at its core has rallied and led the Chinese people of all ethnic groups to forge ahead, making major achievements in various undertakings of the Party and the country. The MOF has followed the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era and borne in mind the country's most fundamental interests. In accordance with the decisions and plans of the CPC Central Committee and the State Council, we have implemented a proactive fiscal policy, taken solid steps to ensure stability on the six fronts (employment, finance, foreign trade, foreign investment, domestic investment and market expectations) and security in the six areas (residential employment, people's livelihood, market entities, food and energy, stability of industrial and supply chains, and grassroots operations), and worked to achieve new progress in creating a new development dynamic and promoting high-quality development. Revenue in the national general public budget reached 20.25 trillion yuan, an increase of 10.7% over the previous year, and in line with the budget. Expenditure in the national general public budget reached 24.63 trillion yuan, an increase of 0.3% year on year, providing a solid fiscal foundation for a good start to the 14th Five-Year Plan (2021-2025) period.

First, we rolled out stronger policies to sustain steady economic recovery. General Secretary Xi Jinping emphasized that scientific macro control and effective government administration are the intrinsic requirements for exploiting the advantages of the socialist market economy system . In 2021, we enhanced cross-cycle adjustment, strengthened unified management of funds and maintained the necessary scale of government expenditure to ensure major economic indicators stayed within an appropriate range. We issued 3.65 trillion yuan of local government special purpose bonds and adjusted the pace according to economic developments, thus playing an important role in maintaining stable growth and tackling areas of weaknesses. We implemented targeted tax and fee reduction policies and made further tax and fee cuts of about 1.1 trillion yuan to help enterprises overcome difficulties and achieve development. We worked to normalize the straight transfer of funds and expand coverage of the mechanism. Funds totaling 2.8 trillion yuan went straight to primary-level governments, which in turn benefited enterprises and the people. Meanwhile, we implemented the requirement for the Party and government institutions to keep tightening their belts, continued negative growth in central government expenditure, and channeled saved funds to bolster financial support for local governments to improve the people's well-being. We improved the quality, efficiency and sustainability of the proactive fiscal policy to offset downward economic pressure and keep the fundamentals of the overall economy stable.

Second, we supported the development of science and technology and promoted the upgrading and stabilization of industrial and supply chains. General Secretary Xi Jinping emphasized that the essence of the new development dynamic is realizing a high level of self-reliance . The MOF implemented the innovation-driven development strategy. We continued to invest more in science and technology. In 2021, we spent 0.97 trillion yuan on science and technology, an increase of 7.2% over the previous year, to provide strong support for the development of integrated circuits, new energy vehicles, and other industries as well as major breakthroughs in core technologies in key fields. At the same time, we innovated and improved policies and mechanisms. We reformed and optimized the management of research funding allocated by the central government, introduced new preferential tax and fee policies, granted subsidies for small- and medium-sized enterprises (SMEs) with high growth potential, advanced technology and strong market competitive edge, and implemented an open competition mechanism to select the best candidates. These measures are aimed at stimulating the innovation and creativity of researchers and enterprises.

Third, we have increased investment in living standards, and people's sense of fulfillment, happiness, and security have been significantly enhanced. General Secretary Xi Jinping emphasized that the people are the country. As we have fought to establish and consolidate our leadership over the country, we have in fact been fighting to earn and keep the people's support and to ensure them a good life. The MOF has always adhered to the people-centered philosophy of development, coordinated the needs of the people and the possibility of financial resources, and continued to strengthen fundamental well-being for all and ensure there is a cushion in place for those most in need. In 2021, public spending on education stood at 3.76 trillion yuan, up 3.5% over the previous year.

Meanwhile, public expenditure on social security and employment amounted to 3.39 trillion yuan, up 4% over the previous year. Despite enormous public spending in 2020 due to the COVID-19 pandemic, we still ensured high spending on improving people's lives in 2021. Therefore, the scale of expenditure in 2021 was basically the same as that of the previous year, and multiple livelihood policies were effectively implemented.

Fourth, we have promoted the coordinated development of urban and rural areas and further optimized the development pattern. General Secretary Xi Jinping emphasized that coordination is the means, end, and evaluation criterion of development. The MOF firmly followed the new development philosophy and ensured that the transfer payments, fiscal and tax policies, and other instruments were given full play to improve the balance and coordination of urban and rural regional development. In 2021, the central government's transfer payments (including tax rebates) made to local governments topped 8 trillion yuan, with a priority on areas with financial difficulties and underdeveloped regions, so as to enhance the financial guarantee capability for the coordinated development of urban and rural areas. We worked to ensure the effectiveness of major assistance policies and supported consolidating and expanding the country's poverty alleviation achievements and guaranteeing a smooth transition into rural vitalization. In addition, we implemented major national regional strategies such as developing the Yangtze River Economic Belt and the construction of the Guangdong-Hong Kong-Macao Greater Bay Area and promoted coordinated regional development to a higher level and better quality.

Fifth, we have strengthened ecological protection and continue to make our skies bluer, waters clearer, and mountains greener. General Secretary Xi Jinping emphasized that lucid waters and lush mountains are both natural and economic wealth. We must keep in mind that lucid waters and lush mountains are invaluable assets. The MOF resolutely implemented Xi Jinping's Thought on Ecological Civilization, and comprehensively employed policies and measures such as fiscal fund guidance, tax adjustment, and government green procurement to support resource conservation and ecological, environmental protection, and vigorously promoted the transition and economic and social development featuring green and low carbon. In 2021, the national fiscal investment in ecological and environmental protection reached 821 billion yuan. In addition, we introduced an action plan to support the establishment of a horizontal eco-compensation mechanism in the entire Yangtze River Basin, strengthened the role of taxation in regulating the ecological environment protection, and improved government green procurement policies.

Sixth, we have deepened fiscal and tax system reforms and strengthened the supervision of fiscal management. General Secretary Xi Jinping emphasized that good fiscal and taxation systems are the institutional guarantee for improving resources allocation, maintaining market unity, promoting social equity, and realizing enduring peace and stability. Therefore, playing an active and leading role, the MOF has deepened fiscal and taxation reforms speedily and steadily and expedited the building of a modern public finance system. In 2021, we promoted tax legislation such as value-added tax, further deepened the reform of the budget management system, carried out the evaluation of transfer payment and major expenditure policies, promulgated administrative regulations on state-owned assets, and promoted the launch of integrated budget management systems in all provinces. Meanwhile, we carried out special campaigns rectifying violations in four types of activities, including the unlicensed operation of accounting firms, and the supervision of financial management was further strengthened.

Ladies and gentlemen, friends from the media, 2022 is an important year as China enters a new era of building a modern socialist country in an all-round way and strides toward the second centenary goal. The CPC will hold its 20th National Congress, and it is significant to do public finance work well. The MOF will adhere to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, resolutely uphold General Secretary Xi Jinping's core position on the Party Central Committee and in the Party as a whole, and resolutely uphold the Party Central Committee's authority and its centralized, unified leadership. We will also bear in mind the country's most fundamental interests, improve the efficiency of fiscal policies, pay more attention to the precision and sustainability of policies, and exert the role of policies in advance. 

In these ways, we will contribute to sound and sustained economic development and social stability, paving the way for the 20th National Party Congress with actions.

That concludes my introduction. Next, my colleagues and I would like to answer your questions. Thank you all!

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Chen Wenjun:

Thank you, Mr. Liu. Now the floor is open for questions. Please identify the news outlet your work for before raising questions.

CCTV: 

At the Central Economic Work Conference, it was noted that the proactive fiscal policy would be implemented in a more effective, targeted, and sustainable way. Therefore, would you like to elaborate on this, and explain how fiscal policy will play a role at an earlier stage? Thanks. 

Liu Kun:

Thank you for your questions. The proactive fiscal policy will be implemented in a more effective, targeted, and sustainable way, which is the major decision made by the Central Committee of the CPC and the State Council after assessing the domestic and international situations. It aligns with the new development philosophy and the general principle of prioritizing stability and pursuing progress while ensuring stability.

To implement the policy more effectively, we need to plan fiscal resources as a whole and improve budget compilation, review, expenditure, and performance-based budget management. In addition, we will work to see the evaluation results are linked to budget arrangement, strengthen the coordination with monetary policy, and ensure macro policies are stable and effective.

To implement the policy in a more targeted way, we need to focus on the high-quality development of manufacturing, easing difficulties for micro-, small- and medium-sized enterprises, scientific and technological innovations, and ramp up efforts to cut taxes and fees. We will also further improve the composition of fiscal spending and truly live on a tight budget, while at the same time working harder to provide funds for ensuring people's basic living needs, major areas, local governments, and especially the grassroots level. 

To implement the policy more sustainably, we need to arrange budget allocation based on what is necessary and possible. We must ensure and enhance public well-being in development instead of aiming too high and making the goals tantalizingly out of reach. We will keep the deficit-to-GDP ratio at safe levels and keep the debt under control scientifically to effectively prevent and defuse risks. 

You asked me how fiscal policy can play its role at an earlier stage. In fact, it means that we need to make the best use of our policies and plan such policies in advance. The sooner the policies are rolled out, the better the policies take effect. If you pay heed to financial news, you may notice that there have been several policies introduced on cutting tax and fees from the fourth quarter of last year to this January. And we will carry out work in the following aspects:

First, we will ramp up efforts to cut taxes and fees. Last year, we cut 1.1 trillion yuan of taxes and fees. Based on that, we will take more extensive measures to cut taxes and fees this year, to help market entities gain a stronger sense of accomplishment. 

Second, we will maintain an appropriate spending intensity. We will focus on achieving major scientific and technological breakthroughs, ecological and environmental protection, ensuring basic living needs, major regional strategies, modern agriculture, and major projects outlined in the 14th Five-Year Plan. We will work to see more targeted budgetary investment and avoid the money being spread too thin. 

Third, we will appropriately arrange special local government bonds. At the end of last year, we allocated 1.46 trillion yuan in advance from the country's 2022 quota for special local government bonds. In January, local governments issued 484.4 billion yuan in special bonds, accounting for a third of the advance quota. The money from the special bonds was used in infrastructure for transportation, municipal facilities and industrial parks, construction projects for affordable housing, and other key areas. In fact, some of the quota at the end of last year were saved for this year's use, so you may see that many new projects at local levels have already broken ground, and many of those projects have accessed funds from the special bonds.

Fourth, we will increase the scale of transfer payments from central to local governments. This year, we will arrange a considerable increase in the scale of transfer payments from central to local governments, especially the general transfer payments, which will continue to be weighted toward poor and less-developed areas and support grassroots governments in their efforts to ensure payment of salaries, normal operations, and the basic wellbeing of the people.

Fifth, Party and government institutions should tighten their belts. The central government will lead by example in living on a tight budget and cut non-essential and non-obligatory expenditures. Governments at local levels should also tighten their belts and advocate thrifty and frugal working. 

Sixth, we will tighten up financial discipline. We will work harder to improve financial orders at local levels and ensure that the financial discipline becomes the "red line" that cannot be crossed. 

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CRNTT:

In recent years, the central government has taken the lead in living on a tight budget, and the saved money has been used to improve people's wellbeing. So what are the considerations for the central government to live on a tight budget this year? Thanks. 

Liu Kun:

You asked a question that is concerned by all. Just like you said, the government is now living on a tighter budget. Take the central government as an example. The expenditure at the central level has registered negative growth for two years in a row. In addition, the spending on official overseas visits, official vehicles, and official hospitality have been cut for successive years, declining from 8.107 billion yuan in 2019 to 5.187 billion yuan in 2021, down by 36%.

However, I want to make it clear that tightening the belt of the government is a policy that we must uphold on a long-term basis, rather than it being a short-term measure. General Secretary Xi Jinping emphasized on many occasions that the Party and the government tighten their belts to let the people live better lives — it is a move determined by the nature and the mission of the Party. To limit government spending, we should implement the instructions and demands of General Secretary Xi Jinping. Party and government departments, the central government organs, in particular, should set an example by practicing thrift and economy, and invest the money saved to improve people's livelihoods and support market entities. This policy was not adopted as a result of fiscal pressures.

Remaining committed to the instructions of General Secretary Xi Jinping, we will ensure austerity in all endeavors — taking it as kind of political awareness and political responsibility — and keep government spending low and enrich our people. 

First, we will cut expenditures in a scientific way. This year, the central government will further cut outlays on non-obligatory and non-essential items, save money that is supposed to be saved, and ensure outlays on the operation of government departments and other essential items.

Second, we will continue to live on a tight budget. We will take rigid measures to control expenditures on meetings, trips, training programs, and forums, prohibit the construction of new government buildings or the extension to such facilities, ban unnecessary meetings and projects, and cut out or reduce spending whenever and wherever possible.

Third, we will see that funds are put to better and more effective use. We will keep track of the efficiency of fund use, and carry out performance evaluations to push all departments to improve the efficiency of fund use and make every cent count. Thank you.

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The Poster News APP:

Some small and medium-sized businesses have been hit hard by the COVID-19 pandemic. What specific measures has the finance ministry taken to support those enterprises? Thank you.

Liu Kun:

Vice minister Yu Weiping will answer this question. 

Yu Weiping:

Micro, small and medium-sized enterprises prop up economic and social development and play an indispensable role in creating jobs, promoting technological innovations, and improving people's livelihoods. 

Due to the impact of COVID-19, some small and medium-sized enterprises are facing difficulties with production and operation. The MOF has worked out and introduced a series of policies in accordance with the decisions and plans of the CPC Central Committee and the State Council to help them overcome difficulties, revive, and achieve better development.

First, we have reduced the tax burden on small and medium-sized enterprises. We continue to cut taxes and fees, postponing the payment of all the domestic value-added tax and corporate income tax for small and micro manufacturing enterprises, and postponing the payment of 50% of those taxes for medium-sized manufacturing enterprises. We have extended the validity period of the policies on temporarily reducing the premiums for unemployment insurance and workers' compensation insurance. We cut about 1.1 trillion yuan of taxes and fees last year, as Mr. Liu just said, and micro, small, and medium-sized enterprises benefited the most from it.

Second, we have alleviated the difficulty and high cost of financing for micro, small, and medium-sized enterprises. In 2021, the central government allocated 3 billion yuan of funds for rewards and subsidies to support the expansion of the scale of financing guarantees and the reduction of guarantee fees for small and micro enterprises . The reduction of financing guarantee fees for market entities surpassed 10 billion yuan throughout the year. We have continued offering greater financial support to subsidize interest payments on guarantee loans for business startups . In 2021, the central government made 6.34 billion yuan in funds available for subsidizing the interest payments and for rewards and subsidies, up 65.9% year on year. We have supported the construction of demonstration zones for inclusive finance to improve the financing environment for micro, small, and medium-sized enterprises.

Third, we have supported the high-quality development of those small and medium-sized enterprises which specialize in a niche market and boast cutting-edge technologies . From 2018 to 2022, the central government allocated about 9 billion yuan for innovation and entrepreneurship of small and medium-sized enterprises. In 2021, it offered funds for rewards and subsidies to support the development of small and medium-sized enterprises which specialize in a niche market and boast cutting-edge technologies, realizing the nationwide coverage of such "little giant" firms . At present, there are over 300 listed "little giant" firms. Their average growth rates of operating revenue and net profit in the past two years both exceeded 25%, about twice the average of all listed companies.

Next, the MOF will focus on helping micro, small, and medium-sized enterprises overcome difficulties and achieve better development. We will further step up tax cuts, and use financing guarantees, subsidies for interest payments on guarantee loans, and rewards and subsidies to guide and mobilize financial resources towards micro, small, and medium-sized enterprises so that they show greater vitality. Thank you.

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Bloomberg:

I have three questions. I'll be very quick. Most of the provinces expect weaker revenue growth this year while spending continues to increase. What's your estimate for national income and spending this year? And what will the central government do to help regional governments meet their needs? What is your target for tax and fee cuts this year? And in the People's Daily last Friday, you wrote that transfer payments from the central government to local governments will be increased by a relatively large margin. How big do you estimate this payment will be? And how will this help offset the impact of tax and fee cuts? Thank you.

Liu Kun:

Your questions are highly specialized. I'd like to answer them. As a matter of fact, your questions involve our need to set an appropriate deficit-to-GDP ratio target, increasing spending, implementing larger tax and fee cuts, and increasing transfer payments to local governments. In view of the composition of your three questions, you may feel that some of these goals are hard to achieve, but China's socialist system has its strength. And we want to solve these problems properly and hope to achieve our goals this year. The answers I give you today may be brief, but I hope and expect you will find them in this year's budget report to the National People's Congress.

You mentioned that the regional revenue is expected to be relatively low. In fact, this is a result of our arrangement for tax and fee cuts, which is still under approval, while the overall direction is clear. That's why local governments have taken tax and fee cuts into account when they forecast their revenue. However, we will increase transfer payments from the central government to local governments to make up for the loss of local revenue.

Mr. Xu Hongcai is in charge of the budget. I'd like to invite him to provide a more detailed answer.

Xu Hongcai:

Thank you for your questions. Your questions are really important, and can be summed up below. The first question is about the imbalance between revenue and spending this year –weaker revenue growth and increased spending. This creates a contradiction between revenue and spending. The second one, or the third question you asked, relates to what the central government will do in such circumstances to increase transfer payments to local governments and ensure their spending can be guaranteed. The third question involves budget arrangements and this year's target. I will answer them one by one in this order.

Tax and fee cuts are indeed an issue of great concern to market entities. In recent years, the MOF has taken it as an important first move in stimulating the vitality of market entities, and strived to reduce government revenue for increasing corporate performance and boosting market vitality. We use tax and fee cuts to boost economic growth. As a matter of fact, tax and fee cuts appear to reduce revenue, but in fact they will bring economic growth and subsequent fiscal revenue increases. Here, I would like to share with you some data.

The first is 1.1 trillion yuan. This was the scale of tax and fee cuts nationwide in 2021, with a focus on supporting the upgrading of the manufacturing sector and the development of micro, small, and medium-sized businesses as well as self-employed individuals. The 1.1 trillion yuan in tax and fee cuts were achieved against the backdrop of continued tax and fee cuts in the last few years as well as growing pressure from fiscal imbalance. We have effectively helped market entities overcome difficulties and stimulated their vitality with solid measures.

Second, in the six years since the beginning of the 13th Five-Year Plan (2016), China reduced 8.6 trillion yuan in taxes and fees, an unprecedented scale in China's history and a relatively large scale worldwide. Through continued tax and fee cuts, the ratio of tax revenue in China's GDP also decreased from 17.5% in 2016 to 15.1% in 2021.

Now comes the third set of data. In total, there are more than 150 million market entities in China. Among them, 13.26 million were newly set up in 2021 and have engaged in tax-related activities, up 15.9% year on year. The implementation of tax and fee cuts has eased the burden of millions of market entities, strengthened economic resilience, and played an important role in meeting challenges and stabilizing economic fundamentals. 

What we wish is that businesses can sustain themselves and assure success for the future. As I mentioned just now, despite the expected sluggish revenue growth and serious budgetary constraints, our tax and fee-cutting policies will bolster economic growth and gradually boost fiscal revenue. This year, finance departments will resolutely carry out the decisions and deployments of the CPC Central Committee and conscientiously implement a combination of policies to cut taxes and fees so as to further vitalize market entities. 

First, the policies will be expanded. We will continue extending a total of 11 tax and fee reduction policies to the fields such as science and technology, employment, business start-ups, health care, and education. Some of the policies will be more preferential than before, and a slew of new measures will be adopted as soon as possible.

Second, the policies will be more targeted. In particular, we will formulate a series of supporting policies in order to boost the high-quality development of manufacturing and help micro, small, and medium-sized enterprises overcome difficulties and promote sci-tech innovation. 

Third, the policies will be well coordinated. We will coordinate tax and fee-reducing policies with other incentives such as proactive fiscal policy, monetary policy, and industrial policy so that we can lend the needy a strong hand through the synergy gains. 

Your second question, according to my understanding, is about how to guarantee local governments' fiscal expenditure as the growth of local fiscal revenue slows due to the tax and fee cuts. Mr. Liu has given the answer: The central finance will increase its transfer payments to local governments, a priority of this year's central budget. The increased transfer payments will be mainly channeled to regions in financial difficulty, underdeveloped areas, and places where revenues dramatically dropped because of tax and fee cuts. Meanwhile, we will improve incentive and constraint mechanisms, encourage local governments, at both provincial and municipal levels, to reinforce financial resources at the county level. We will further increase transfer payments, adopt related guiding policies, and support local governments' efforts in cutting taxes and fees and ensure payment of salaries, normal operations, and the basic wellbeing of the people, thus securing the sound operation of local finances. As always, certain funds will go straight to the targeted areas to meet their policy goals. 

Your third question is about this year's targets for tax and fee cuts. Mr. Liu has suggested you watch the budget report to be issued at the upcoming NPC session. It will tell you all. 

Thank you.

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Science and Technology Daily:

Regarding the fifth plenary session of the 19th CPC Central Committee valued sci-tech self-reliance and self-strengthening as a strategic underpinning for national development, we noticed that the MOF had taken a number of measures to innovate research funding management and support basic research. Can you give us more details? Thank you.

Yu Weiping:

Thank you for your question, and I do appreciate your concerns. Viewing the course of human history and the country's future from a comprehensive and strategic perspective, General Secretary Xi Jinping has repeatedly emphasized that sci-tech self-reliance and self-strengthening should aways be considered a strategic support for national development, urging more efforts to build up China's strength in science and technology and strive for sci-tech self-reliance and self-strengthening at higher levels. Making sci-tech self-reliance a priority, the MOF has continuously scaled up investment, deepened management reforms, and innovated and perfected policies, steadily advancing the cause of building China into a sci-tech giant. Despite of the negative growth in its budgetary spending in 2021, the central government managed to allocate 320.554 billion yuan to the science and technology sector through adjusting its spending structure. 

First, we helped solidify the sci-tech foundation through continuously stepping up investment in basic research. In 2021, the central government's spending on basic research increased by 15.3%, mainly directed to natural science funds and basic research work of the Chinese Academy of Sciences. We also further improved the institutions and mechanisms designed to support basic research and original innovation. 

Second, we helped achieve sci-tech breakthroughs. Leveraging the new whole-nation system in a market economy, we successfully advanced the implementation of a batch of major sci-tech programs. With our financial support, an open competition mechanism was introduced to select the best candidates to lead key research projects with the aim of achieving breakthroughs in core technologies in key areas.

Third, focus on priorities. We have advanced the construction of national laboratories, supported reforms and development of research institutes, and promoted the building of high-level research-oriented universities. We have supported innovative organizations in cultivating, introducing and hiring scientific and technological talents, accelerated the construction of a major world center for professional talent and innovation, and boosted the country's strategic scientific and technological strength.

Fourth, promote development. We have boosted the principal role of enterprises in innovation, and supported enterprises to establish innovation alliances to undertake national scientific research tasks, and promoted the integration of industrial and innovation chains. We have improved the tax policies that support innovation, encouraged enterprises to increase R&D spending, and promoted close integration of science and technology with economic development. During the first three quarters of last year, the amount of R&D spending by enterprises eligible for additional tax deductions was 1.3 trillion yuan, with 330 billion yuan in tax cuts and exemptions. 

Fifth, promote reforms. We have improved the management of central government funds for scientific research, and granted greater autonomy in the management of scientific research funds. The number of budget items has been drastically reduced from more than nine to three. The three items are equipment cost, operating expenses and labor cost. The proportion of indirect expenses has been increased, and the proportion of scientific research funds spent on people reached more than 50%. Bureaucratic burdens of scientific research personnel have been reduced to create a good environment for them to devote themselves to research and make more high-quality scientific research achievements. 

If scientific and technological capabilities are strong, the country will be strong. The MOF will strengthen support of fiscal and tax policies and funds, optimize the structure of scientific research expenditure, promote the implementation of scientific research policies and ensure that science and technology, one of the country's most powerful weapons, can better serve the high-quality development and promote the building of a great modern socialist China in all respects. Thank you. 

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Yicai:

Since the system of direct fiscal fund allocation was established, fiscal funds of the central government have reached local primary-level governments at a faster rate. Could you give us more details on this? What new measures will be rolled out in terms of improving the system? Thank you. 

Liu Kun:

Thank you for your questions. Just now, Mr. Xu talked about the system of direct fiscal fund allocation. I'd like to invite him to answer your questions. 

Xu Hongcai:

Thank you for your questions. Establishing the system of direct fiscal fund allocation is an important decision made by the CPC Central Committee and the State Council, and also a significant innovation in fiscal management. In 2021, the MOF joined relevant departments to regularize the system of direct fiscal fund allocation, and expand its scope. By "regularize" we mean making the direct allocation of budgetary funds to prefecture- and county-level governments during a particular period of 2020 a normal practice, and expanding the system's coverage. Based on the operations last year, the system has given full play to its advantage of directly allocating those funds to primary-level governments, and improved both management efficiency and fund efficiency. Its characteristics are as follows:

First, fast allocation. Fiscal fund allocation took the "direct train" straight to the primary level, directly benefitting businesses and people, and greatly reducing the "travel time." The operation mode of the system of direct fiscal fund allocation last year was different from that of the year before last. When compiling the budget at the beginning of last year, the central government asked provincial-level governments to allocate fiscal funds in 10-30 days, which was longer than the preceding year. Based on feedback from monitoring the direct fiscal fund allocation, most provincial-level governments completed fund allocation in around 10 days, which was really fast, and faster compared with general fund or non-direct transfer payment funds. According to statistics of direct fiscal fund allocation released at the end of last year, the rate of direct fiscal fund allocation was much faster than that of the general public budget, which shows the advantage of being fast.

Second, targeted manner. Annual statistics show 2.8 trillion yuan of direct fiscal funds, of which 2.67 trillion yuan has arrived at fund users. The directly allocated fiscal funds mainly supported local employment, people's well-being, the operation of market entities, wage payments and the normal functioning of primary-level governments. According to incomplete statistics, spending on people's well-being including elderly care services, compulsory education, basic medical services and basic housing services reached almost 2 trillion yuan, fiscal funds directly used for employment exceeded 51 billion yuan, and fiscal funds directly used for relevant enterprises exceeded 600 billion yuan, benefiting more than 1.66 million market entities, which shows that targeted measures based on specific conditions have been effective.

Third, funds directly allocated to primary-level governments and businesses are under strict supervision. We need to give better play to the role of the relevant supervision system and expose these funds to more supervisory bodies to avoid the decline in quality due to high efficiency. The supervision system covers central, provincial, city, and county-level authorities. In terms of the central government, fiscal and auditing bodies and other relevant bodies have all been connected via the internet so that everyone can have access to the flow, allocation, and spending of funds on one internet platform. The supervision efforts in this regard are stricter than that of other kinds of funds. The National Audit Office has carried out follow-up auditing work on implementing major national policies. The results show comparatively fewer violations of regulations concerning these directly-funneled funds. Funds involved in violation of regulations account for a relatively small part, and the use of these funds is more regulated. As the supervision system continues to work, problems will be timely identified and corrected.

This year, we will earnestly review existing experience and practices, further expand the scope of directly-funneled funds and improve the management system. In addition, we will strengthen supervision on these funds and make sure they are used safely and efficiently and based on regulations to give better play to their role and serve for economic and social development.

Thank you.

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Xinhua News Agency:

In recent years, we have felt the continuous improvement of the environment around us, and more blue-sky days have been reported. What measures did the MOF take to help win the battle of pollution prevention and control? What are your next plans? Thank you.

Liu Kun:

Thank you. You've raised an excellent question. A fine ecological environment is the fairest public product and the most accessible welfare for the people. The government funding should provide the fairest public goods. General Secretary Xi Jinping has stressed on multiple occasions that lucid waters and lush mountains are invaluable assets and that we should protect Nature and preserve the environment like we protect our eyes and endeavor to foster a new relationship where man and Nature can both prosper and live in harmony. The MOF has thoroughly studied General Secretary Xi Jinping's views and proposals, comprehensively made use of fiscal policies, and supported the resource conservation and the protection of the ecosystem and environment to better meet people's needs for a good environment. We have mainly made efforts in the following three aspects:

First, investment has been increased. In 2021, the central government allocated 437.4 billion yuan for eco-environmental protection. In the meantime, the MOF innovated methods for fiscal administration and proactively gave full play to the leveraging role of government funds. Through the national green development fund, provincial-level funds for the prevention and control of soil pollution, and others, the MOF has encouraged private capitals to participate in eco-environmental protection and treatment.

Second, more efforts have been made on key issues. Since the 18th CPC National Congress, the central government has set up special funds to manage water, air, and soil. These funds are used to protect our blue skies, clear waters, and clean lands, with special efforts to address prominent eco-environmental issues and help significantly improve the environment. Due to financial investment and efforts of the whole society, we have seen remarkable results. Take blue skies, for an example. In 2021, the PM2.5 density of cities at or above the prefectural level decreased 9.1% over the previous year, and 87.5% of days saw good or excellent air quality. I believe that every citizen can feel the obvious improvement in this field in their daily lives.

Third, the long-term mechanism has been established. The MOF set up mechanisms for trans-regional and intra-watershed compensation for ecological conservation efforts in all river basins of the Yangtze River and the Yellow River. We have also made coordinated efforts in the systematic governance of mountains, rivers, forests, farmland, lakes, grasslands, deserts, and glaciers. We established nature reserve systems based on national parks, continuously improved green government procurement policies, and effectively promoted the green and low-carbon transformation of the economy and society.

If we do not fail Nature, Nature shall never fail us. Therefore, the MOF will firmly carry out Xi Jinping thought on eco-civilization, continuously increase investments and solve prominent environment problems as soon as possible, and help secure victory in the prolonged battle of environmental protection, in a bid to make skies bluer, mountains lusher, and waters clearer. Thank you.

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Economic Daily:

In January, special bonds were issued significantly faster than during the same period last year. What were the considerations behind this? And how have the funds been put into use? Thank you.

Liu Kun:

Vice Minister Xu Hongcai and I covered the questions you raised in his answers and in my opening remarks. I'd like to invite Mr. Xu to elaborate on the matter.

Xu Hongcai:

Thank you. This is an important question. As Finance Minister Liu Kun said, in 2022 we should adopt proactive fiscal policy in advance and make full use of the policy toolbox, issue policies earlier and see results earlier, so as to let the policies be more targeted and effective.. In line with the decisions and plans of the CPC Central Committee and the State Council, the MOF has allocated 1.46 trillion yuan (about $229 billion) from its 2022 quota for local government special bonds in advance, authorized by the National People's Congress (NPC) Standing Committee and agreed upon by the State Council. 

The advance allocation is characterized by the country's proactive fiscal policy. The special bonds should be issued properly in accordance with the economic climate and macroeconomic regulation. China's economy is currently facing new downward pressure, which requires fiscal policies to be "brought forward appropriately." Set to be allocated in advance, issued and used at high speed, these special bonds are expected to encourage effective investment. As Minister Liu Kun introduced earlier, statistics show that many new projects were started and expenditures grew a lot. In January, local governments already issued 484.4 billion yuan of newly-added special bonds, accounting for 33.2%, or almost one-third, of the advanced allocation of 1.46 trillion yuan. Among the new bonds, about 30% were spent on infrastructure related to city planning and industrial parks, 20% on the construction of transportation infrastructure, 20% on fields related to social construction like education, healthcare and elderly care, and the remaining 30% was spent on other fields. We have launched this policy as part of implementing in advance the decisions and plans of the CPC Central Committee . The results in January were relatively good. In the following months, we will continue to provide guidance to local governments and help them speed up the use of funds, so as to accomplish the work as soon as possible and better promote economic growth.

Thank you.

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ThePaper.cn:

Affected by the pandemic, some local pensions are in deficit. How does the MOF ensure pension funds are paid on time and in full? This year, a unified elderly-care insurance system for enterprise employees will be implemented nationwide. How is this progressing? Thank you.

Liu Kun:

I'd like to stress first and foremost that the pension funds for retired people can be paid on time and in full everywhere in China. Next, Vice Minister Yu Weiping will answer your questions with some more details.

Yu Weiping:

Pension funds are the money that Chinese people entrust to the government to use for their basic living. The public pays great attention to the running of pensions. Let me give you some statistics. Preliminary data shows that the cumulative balance of social security funds nationwide totaled 4.8 trillion yuan, which can cover payments for more than 14 months. The revenue into social security funds exceeds expenditures, and like Minister Liu Kun said, the payment of pensions is guaranteed to be on time and in full. 

We need to properly manage and use pension funds, so as to ensure that the hundreds of millions of elderly people can be well cared for. This manifests the practice of a people-centered development philosophy within finance departments. In recent years, we have adopted a series of measures to ensure the elderly across the country receive their pensions on time and in full. 

The first is to increase the central government's subsidies. Since the implementation of the unified pension fund system in 1998, the central government has been increasing subsidies to the basic pension funds for enterprise employees. In 2021, the central government arranged subsidies of more than 600 billion yuan to support local governments to ease the pressure on fund revenue and expenditure.

The second is to increase the adjustment ratio. In 2021, the central adjustment ratio of basic pension funds for enterprise employees was increased to 4.5%, and the total scale of the adjustment has reached more than 930 billion yuan. The central government focused on supporting provinces with prominent revenue and expenditure problems – so China's central and western regions, as well as provinces with old industrial bases, have benefited with more than 210 billion yuan.

The third is to transfer state-owned capital to enrich social security funds. At the central government level, a total of 1.68 trillion yuan of state-owned capital from 93 central government enterprises was transferred to the funds.

The basic pension funds for enterprise employees is coordinated, and the funds complement each other across the country, which is conducive to giving full play to the funds' scale and enhancing their support capacity. This work was officially implemented on Jan. 1 this year. At present, we are speeding up the research and formulation of relevant supporting documents, measuring the scale of fund allocation, rationally adjusting the surplus and deficit of funds between regions, strengthening the tracking and guidance for local implementation work, adjusting and improving policies and measures in a timely manner, and getting the job done earnestly. Thank you.

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Chen Wenjun:

One last question.

China Daily:

The year 2021 was the first year for China to win the battle against poverty, as scheduled. I would like to ask what efforts the MOF has made in consolidating and expanding the achievements of poverty alleviation? What new plans will be taken in these aspects this year? Thank you.

Liu Kun:

Thank you for your questions. Poverty alleviation is the biggest concern of General Secretary Xi Jinping. The year 2021 was the first year of the transition period after China won the battle against poverty. The MOF has borne in mind General Secretary Xi Jinping's instruction of consolidating and extending the achievements of poverty alleviation while shifting toward, and pushing forward, all-around rural vitalization. We have maintained the overall stability of the central government's financial support policies, supported and firmly held the bottom line of preventing a large-scale return to poverty, and continued to push forward the economic and social development of poverty-alleviated regions.

First, we increased input. In 2021, the central government arranged 156.1 billion yuan of subsidies for shifting toward, and pushing forward, rural vitalization, an increase of 10 billion yuan from the central government's original poverty relief fund in 2020. We actively ensured funding for industry assistance. During the critical period of the battle against poverty, we gave transfer payments to 832 poverty-stricken counties. During the transition period, we continued to give transfer payments to poverty alleviated areas to ensure they get enough much-needed supplies to accelerate development. And we will continue to increase the funds in this regard.

Second, we highlighted precision. We promulgated the management measures for the central government's follow-up funds, which clearly defined the content of support and the negative list, meaning that this money can't be used in other aspects. We continued to delegate the approval authority for funding projects to counties. We continued to support poverty-alleviated counties to carry out pilot projects for the integration of agriculture-related funds, continued to implement policies such as tax incentives and government procurement, and provided institutional guarantees for the consolidation and follow-up work. 

Third, we tracked the effects and results. We strengthened the performance evaluation of the central government's follow-up funds, and encouraged all regions and departments to manage and use the follow-up funds well. We supported the improvement of the monitoring and assistance mechanism to prevent the return to poverty, gave priority to supporting the development of characteristic and advantageous industries in poverty-alleviated areas, and helped the poverty-alleviated people continue to increase their incomes. We also increased follow-up support for families relocated from inhospitable areas and improved work and living conditions in poverty-alleviated areas. 

With the joint efforts of all departments, positive results were achieved in consolidating and extending the achievements of poverty alleviation while effectively shifting and linking with rural vitalization, and the bottom line of preventing a large-scale return to poverty was guarded. According to the monitoring data, the income among people lifted out of poverty has continued to grow, and their per capita net income in 2021 was estimated to exceed 12,500 yuan. People's lives have been further improved.

General Secretary Xi Jinping has pointed out that the premise of rural vitalization is to consolidate the achievements of poverty alleviation, and we must continue to pay close attention to it. The central government will further strengthen the guarantee of input, and give priority to areas where the task of consolidating the achievements of poverty alleviation is heavy and the foundation to promote rural vitalization is weak. We will continue to enhance the ability of independent development in poverty-alleviated areas so that people's lives will become more and more prosperous. Thank you.

Chen Wenjun:

Thank you to Minister Liu Kun and to the two vice ministers. Also, thank you, friends from the media. That's it for today's press conference, goodbye.

Translated and edited by Zhang Liying, Wang Qian, Wang Yiming, Ma Yujia, Cui Can, Yuan Fang, He Shan, Zhang Jiaqi, Wang Wei, Duan Yaying, Huang Shan, Li Huiru, Yang Xi, Liu Qiang, Zhu Bochen, Wang Yanfang, Liu Sitong, Chen Xia, Zhang Rui, David Ball, Tom Arnstein, Jay Birbeck. In case of any discrepancy between the English and Chinese texts, the Chinese version is deemed to prevail.