.

                                                                                                                                                              Read in Chinese

Speakers:

Mr. Liu Kun, minister of finance

Mr. Xu Hongcai, vice minister of finance

Mr. Zhu Zhongming, vice minister of finance

Chairperson:

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

Date:

March 1, 2023

Chen Wenjun:

Ladies and gentlemen, good morning. Today, the State Council Information Office (SCIO) is holding the fifth press conference in the series "Embarking on the New Journey — A Government Perspective." We are honored to have invited Mr. Liu Kun, minister of finance, to brief you on how the Ministry of Finance (MOF) has implemented the major decisions of the 20th National Congress of the Communist Party of China (CPC), and take your questions. Also present at today's press conference are Mr. Xu Hongcai and Mr. Zhu Zhongming, both vice ministers of finance.

Now, I'll give the floor to Mr. Liu Kun for a brief introduction.

Liu Kun:

Ladies and gentlemen, friends, good morning. It's my great pleasure to meet with you face-to-face ahead of the "two sessions." First of all, on behalf of the MOF, I would like to thank friends from the media for your long-term interest in and support for public finance work. I'll take this opportunity to briefly introduce public finance work in 2022.

2022 was an extraordinarily significant year in the history of the CPC and our country. The 20th CPC National Congress was successfully convened, drawing up a grand blueprint for comprehensively building a modern socialist country. The CPC Central Committee with Comrade Xi Jinping at its core rallied and led the Chinese people in rising to challenges, steadily improving development quality, and ensuring overall economic and social stability. At a meeting held by the Political Bureau of the CPC Central Committee on April 29, 2022, General Secretary Xi Jinping emphasized that China should step up macroeconomic policy adjustment, take solid steps to keep economic performance stable, and strive to meet the economic and social development goals set for the whole year. Under the centralized, unified leadership of the CPC Central Committee, the MOF thoroughly implemented the guiding principles of the 20th CPC National Congress, adhered to the general principle of pursuing progress while ensuring stability, fully and faithfully applied the new development philosophy, accelerated efforts to foster a new development pattern, and implemented various fiscal policies early on for the steady recovery and growth of the economy. Revenue in the national general public budget reached 20.37 trillion yuan, an increase of 0.6% over 2021. Expenditure in the national general public budget reached 26.06 trillion yuan, an increase of 6.1%, providing necessary financial support for efficiently coordinating epidemic prevention and control with economic and social development.

First, we stepped up implementation of fiscal policies to maintain stable macroeconomic performance. We promoted the overall planning of financial resources, maintained a necessary level of spending intensity, and increased aggregate domestic demand while keeping a reasonable level of deficit ratio. We maintained the overall deficit ratio within 3% during the past five years to leave ample policy space for meeting new difficulties and challenges. We fully implemented tax and fee policies to support enterprises. Tax and fee reductions, tax refunds and cuts, and fee deferrals introduced last year totaled more than 4.2 trillion yuan, lowering the tax-to-GDP ratio in China from 17% in 2018 to 13.8% in 2022. We accelerated the issue and use of local government special-purpose bonds, and made good use of 502.9 billion yuan in the special bond spare quota in accordance with the law. We implemented robust and effective macro-fiscal control to help maintain stable macroeconomic performance.

Second, we strengthened funding and policy support for primary-level governments to maintain stable fiscal operations. In the past year, we prioritized fiscal operations at county and district levels, strengthened funding and policy support, and did our best to help primary-level governments maintain stable operation. In 2022, central government transfer payments to local governments reached 9.71 trillion yuan, representing a growth of 1.42 trillion yuan, or 17.1%. In the past five years, transfer payments to local governments totaled 40.66 trillion yuan, with an average annual growth rate of 8.4%, providing a strong support for guaranteeing the payment of salaries, normal operation of primary-level governments and the basic wellbeing of the people. We expanded direct allocation to prefecture- and county-level governments, with direct allocated funding increasing from 1.7 trillion yuan in 2020 to around 4.1 trillion yuan last year. On the whole, fiscal operations at county and district levels remained stable, laying a solid foundation for overall economic and social stability.

Third, we pursued innovation to promote the stability of industrial and supply chains. In 2022, national expenditure on science and technology hit 1,002.3 billion yuan, up 3.8% year on year, which guaranteed the capital needed for basic research and making breakthroughs in key and core technologies. Meanwhile, we optimized our policies. We raised the R&D expenses related additional tax deduction rate to 100% for small and medium-sized scientific and technological enterprises. We improved government procurement policies to support innovation. We implemented policies to provide temporary fiscal subsidies for domestic passenger flights. We supported a portion of national comprehensive freight hubs to shore up logistic chains in a bid to increase the tenacity of industrial and supply chains. 

Fourth, we advanced rural revitalization and strengthened the balanced and coordinated development between urban and rural areas and between different regions. Following the new development philosophy, we leveraged the roles of transfer payments and fiscal and tax policies to advance the coordinated development between urban and rural areas and between regions. We provided 40 billion yuan in subsidies for grain planters in three batches and allocated 10 billion yuan from central reserve funds to support drought relief, disaster mitigation, and ensuring autumn harvest. The central government increased the scale of subsidies for rural revitalization. We pushed forward the implementation of major regional strategies and the strategy for coordinated development between regions, increasing transfer payments to old revolutionary base areas, areas with large ethnic minority populations, border areas, and poor areas by 8.2%. 

Fifth, we met basic needs and helped those most in need to improve people's well-being. Upholding a people-centered development philosophy, we met people's needs as much as possible to ensure that public services are inclusive, meet essential needs, and ensure basic living standards for people in difficulty. We ensured expenditure on epidemic prevention and control to reduce the impact on production and daily life. We guaranteed key spending in ensuring people's well-being. The national capital invested in education, social security and employment, public health, as well as addressing air, water and soil pollution and improving rural environment increased by 5.5%, 8.1%, 17.8% and 13.8%, respectively. People's lives have continued to be improved. Since 2017, the national average subsistence allowance standards in urban and rural areas have grown by 39.2% and 62.4%, respectively. The per capita government subsidies for basic health insurance for rural and non-working urban residents increased from 450 yuan to 610 yuan.

Sixth, we deepened the reform of the fiscal and tax system and enhanced the quality and efficiency of governing and supervising finance. The oversight of finance and accounting is an important part of the Party and state oversight system. In our efforts to advance fiscal and tax reforms, we issued guidelines on advancing fiscal system reform at the sub-provincial level and stepped up with integrated budget management. We fulfilled our primary responsibilities in the oversight of finance and accounting and improved the supervision system for fiscal work, focusing on key points in supervision and emphasizing financial disciplines. In doing so, the ability to govern finance was steadily improved.

Ladies and gentlemen, friends from the media, the year 2023 marks the first year of fully implementing the guiding principles of the 20th CPC National Congress. The MOF will take studying and implementing the guiding principles of the 20th CPC National Congress as a primary political task at present and in the coming years. We should 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, and 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. We should stay confident in the path, the theory, the system, and the culture of socialism with Chinese characteristics. We should 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. We will prevent and control the COVID-19 pandemic and pursue economic and social development in a well-coordinated way, improve the quality of the economy while maintaining a moderate growth rate of GDP, and balance supply-side structural reform and expanding domestic demand. We will align economic policies with other policies and the domestic economic cycle with the international economic cycle and coordinate current and long-term development. Positive fiscal policies with expanded coverage and enhanced efficiency will facilitate the overall improvement of national economic performance to provide strong support for getting this endeavor to build China into a modern socialist country in all respects off to a good start. 

That's all for my introduction. Thank you. 

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.

Reuters:

Some local governments face a tight fiscal balance due to less revenue from land sales, anti-COVID spending, infrastructure expenditure, and pressure from maturing debts in large volumes. How does the MOF view this situation?

Liu Kun:

Your question includes many small ones. Thank you very much for your questions. First, I would like to brief you on the revenue and expenditure of local governments last year. In 2022, revenue in local governments' general public budget was 10.88 trillion yuan, an increase of 5.9% after deducting value-added tax (VAT) credit refunds. Expenditure in local governments' general public budget was 22.5 trillion yuan, an increase of 6.4% over the previous year. The fiscal performance of local governments was generally stable. With the improvement and adjustment of epidemic prevention and control policies, and the continuous effects of the package of policies and follow-up measures to stabilize the economy, the economy is expected to pick up, in general, this year, and the fiscal performance of local governments is expected to improve gradually.

Your question contains three small questions, which I would like to answer one by one.

Regarding revenue from land sales, a large part of the budgets of local government-managed funds come from land sale revenue. Looking at the budgets of local government-managed funds across the country, some revenue was transferred to the general public budget, accounting for about 15% of the budgets of local government-managed funds. Although there was a decline last year, the effect on expenditure in local governments' general public budget was controllable. The specific data is yet to be determined in the final accounts. However, suppose we estimate based on a decrease of about 2 trillion yuan in revenue from land sales in 2022. In that case, the affected financial capacity in local governments' general public budget will be about 300 billion yuan. I would also like to point out that revenue from land sales is gross revenue. When revenue decreases, there will also be a corresponding reduction in cost outlay, such as compensation for demolition and relocation. Since revenue and expenditure are interconnected, the revenue decline has no significant influence.

You also mentioned pressure from maturing debts in large volumes. Regarding debts, the liability ratio of statutory debt last year was about 50%, a relatively low level by global standards and in the economic world. The main problem regarding the debts of China's local governments is that they are distributed unevenly, with some regions facing higher debt risks and pressure to pay principal and interests. We have urged local governments to assume their primary responsibility for defusing local government debt risks to ensure no systemic risks arise. That's a bottom line we can hold to.

You also asked about the fiscal balance of local governments. Revenue in local governments' general public budgets grew by an average of 2.5% from 2020 to 2022, compared with a 2.1% decline last year. You also said it was falling and in a state of borderline sufficiency. It fell by 2.1% last year, many percentage points lower than the ten-year average. But you have to know that the financial capacity of local governments is not the same as local-level revenue in their general public budget. About 40% of local governments' financial capacity comes from transfer payments from the central government. In the past three years, transfer payments from the central government have grown at an average annual rate of 9.3%. I mentioned at the very beginning the average growth rate over the past five years, and here is that over the past three years. You can see that our transfer payments to local governments are growing. The 9.3% growth rate was 6.8 percentage points higher than the growth rate of revenue in local governments' general public budgets, effectively making up for the shortfall in local-level revenue. In terms of the execution of local budgets, local government expenditures have increased by an average of 3.4% in the past three years. Therefore, it is a state characterized by borderline sufficiency but an increasing aggregate. Local budgets are well executed. Thank you for your question.

21st Century Business Herald:

Government funds always play a leveraging role in effectively propelling the expansion of total investment. With special-purpose bonds being an important channel, will local governments issue more this year? In what fields will the bonds be mainly invested? You've just mentioned the funds should be used as soon as possible so that they can take effect early.

Liu Kun: 

Now let's give the floor to Vice Minister Xu Hongcai.

Xu Hongcai:

Issuing special-purpose bonds for local governments is essential for driving and expanding effective investment and maintaining macroeconomic stability. Since 2018, newly added special-purpose bonds for local governments have totaled 14.6 trillion yuan. Among them, newly added bonds in 2022 totaled 4 trillion yuan, including those enlisted in government budgets and allocated from unused quotas before in accordance with law, used to support the construction of 30,000 key projects. These projects helped strengthen the economic foundation, enhance areas of weakness, improve people's lives, expand investment, and propel social and economic development.

This year, we will step up proactive fiscal policies. According to the Central Conference on Economic Work, tools like deficits, special-purpose bonds, and interest subsidies should be better combined to guarantee the sustainability of government funds and control local government bond risks while supporting high-quality development. We will follow and implement the principles of the Central Conference on Economic Work, ensuring that the size of special-purpose bonds is kept within an appropriate range. We will ensure government investment does not diminish and that it better plays its leveraging role. The specific amount will be released during the annual session of the National People's Congress.

As for the question of the investment orientation and fields, this year, we will mainly support the construction of projects in the 11 fields set before. On this basis, we will expand the investment fields and the range of funds used as project capital appropriately. We will step up the construction of key projects continuously, make solid achievements, and form the driving force of investment to support high-quality development effectively. These tasks will be further deployed and arranged later. Thank you.

China Securities Journal: 

The MOF recently issued a bulletin on accounting quality inspection. According to it, over 170 accounting firms were punished. We see that the supervision of auditing firms has become stricter and the redline of financial discipline has become more apparent. My question is, what will the MOF do to enforce financial discipline this year? Thank you.

Zhu Zhongming:

Thank you for your attention to financial and accounting supervision. The CPC Central Committee and the State Council attach great importance to this work and General Secretary Xi Jinping has made important instructions on tightening financial discipline and enhancing financial and accounting supervision on different occasions. The MOF has followed and implemented the guiding principles of the important instructions, fulfilled the primary responsibility of financial and accounting oversight, tightened up financial discipline and played an important role in exercising full and rigorous Party self-governance, ensuring financial order, and promoting high-quality social and economic development. 

Recently, the central authorities released a document on enhancing financial and accounting supervision, which stipulated the main aspects of the work, such as establishing a supervision system, developing sound mechanisms, and so on. It is significant in advancing the work in the new era and enforcing financial discipline. The MOF will follow and implement the document, focus on the main responsibility of supervision, clarify incentive and constraint mechanisms, have zero tolerance towards violations of laws and rules and never let financial discipline exist in name only.

In 2023, we will conduct special campaigns on financial and accounting supervision and make efforts in the following three key areas: 

First, we will ensure the implementation of major decisions and deployments made by the CPC Central Committee and the State Council. We will prioritize this on the agenda of financial and accounting supervision work. We will strictly investigate and handle financial infractions that violate the central government's macro decisions, governance, and regulatory requirements and impact the high-quality development of the economy and society. We will ensure that the central government's policies and decisions are implemented smoothly. 

Second, we will adopt more stringent financial discipline and restrictions. We will focus on implementing tax-and-fee policies , tightening the belts of the Party and government institutions, and stepping up efforts to ensure payment of salaries, normal operations, and the basic well-being of the people at the community level. We will also enhance restrictions and supervision and tighten financial discipline.

Third, we will crack down hard on financial and accounting violations. We will adhere to the principles of adopting powerful measures, closing loopholes, imposing severe punishments and promoting integrity. We will strengthen supervision of the quality of accounting information and intermediary institutions' performance, strictly investigate and handle violations such as financial fraud and accounting deceit, resolutely eliminating the "black sheep." 

You mentioned that the MOF punished more than 170 accounting firms last year, which is more than the total of the previous three years. This year, we will intensify our efforts in this regard. In addition to the MOF's direct inspection of 35 accounting firms and 10 asset evaluation agencies, we will organize financial departments nationwide to conduct inspections with broad coverage. We will rigorously handle and punish any breaches uncovered during inspections in accordance with laws, promptly publish inspection announcements and typical cases, and strengthen financial discipline, making it an untouchable "high-voltage wire." Thank you.

The Paper:

Mr. Liu noted that China cut 4.2 trillion yuan in taxes and fees last year, hitting a record high. How will the preferential policy of tax and fee reductions continue and be improved this year? Thank you. 

Liu Kun:

I will invite Mr. Zhu to answer this question about tax and fee reductions. 

Zhu Zhongming:

Thanks for your question. In 2022, facing the triple pressures of shrinking demand, disrupted supply and weakening expectations, the CPC Central Committee with Comrade Xi Jinping at its core exercised overall leadership, made sound decisions, improved and innovated macro regulation, promptly and decisively implemented a new package of tax-and-fee policies, which helped cultivate and develop business entities, and promote economic recovery. 

The tax and fee reduction policies implemented last year had the following three features:

The first was intensive efforts. Tax and fee reductions, as well as tax refunds and postponed tax and fee payments introduced last year, totaled more than 4.2 trillion yuan, including approximately 2.46 trillion yuan in value-added tax (VAT) credit refunds, which is 3.8 times more than that of 2021. This was the most substantial effort in recent years. 

The second was early implementation. Efforts were made to refund substantial VAT credits at a bigger scope and faster pace, with most completed in the first half of last year. The outstanding VAT credits for the year were refunded in advance by the second quarter. Various preferential policies were implemented early for quick effect.

The third was more coordination. We strengthened coordination and connection and successively introduced a package of policies, including granting small taxpayers exemptions from VAT payments, temporary postponement of social insurance premium payment, and purchase tax reductions on certain passenger vehicles. These policies were designed to ease difficulties and promote synergies.

Tax cuts and fee reductions get right to the spot in tackling the pains and difficulties currently troubling business entities and apply a "fertilizer" to the roots of their development. The effect of easing the burdens and difficulties is quite obvious. We compiled statistics and found that in 2022, the tax burden of 100,000 key tax source enterprises across the country dropped by 2.7% per 100 yuan revenues. As Mr. Liu Kun just reported, the proportion of China's tax revenue in GDP dropped to 13.8% last year. After excluding the one-time factor of large-scale VAT credit refunds, the tax burden level was about 15%. This has increased cash flow and enhanced development vitality for enterprises, making them more resilient in responding to risks and challenges.

In 2023, various tax-and-fee policies will still play a significant role in helping enterprises ease their difficulties and maintaining major economic indicators within an appropriate range. We will take into account the bearing capacity of finance and the need to ease the difficulties of businesses, study and clarify policies as soon as possible, ensure they are implemented, and promote the formation of a positive circle of "building a deeper pool to farm more fish."

First, we will fully implement all existing policies. We will continue to implement the tax cut and fee reduction policies that have been clearly outlined. We will take solid steps to ensure that tax and fee reductions take full effect. At the same time, we will act firmly against tax evasion and tax fraud, and resolutely deter arbitrary charges.

Second, we will refine and improve our preferential policies. In terms of existing measures such as tax cuts, fee reductions, tax refunds, and tax deferrals, we will focus on continuing and optimizing these measures so that these policies can better benefit business entities.

Third, we will further enhance the precision of our policies. We will focus on support for MSMEs, self-employed individuals, and industries in extreme difficulty and create momentum and vitality for micro-entities' development. Thank you.

Kyodo News:

From a macroeconomic point of view, General Secretary Xi Jinping places great importance on expanding domestic demand. Which policies are particularly critical in achieving this goal? For instance, purchase subsidies for new-energy vehicles have been terminated. From what aspects will the MOF use fiscal policy resources to drive the expansion of consumption? Thank you.

Xu Hongcai:

You raised a very important question because consumption is a key engine of economic growth and the ultimate aim of people's work and lives. The report to the 20th CPC National Congress pointed out that the fundamental role of consumption in stimulating economic growth should be leveraged. Clear requirements were put forth at the Central Economic Work Conference for prioritizing consumption recovery and expansion. A few years back, the contribution of final consumption to China's economic growth was more than 60%. However, the consumption growth rate has declined due to factors such as the epidemic in recent years. This is also an important reason for slower economic growth.

Promoting consumption is crucial for driving economic growth and ensuring sustained and healthy economic development. Restoring consumption as soon as possible is the main driving force of economic growth. The key to vigorously improving consumer confidence and unleashing consumption potential is to address acute issues such as limited spending power, inconvenient consumption, and reluctance to spend. Financial departments will fully implement the strategy of expanding domestic demand and actively improve policies and measures centered on better exploiting the fundamental role of consumption. We will start from the following three aspects to stimulate consumption potential to further support and promote the recovery and upgrading of the consumer market.

First, we will strive to increase personal income through various channels to ensure ordinary people have more money to spend. We should do everything possible to increase employment, enabling people to create income through hard work. We will expand social security, transfer payments, and other adjustments to improve the consumption capacity of medium- and low-income residents while improving tax and fee preferential policies to stimulate social consumption potential.

Second, we will support efforts to increase the supply of readily marketable products to enhance people's willingness to consume. By adopting proactive fiscal policies and advancing supply-side structural reform, we will continue to improve domestic supply quality to unleash market demand's potential. We will encourage localities with the right conditions to support, through current financial channels, the replacement of old home appliances as well as the purchase of green and smart home appliances in rural areas. We will continue to waive vehicle purchase tax for new-energy vehicles purchased in 2023 and lower import tariffs for some quality consumer goods. We will speed up establishing a housing system with multiple types of suppliers, multiple channels for housing support, and encouragement for renting and buying. We will also support people in buying their first homes or improving their housing situation. With all these efforts, we will actively expand consumer spending.

Third, we will ensure smooth sales channels and logistics services to make people's consumption convenient. We will facilitate action to develop county-level commerce to upgrade and expand consumption at the county level. Support will be given to develop the supply chain system for agricultural products and expand the consumer market for agricultural products. We will support the construction of a batch of national integrated freight transport hubs to reduce costs and improve efficiency in logistics. Thank you.

China News Service:

Fiscal revenue and expenditure this year have attracted wide attention. Can you provide a brief analysis? How will funding for key areas, such as ensuring people's livelihoods, be affected this year? Thank you.

Liu Kun:

You raised a question of public concern. To speak on fiscal revenue and expenditure this year, considering all factors, I believe that we can expect the economy's overall recovery this year, and fiscal revenue is mainly affected by two factors. One is that the recovery of the economy will lead to an increase in fiscal revenue. The other is that because we launched VAT credits refunds on a large-scale last year, the base is relatively low correspondingly. The joint influence of these two factors will lay a foundation for a rebound in fiscal revenue. However, we must also note that the foundation for achieving China's economic recovery needs to be further consolidated, and fiscal revenue faces major uncertainties. In terms of fiscal expenditure, expenditures in key areas, including research and development in science and technology, rural revitalization, and eco-environmental protection, will increase undoubtedly. Greater support is needed to shore up weak links in elderly care, education, healthcare and other areas that are important to people's lives. Government spending is directed to support the coordinated development of regions and support local governments in their efforts to ensure payment of salaries, normal operations, and people's basic well-being; sufficient funding is required to provide transfer payments.

Although notable budgetary imbalances still exist in 2023, we will not cut our spending on basic living needs. We will do everything within our capacity to ensure continued increases in spending to meet basic living needs, make every effort to bring tangible benefits to the people, and ensure a more complete and lasting sense of fulfillment, happiness, and security for our people.

First, we will fully implement the employment-first strategy. We will make full use of the central government's employment subsidies to support reducing burdens, stabilizing jobs and increasing employment. We will facilitate the employment of young people, especially college graduates. We will support rural migrant workers, people lifted out of poverty, ex-service members and other key groups in finding jobs and starting businesses. We will continue to support vocational skills training to tackle structural unemployment.

Second, we will give priority to ensuring the development of education. Based on the 21 trillion yuan of government spending on education in the past five years, we have continued to improve the mechanism for government spending on education. For many years, government spending on education has remained above 4% of GDP. Just now, I mentioned that the share of tax revenue in GDP has decreased. Tax revenue is a major source of fiscal revenue. The share of fiscal revenue in GDP has been decreasing. Meanwhile, the share of spending on education in GDP should be kept basically stable. Therefore, that means the share of government spending on education in fiscal expenditure has increased over the past few years. We will enhance weak links in compulsory education, increase resources for public-interest preschool education via multiple channels, and support the improvement of regular high schools' basic conditions.

Third, we will enhance medical and health services. We will support the COVID-19 response in a new phase and improve the funding mechanism for basic medical insurance. We will deepen the reform of public hospitals to ensure that they genuinely serve the public interest and advance the unified management of basic medical insurance funds at the provincial level.

Fourth, we will improve social security. We will fully implement unified national management of basic old-age insurance funds for enterprise employees and take active steps to promote the development of private pensions. We will improve supporting measures to boost birth rates as well as fiscal policies and measures in response to the aging population. We will support people in buying their first homes and improving their housing situation. I remember that at a press conference held here before, a reporter asked about efforts to guarantee basic old-age insurance for enterprise employees. My answer was that all enterprise employees in China would be ensured of the insurance. Now, basic old-age insurance funds are guaranteed in the way that I mentioned then.

Fifth, we will continue to improve the ecological environment. We will speed up the efforts to launch projects for the holistic conservation and restoration of mountains, waters, forests, farmlands, grasslands, and deserts. We will support the actions to keep our skies blue, waters clear, and lands clean and facilitate the transition of major industries and sectors towards green and low-carbon development. Thank you.

Chen Wenjun:

The last question.

Xinhua News Agency:

Tightening the government's belt is both a solution in response to contemporary developments and a strategy with a far-reaching impact. How will the central government implement the requirement for Party and government organs to keep tightening their belts?

Liu Kun:

It is a very good question. In recent years, finance departments at all levels have implemented the guiding principle of hard work, plain living, and thrift in fiscal work. The effectiveness of fiscal funding has been enhanced to help the Party and government organs live on a tight budget. Take the central government, for instance. Central government departments have exercised strict management over departmental spending, cutting general expenditures for four consecutive years. In 2022, the budgetary spending of central government departments was planned to decrease by 2.1%, while the actual decrease reached 3.5% in budget execution. We have spent money where it can be used most efficiently to better ensure funding for key areas.

General Secretary Xi Jinping once pointed out that hard work, plain living, and thrift are important for continuing our journey to grow in strength and building on past success for new historic achievements. The remarks remind us that tightening the government's belt is a policy we must uphold as a long-term rather than a short-term measure. We should cut expenditures to reorient fiscal resources toward supporting local governments in their efforts to guarantee people's basic living needs and the interests of market players. The government should tighten its belt to let people live better lives. 

During the execution of the budget, an increase in government administrative charges and spending on official overseas visits, official vehicles and official hospitality will lead to a decrease in spending to meet basic living needs. Likewise, transfer payments to local governments may decline when central government expenditures rise. In this regard, we have stepped up efforts and balanced expenditure and revenue nationwide over the three years of the fight against COVID-19. We have spent money where it can be used efficiently and effectively and generally achieved good results. A decline in local revenues hasn't impacted national financial security.

Remaining committed to the instructions of General Secretary Xi Jinping, the MOF will continue to fully implement the requirement of living on a tight budget. We will be as "tight-fisted" and "calculating" as possible, and see that every cent is used where needed most.

First, tighten the budget. Second, strengthen budget execution. Third, make effective use of available fiscal funds. Fourth, carry out regular assessments.

Specifically, we will draw up a tighter budget, cut or cancel inefficient or ineffectual expenditures, and pool resources to ensure funding for tasks involving major national strategies.

We will tighten constraints on budgetary spending and keep additional items in budgets under strict control for which funds may be appropriated. In principle, we will not introduce new policies that increase spending, except for expenditures on emergency response and disaster relief items. Overspending and spending beyond the set standard are forbidden.

We will timely review and recall surplus funds to avoid funds sitting idle for a long period of time. The budget for projects with large carryover funds will be reduced.

We will conduct quarterly assessments of central government departments to evaluate their implementation of living on a tight budget and strengthen the application of assessment results. We will also urge local governments to actively advance the development of an assessment system in this regard to cut administrative costs. Thank you.

Chen Wenjun:

Thank you to Mr. Liu and all the other speakers. Thank you to all my friends in the media. Today's press conference concludes here. Goodbye.

Translated and edited by Zhang Liying, Wang Qian, Liu Jianing, Liu Sitong, Zhu Bochen, Zhang Junmian, Zhang Jiaqi, Wang Yanfang, Mi Xingang, Yuan Fang, Xu Xiaoxuan, Li Huiru, Yan Bin, Huang Shan, Xu Kailin, Ma Yujia, Li Xiao, David Ball, Tom Arnsten, and Jay Birbeck. In case of any discrepancy between the English and Chinese texts, the Chinese version is deemed to prevail.