Read in Chinese

Speakers:

Mr. Lan Fo'an, minister of finance

Mr. Liao Min, vice minister of finance

Mr. Wang Dongwei, vice minister of finance

Ms. Guo Tingting, vice minister of finance

Chairperson:

Ms. Shou Xiaoli, director general of the Press Bureau of the State Council Information Office (SCIO) and spokesperson of the SCIO

Date:

Oct. 12, 2024

Shou Xiaoli:

Ladies and gentlemen, good morning. Welcome to this press conference held by the State Council Information Office (SCIO). Today, we have invited Mr. Lan Fo'an, minister of finance, to brief you on intensifying countercyclical adjustment of fiscal policy to promote high-quality economic development, and to answer your questions. Mr. Liao Min, Mr. Wang Dongwei and Ms. Guo Tingting, all vice ministers of finance, are also present today.

Now, I'll give the floor to Mr. Lan for his introduction. 

Lan Fo'an:

Hello, friends from the media. It is a great pleasure to have the opportunity to speak with you today. First of all, on behalf of the Ministry of Finance (MOF), I would like to extend my sincere gratitude to you for your long-term interest in and support for the finance work. I would like to begin by sharing with you the implementation of the proactive fiscal policy so far this year, and outline our overall plans for intensifying countercyclical adjustment of fiscal policy and promoting high-quality economic development.

Since the beginning of this year, the financial departments have thoroughly implemented the requirements of the Central Economic Work Conference. We have appropriately enhanced the intensity of our proactive fiscal policy and improved its quality and effectiveness. We have used a mix of policy tools such as deficits, special-purpose bonds, ultra-long special treasury bonds, tax cuts, fee reductions and fiscal subsidies. Additionally, we have intensified our fiscal policy, strengthened support for key sectors, and actively prevented and mitigated risks, promoting sustained economic recovery and growth. These efforts can be mainly summarized in the six following areas:

First, we have expanded fiscal spending. The deficit this year is set at 4.06 trillion yuan, an increase of 180 billion yuan over the 2023 budget figure. The quota for local government special-purpose bonds is 3.9 trillion yuan, up by 100 billion yuan from last year. 1 trillion yuan of ultra-long special treasury bonds has been approved for issuance in 2024, and the additional treasury bonds issued in 2023 have been well utilized. Total general public expenditure in the government budget in 2024 are projected to reach 28.55 trillion yuan, maintaining a relatively high spending intensity, thereby providing strong support for high-quality development.

Second, we have optimized tax and fee relief policies. We have fully implemented the structural tax and fee reduction policies, and continued with measures such as additional tax deductions for R&D expenses, additional VAT deductions for advanced manufacturing enterprises, and tax reductions and exemptions for the application of scientific and technological advancements. The preferential tax policies for manufacturing enterprises to upgrade their technologies have also been improved. From January to August, tax reductions, fee cuts and tax rebates related to policies supporting sci-tech innovation and manufacturing development exceeded 1.8 trillion yuan.

Third, we have actively expanded effective domestic demand. We have urged local governments to effectively use the additionally issued treasury bonds to support post-disaster reconstruction and enhance capacity for disaster prevention, mitigation and relief. We have ensured the proper issuance and use of ultra-long special treasury bonds to support major national strategies and build up security capacities in key sectors. We have also actively promoted large-scale equipment upgrading and consumer goods trade-in programs. Additionally, we have continuously enhanced the management of local government special-purpose bonds, appropriately expanding the range of areas and uses to which funds from the sale of such bonds can be channeled, thus supporting local governments in strengthening key sectors that have weaknesses. From January to September this year, 3.6 trillion yuan in new special-purpose bonds was issued, with more than 260 billion yuan used as project capital, supporting over 30,000 projects.

Fourth, we have redoubled our efforts to ensure that, at the primary level, the "Three Guarantees" (guaranteeing basic living needs, payment of salaries and government functioning) are met, and that key sectors are secured. Following the requirement that Party and government institutions must get used to keeping their belts tightened, we have strictly controlled general expenditures, ensuring more funds are available for basic living needs, salaries and government functions as well as key sectors. In 2024, the central government's transfer payments to local governments were set at more than 10 trillion yuan. Specifically, transfer payments for ensuring equal access to basic public services increased by 8.8%, and those for rewards and subsidies to ensure basic funding for county-level governments rose by 8.6%. By doing so, we have provided greater fiscal support for local governments to ensure that, at the primary level, the "Three Guarantees" are met. We have increased support for sci-tech development, all-round rural revitalization and ecological conservation. Specifically, central government expenditures on science and technology were set to increase by 10%, central government subsidies for rural revitalization were set at 177 billion yuan, and 65.1 billion yuan was approved for pollution prevention and control. Moreover, we have refined the fiscal and tax support policies aimed at promoting coordinated regional development, and actively implemented regional development strategies such as the promotion of the coordinated development in the Beijing-Tianjin-Hebei region, the development of the Yangtze River Economic Belt, and the integrated development of the Yangtze River Delta.

Fifth, we have bolstered support to ensure basic living needs. Since the beginning of this year, the central government has approved 66.7 billion yuan for employment subsidies, supporting local governments in their efforts to ensure employment and vocational skills training for key groups such as college graduates. From January to September, education spending nationwide reached 3 trillion yuan. We have increased national basic pensions for retirees by 3% compared to 2023 and significantly raised the minimum basic old-age benefits for rural and non-working urban residents. We have raised the annual per capita government subsidies for basic public health services to 94 yuan and annual per capita government subsidies for basic health insurance for rural and non-working urban residents to 670 yuan. Going forward, we will further boost expenditures in relevant areas based on the changing demographics as well as the diverse and multifaceted needs of our people, so as to deliver more benefits to them.

Sixth, we have made real efforts to defuse local government debt risks. We have ensured that the primary responsibilities of local governments are fulfilled, implementing tailored risk defusing measures for each province. In addition to the over 2.2 trillion yuan local government debt limit approved by the central government in 2023, an additional 1.2 trillion yuan has been approved for 2024 to support localities, especially high-risk regions, in defusing risks caused by existing debts and settling overdue payments owed to enterprises. Overall, local government debt risks have been mitigated, signaling further progress in risk defusing.

In general, the proactive fiscal policy has delivered remarkable results. It has provided effective support for the implementation of major national strategic tasks and has enabled the economy to achieve an overall stable performance while making progress. Currently, favorable conditions for China's economy remain unchanged, including its robust economic fundamentals, vast market size, strong economic resilience and huge potential. In the meantime, the country's economic performance has also encountered new situations and issues. For example, the growth rate for revenue of the national general public budget is lower than expected. Therefore, the public is concerned whether the country's annual budget target can be met. Here, I can assure you in a responsible manner that China's fiscal system is resilient enough and, by taking comprehensive measures, can achieve a balance between revenue and expenditures, meeting the annual budget target. Please don't worry!

In line with the decisions made at the meeting of the Political Bureau of the CPC Central Committee on Sept. 26, the MOF is expediting the implementation of confirmed policies. Building on this, we will further focus on stabilizing growth, expanding domestic demand and defusing risks. In addition, we will introduce a package of targeted incremental fiscal policy measures mainly in the following areas:

First, more effort will be made to support local governments with dissolving debt, increasing the debt ceiling on a relatively large scale and assisting local governments to alleviate hidden debt, so that they can have greater capacity and fiscal space to promote growth and ensure people's well-being.

Second, special treasury bonds will be issued to support large state-owned commercial banks in replenishing their core tier 1 capital. This aims to enhance the banks' risk resilience and lending capacity to better serve the development of the real economy.

Third, a set of tools will be applied, including local government special-purpose bonds, special funds and taxation policies, in a bid to support the property market in resuming growth and returning to stability.

Fourth, support for key groups will be increased. Before this year's National Day holiday, one-time living subsidies were distributed to people who are facing difficulties. Moving forward, the country will raise the standard of financial aid for college students, so as to enhance the overall capacity of consumption.

I'd also like to add that the fiscal counter-cyclical adjustments are certainly not limited to these four areas. These are just the policies that have already entered the decision-making process. We are currently also exploring other policy tools as well. For instance, the central government has a relatively large capacity for debt financing and raising the deficit.

That concludes my briefing. Next, my colleagues and I are more than happy to take your questions. Thank you.

Shou Xiaoli:

Thank you, Mr. Lan. The floor is now open for questions. Please identify the media outlet you represent before asking questions.

Xinhua News Agency:

The Political Bureau of the CPC Central Committee recently held a meeting and underscored the need to ensure necessary government expenditures. What specific measures will the MOF take in this regard? Thank you.

Lan Fo'an:

Thank you for the question. Since the beginning of this year, the MOF has earnestly implemented the proactive fiscal policy, appropriately enhanced the intensity of the policy as well as has improved its quality and effectiveness. We have also strengthened guarantees with funding for people's basic livelihood and other key sectors, while maintaining a robust level of government expenditures. As a result, fiscal operations have remained generally stable and orderly, with critical expenditures being better ensured. Here are some statistics for your reference:

From January to September, general public expenditures increased by 2% year on year to 20.18 trillion yuan. Specifically, spending on social security and employment rose by 4.3%; expenditures on education rose by 1.1%; expenditures on agriculture, forestry and water conservancy increased by 6.4%; expenditures on urban and rural communities rose by 6.1%; and housing support spending rose by 2.5%. In contrast, the national general public budget revenue is lower than the target set at the beginning of the year. Thus, we will take multiple measures and comprehensive policies to achieve a balance between revenue and expenditures. As I mentioned earlier, the MOF needs to raise fiscal revenue in accordance with laws and regulations, while also avoiding the collection of tax not prescribed by law and effectively safeguarding the rights and interests of business entities. In the meantime, the MOF will work to maintain a robust level of mandatory government expenditures as well as ensure necessary and sufficient funding for key sectors. It will better leverage the role of fiscal counter-cyclical adjustments and work to accomplish the country's annual economic and social development goals. Our measures in this regard lie in the following three aspects:

First, the MOF will effectively provide additional fiscal resources. The central government has allocated 400 billion yuan from carryover quotas for local government debts. The move aims to provide additional fiscal resources for local governments, supporting them in alleviating existing debt from government investment and settling overdue payments owed to private businesses. The MOF will encourage regions with favorable conditions to put idle assets into good use, to strengthen management of state-owned enterprises' profits and to work toward increasing fiscal revenue. The MOF will also guide local governments with using budget stabilization adjustment funds and other idle funds in accordance with laws and regulations to meet the demands of safeguarding government expenditures.

Second, the MOF will effectively ensure expenditures on key sectors. In line with the directive that Party and government institutions must get used to keeping their belts tightened, the MOF will strictly control general expenditures, directing more funds to address shortcomings, strengthen weaknesses and deliver benefits to the people, so as to ensure that key expenditures will not be reduced. As you can see from the figures mentioned earlier, expenditures on key sectors have all maintained a high level of growth. In addition, the MOF will strengthen support for expenditures on critical sectors such as science and technology as well as education. It will better implement polices related to people's well-being, such as raising the basic old-age benefits for rural and non-working urban residents and the annual per person government subsidies for basic public health services. The MOF will also effectively support key strategies such as all-round rural revitalization, green development and coordinated regional development, ensuring the sound implementation of various policies set by the CPC Central Committee.

Third, the MOF will fully and properly utilize various debt funds. At present, the use of additional treasury bonds is being accelerated, and ultra-long special treasury bonds are also being issued and utilized. In terms of special-purpose bonds, there is a total of 2.3 trillion yuan in special-purpose bond funds available for use from October to December of this year. This total is with the pending issuance quota and funds that have been issued but not yet put to use. The MOF will urge local governments to effectively make good use of various funds from bond issues, expedite project implementation and ensure the timely allocation of funds based on actual needs. By doing so, our aim is to achieve tangible results and to leverage local governments' empowering roles in driving investments. Thank you.

Nanfang Daily, Nanfang Plus:

Mr. Lan mentioned that the MOF will increase support for local governments to defuse hidden debt risks. Could you brief us on what measures will be taken and the next policy plans? In addition, there are rumors from the market that there will be fiscal policy quotas of several trillion yuan, and you just mentioned that you will significantly increase the debt ceiling to replace existing hidden debts of local governments. Could you provide more details in this regard? Thank you.

Lan Fo'an:

Thank you for your questions. Preventing and defusing local government debt is a major issue related to development and security, and the sustainable development of finance. Since 2015, the CPC Central Committee has required the establishment of sound and standard mechanisms for local governments to secure financing, opening wider the "front door" for local governments to raise funds in compliance with the regulations, while barricading the "back door" of borrowing money via methods that are illegal and against regulations, resolutely curbing the scale and expansion of hidden debt, steadily defusing existing debt, and effectively preventing debt risks. The MOF, along with relevant departments, has resolutely implemented and adopted a series of measures, including issuing local government bonds to replace outstanding debt, establishing closed-loop management for local government debt, promoting Beijing, Shanghai and Guangdong, where debt risks are relatively low, to achieve zero hidden debt, carrying out pilot debt relief projects in counties and districts with relatively high debt risks, and jointly preventing and defusing hidden debt risks of financing platforms, and strengthening the management of government investment projects with relevant departments. Party committees and governments at all levels have conscientiously assumed their principal responsibility, established a multi-departmental collaborative mechanism, coordinated the management of debts and the prevention and relief of debt risks, actively paid back debts by arranging fiscal funds and using assets and resources, and steadily defused government debt risks, making important progress.

Starting from the second half of 2022, debt risks and hidden dangers have emerged in some places due to various factors. In July 2023, a meeting of the Political Bureau of the CPC Central Committee stated that we should effectively guard against and defuse local debt risks, and formulate and implement a package of debt-clearing plans. The State Council established a work coordination mechanism to guide provinces to formulate specific debt-clearing plans. Relevant departments, Party committees and governments at all levels have stepped up their efforts and taken more pragmatic measures. The MOF set up a bond issuance quota of over 2.2 trillion yuan in 2023 to support localities and particularly high-risk areas, in addressing existing debt risks and clearing arrears owed to enterprises, alleviating the overall local government debt risks. Outstanding hidden debt registered on the government platform nationwide dropped 50% compared to five years ago at the end of 2023, and the risks are controllable.

Since 2024, after fulfilling relevant procedures, the MOF has arranged an additional 1.2 trillion yuan of quota to support local governments in clearing existing hidden debts and settling arrears to enterprises. In order to ease the pressure on local governments to defuse risks caused by debts, in addition to continuing to arrange a certain amount of quota in the new special bond limit each year to support the relief of existing government investment project debts, we planned to substantially raise the local government debt ceiling in one lump sum to pave the way for the replacement of existing hidden local debts, increase support for local governments to defuse debt risks. The relevant policies will be explained in detail to the public after going through the statutory procedures. It should be emphasized that this policy, which is about to be implemented, is the most powerful measure to support debt relief in recent years. This is undoubtedly a timely policy, and will greatly ease the burden on localities to defuse debt risks, release more resources for economic development, boost the confidence of business entities, and ensure that, at the primary level, basic living needs are met, salaries are paid, and governments function smoothly.

Next, the MOF will work with relevant departments to ensure that primary responsibilities of local governments in local debt clearing are fulfilled, guide local governments to steadily defuse hidden debt risks, and promote the transformation of financing platforms. At the same time, we will strictly investigate and hold to account those who violate laws and regulations on debt issuance and rectify them within a time limit. Any issuance of debt that is illegal or against regulations will be dealt with immediately, and those responsible will be held accountable to resolutely control the risk of hidden debt expansion.

As for the specific amount of policy arrangements you mentioned, we will make it public in a timely manner after going through the statutory procedures. Thank you.

TASS:

My question is about the real estate market. What are the considerations of fiscal policy measures in supporting the development of the sector? Thank you.

Lan Fo'an:

I would like to invite Mr. Liao to answer your question.

Liao Min:

Thank you for your question. Real estate is an issue of public concern. The MOF has worked in alignment with relevant departments to focus on promoting a balance between supply and demand in the real estate market, continuously optimizing fiscal and tax policies, promoting China's property market to return to a stable and healthy trajectory.

I will brief you on the policies that have been introduced in three areas: the demand side, the supply side and risk mitigation.

On the demand side, we are mainly working to support people's diverse housing needs and reduce housing costs. This includes the introduction of the phased personal income tax refund policy for "selling old and buying new" housing exchanges. For example, if the existing house is sold for 2 million yuan and the original value was 1 million yuan, the personal income tax payable is about 200,000 yuan, but if you sell it and then purchase another house worth more than 2 million yuan within one year, the personal income tax of 200,000 yuan already paid can be fully refunded. For another example, we have cooperated with relevant departments to cut the loan rates of individual housing provident fund by 0.25 percentage point. It is projected that this policy can save about 20 billion yuan in provident fund personal loan interest payments every year. These two policies have played an important role in reducing the financial burden on homebuyers and increasing housing demand.

On the supply side, we primarily support optimizing the provision of government-subsidized housing as well as securing people's basic livelihoods. Over the past three years, the central government has allocated 212.4 billion yuan in subsidies for government-subsidized housing projects and 280 billion yuan in central government budgetary investments. It has also coordinated local government special bonds to support the development of 6.66 million units of various types of government-subsidized housing that are aimed at meeting the basic housing needs of middle- and low-income urban groups, new urban migrants and young people. Additionally, we have supported the renovation of 160,000 old urban residential compounds, benefiting 27.25 million households, and have helped refurbished 4.2 million housing units in run-down urban areas, and urban villages and other dilapidated urban houses. This has played a crucial role in stabilizing investments, promoting consumption and improving people's livelihoods.

In terms of defusing risks caused by available housing, the MOF has collaborated in releasing the special loan policy for ensuring that overdue housing projects were completed, providing interest subsidies to 350-billion-yuan special loans. Since last year, we have pre-allocated 6.2 billion yuan in interest subsidies to safeguard the legitimate rights of homebuyers. We have also worked to enhance efforts to ensure the timely delivery of homes, to reduce available commodity housing, to leverage idle land and to prevent and mitigate risks in the real estate market, keeping expectations stable.

Regarding our next steps, the third measure that Mr. Lan just mentioned pertains to real estate policy. Moving forward, we will adhere to strictly controlling increase in new projects, optimizing available stock and improving quality. We will actively research and introduce policies that contribute to the stable development of the real estate market. Here, I'd like to share with you all three main considerations that the MOF has in mind:

First, we will allow the use of special bonds with land reserves. This is mainly due to the relatively large amount of idle, undeveloped land across the country. We will support local governments in using special bonds to acquire qualifying idle land reserves. Regions with pressing needs can also use these bonds for new land reserve projects. This policy can adjust the supply-and-demand balance within the land market, reduce idle land, better regulate and control land supply as well as ease liquidity and debt pressures on local governments and real estate companies.

Second, we will support the purchase of available housing to optimize the supply of government-subsidized housing. Considering that there is currently large completed yet unsold housing inventory, we will implement two supporting measures: One is to utilize special bonds to purchase available commercial housing that will be used as government-subsidized housing. The other is to continue using government-subsidized housing subsidy funds. Previously, these funds were primarily used to support new government-subsidized housing projects. Now, we are adjusting the focus by reducing the scale of new construction and supporting local governments in gathering government-subsidized housing sources through the absorption of available homes. These two measures will help reduce the unsold commercial housing inventory, balance supply and demand in the real estate market, and optimize the supply of government-subsidized housing to meet the needs of middle- and low-income groups.

Third, we will promptly optimize and improve relevant tax policies. According to the decisions and arrangements of the CPC Central Committee, we will clarify policies on value-added taxes and land appreciation taxes in line with the scrapping of standards for ordinary and non-ordinary housing. Moving forward, we will work out more policies to enhance support, adjust and optimize tax, and promote the stable and healthy development of the real estate market.

Promoting the stable development of the real estate market is a systematic project that requires the concerted efforts of various policies. In policy implementation, we will continue to strengthen synchronization between fiscal policy and other policies, enhance central-local coordination, and ensure the alignment between new and old policies. By employing a coordinated approach, we will unwaveringly work to stabilize the real estate market and curb further declines.

Thank you all.

National Business Daily:

We've noticed that some localities are facing increased pressure to ensure the "Three Guarantees" (guaranteeing basic living needs, payment of salaries and government functioning). Mr. Lan also mentioned the "Three Guarantees" earlier and they're something that people pay close attention to. What measures has the MOF taken this year to support local governments to ensure that, at the primary level, the "Three Guarantees" are met?"

Lan Fo'an:

Thank you for your question. Ensuring basic welfare, wages and government functioning, referred to as the "Three Guarantees," is a basic requirement for safeguarding the fundamental interests of the people and is also a core function of fiscal policy. In 2024, the MOF has continued to improve the management system for the "Three Guarantees," covering budget formulation, budget execution, dynamic monitoring and emergency response, and ensuring the stable operation of the "Three Guarantees" at the primary level. We have mainly taken the following four measures: First, we are strengthening fiscal support for the "Three Guarantees" at the primary level. In 2024, the central government has planned to allocate more than 10 trillion yuan in budgets for transfer payments to local governments and has urged local authorities to direct these funds to the primary level, prioritizing and fully funding budgets for the "Three Guarantees." Here, the term "primary" mainly refers to the county level. Second, we are establishing and improving work mechanisms. We follow the principle of "county-level responsibility, city-level assistance (as a safety net), provincial-level safety net and central-level incentives," ensuring that responsibilities are fulfilled at every level and that detailed emergency response plans for risks related to the "Three Guarantees" are in place. Third, we are enhancing treasury fund security. We have strengthened treasury management in financially struggling counties to ensure that funds for the "Three Guarantees" are available when needed. Fourth, we are strengthening monitoring of local fiscal operations. Leveraging an integrated budget management system, we now have real-time monitoring of all budget units and primary-level fiscal operations nationwide. We can clearly see how much treasury funds are available and track progress with the "Three Guarantees." We issue monthly risk alerts to local governments and urge them to take timely action when addressing any issues.

Overall, the "Three Guarantees" at the primary level are generally stable, although some areas are facing increasing fiscal pressures. Based on national estimates of financial resources at the primary level, the foundation for supporting the "Three Guarantees" is secure. For example, in 2023, around 50% of available local fiscal resources were allocated to the "Three Guarantees." When factoring in other mandatory expenditures, this figure rises to around 80%. The increased pressure in some regions is largely due to slower fiscal revenue growth, declining land transfer income, and the burden of local government debt.

Looking ahead, the MOF will continue to take practical and effective measures, establish a "Three Guarantees" checklist, and build a long-term mechanism to secure the bottom line at the primary level. The following five specific measures will be implemented:

First, clarifying responsibilities. Local Party committees and governments at all levels are the primary entities responsible for ensuring the "Three Guarantees" in their areas and they should regularly review and improve their support mechanisms. Functional departments are accountable for implementing policies within their fields and will work closely with financial departments to coordinate their efforts.

Second, boosting local financial resources. The central government will continue to increase general transfer payments to local governments through the annual budget. As mentioned earlier, this year, 400 billion yuan in debt limits were allocated to local governments to supplement their comprehensive financial resources, which is important for ensuring the "Three Guarantees." We will also streamline and standardize special transfer payments, optimize their structure, increase the share of general transfer payments, expand local tax bases, and moderately increase local tax management authority to enhance local financial autonomy.

Third, improving fund allocation. We will closely monitor local revenue, expenditure and cash balances. For areas facing tight cash flow, the central government will provide support by advancing fund allocations. Provincial financial departments will be urged to strengthen monitoring and ensure sufficient funds at the primary level, prioritizing the meeting of basic living needs, payment of salaries, and smooth functioning of governments.

Fourth, easing debt pressure. We will intensify efforts to restructure the hidden debt of local governments. As previously mentioned, we plan to implement a sizable debt limit, details of which will be released to the public once the legal procedures are completed. Additionally, we will allocate part of the annual local government special bond quota to supplement government funds, helping local governments manage debt risks.

Fifth, enhancing dynamic monitoring. We will establish an information-driven, intelligent monitoring system that covers the entire process of the "Three Guarantees." This system will track potential risks in real time, issue early warnings, and ensure problems are detected and addressed promptly. Thank you.

Reuters:

How can China's proactive fiscal policy be more effective in boosting consumption and preventing deflationary risks? Additionally, is there an estimate for the scale of this fiscal policy package? And how much room is there for the central government to leverage its finances?

Lan Fo'an:

Thank you for your questions. This year, we have focused more on the counter-cyclical role of proactive fiscal policy, maintaining strong fiscal spending, and continuously working to stimulate consumption and expand effective demand, especially in areas like boosting domestic demand, stimulate consumption and improving people's livelihoods. We have been actively working in three main areas:

First, increasing household income through a range of measures. We have steadily raised social security levels. In 2024, the minimum standard for basic pensions for urban and rural residents has been further increased, which was the largest increase in history. Pension levels for retirees have also been raised by around 3%, and per capita government subsidies for urban and rural residents' health insurance have been significantly increased. In addition to improving the tiered social assistance system, we distributed one-time living allowances before the National Day holiday to disadvantaged groups and individuals, such as people in extreme difficulties and orphans, to boost their incomes and enhance their capacity and willingness to spend.

Second, expanding government investment through multiple channels. As mentioned earlier, the issuance of 1 trillion yuan in ultra-long special treasury bonds, an additional 3.9 trillion yuan quota for local government special bonds, and 700 billion yuan in central government budget investment in 2024, combined with the additional government bonds issued in 2023, the total funds available for increasing government investment have significantly increased compared to last year, driving effective investment and expanding domestic demand.

Third, implementing the policy of large-scale equipment upgrades and consumer goods trade-ins. We have allocated around 300 billion yuan in ultra-long special treasury bonds, with local governments beginning to roll out specific operational measures since late August and early September. These measures focus on supporting key sectors, particularly equipment upgrades, enhancing local capacity to replace old consumer goods with new ones, driving investment growth, unlocking consumption potential and promoting industrial development.

Looking ahead, the MOF will continue to focus on targeted, precise policies. We will optimize fundamental policy mechanisms, improve residents' income expectations, and stimulate consumption potential. We will also make better use of special funds and interest subsidies on loans, improve the trade and circulation system, and enhance the consumption environment. Additionally, we will leverage government bonds to drive effective investment and expand domestic demand.

As for your second question regarding the central government's potential for fiscal leverage, I mentioned earlier that the central government has considerable room to increase debt and raise the deficit. Moving forward, we will follow the decisions of the CPC Central Committee, balance development and security, and take into account such factors as the economic situation, macroeconomic needs and the fiscal position. We will use debt policy tools appropriately to promote sustained economic development. Thank you.

Yicai:

Recently, the MOF has been studying the introduction of new measures for managing special bonds. Could you provide an update on the issuance and use of special bonds since the beginning of this year? What steps will be taken to strengthen management going forward? Thank you.

Lan Fo'an:

Thank you. I would like to invite Mr. Wang to answer this question.

Wang Dongwei:

Thank you for your question. In recent years, the MOF, along with relevant departments, has established and improved policies and systems for managing special bonds. We've guided local governments to enhance the quality of special bond projects. These bonds have played a crucial role in driving effective investment and stabilizing the macroeconomy. Since 2020, we've allocated a total of 18.7 trillion yuan for new special bonds, supporting about 130,000 government investment projects. As Mr. Lan mentioned earlier, in 2024, we have allocated 3.9 trillion yuan for new special bonds, the largest amount ever.

We've focused on leveraging government investment more effectively, and carefully organizing the allocation, issuance and use of special bonds. We've increased support for major economically developed provinces to use funds raised from the sale of special bonds. These funds will be weighed toward regions where projects are well-prepared and investments are more effective. We've also reasonably allocated special bond quotas to other regions to complete ongoing projects and implement national strategic initiatives. We've guided local governments to accelerate bond issuance and use, strengthening coordination and providing updates every 10 days. As of late September, 3.6 trillion yuan in new special bonds had been issued nationwide, 92.5% of the annual quota.

Building on this work, we aim to expand the scope of the use of special bonds, improve management mechanisms, maintain government investment intensity and pace, reasonably reduce financing costs, and promote high-quality development. Specifically, there are three key areas:

First, expanding the scope. This involves three main aspects. First, we will research and improve the management of lists of investments using funds from the sale of special bonds, increasing areas where funds can be used as project capital to maximize their usage. Second, we will make good use of special bonds to support the acquisition of existing commercial housing for affordable housing, as Mr. Lan and Mr. Liao mentioned, to support healthy real estate market development. Third, we will reasonably support forward-looking, and strategic emerging industry infrastructure to accelerate the development of new quality productive forces.

Second, strengthening mechanisms. We're studying ways to improve project management, creating a "green channel" for ongoing projects to ensure smooth transitions from planning to implementation. This will accelerate the issuance and use of special bonds, speed up project construction, and quickly generate tangible results. The goal is to effectively leverage government investment to guide and drive economic growth.

Third, tightening management. This involves three main aspects: First, we will improve the full lifecycle management of special bonds from borrowing to repayment, strengthen oversight of bond fund expenditures, and ensure project departments and units fulfill their responsibilities. Second, we will improve the management of asset account books for special bond projects, managing project assets by category to ensure a balance between government debt and project assets. Third, we will explore early repayments of special bonds, studying the establishment of a debt service reserve system to secure repayment sources. Thank you.

The Beijing News:

I have a question regarding students' financial aid policies. We've noticed that the MOF is currently studying ways to improve the financial aid system for college students, which is an important part of incremental policies. We'd like to know what new policies and measures are planned for the near future. Thank you.

Lan Fo'an:

I would like to invite Mr. Guo to answer this question.

Guo Tingting:

Thank you for your question. In recent years, the MOF, along with the Ministry of Education and other relevant departments, has continuously improved the student financial aid system covering all educational stages. We've steadily increased investment and gradually raised assistance standards to support students in focusing on their studies and personal development. Currently, China has established a comprehensive aid system led by the government with active participation from schools and the public. This system mainly includes state scholarships and grants, government-subsidized student loans, tuition reductions, living allowances and work-study programs. In 2023, government investment reached 93.2 billion yuan nationwide, benefiting over 31 million college students. Through policies such as loan interest subsidies, we supported banks in issuing 70 billion yuan in government-subsidized student loans.

As Mr. Lan mentioned earlier, in the next step, we will work with relevant departments to adjust and improve student financial aid policies in higher education in two phases, focusing on rewarding excellence and assisting those in need. In the first phase, we will introduce the following policies and measures in 2024:

First, the number of National Scholarship recipients will double. For undergraduate and junior college students, the number will increase from 60,000 to 120,000 per year. For master's students, it will rise from 35,000 to 70,000 annually, and for doctoral students, from 10,000 to 20,000 per year.

Second, scholarship funding standards for undergraduate and junior college students will be raised. The National Scholarship will rise from 8,000 yuan to 10,000 yuan per student annually, while the National Encouragement Scholarship will increase from 5,000 yuan to 6,000 yuan per student each year.

Third, the National Grant for undergraduate and junior college students will be raised. Starting in fall 2024, the average subsidy will increase from 3,300 yuan to 3,700 yuan per student annually.

Fourth, we will enhance support for national student loans. Loan amounts will increase, with the maximum loan for undergraduate and junior college students rising from 16,000 yuan to 20,000 yuan per student annually, and for graduate students from 20,000 yuan to 25,000 yuan. Additionally, interest rates will be lowered, set at 70 basis points below the market quotation rate for loans of the same category during the same period.

In the second phase, we will raise the standards for graduate academic scholarships in 2025. Additionally, the subsidy standards for the National Grant Program for regular high school students and secondary vocational school students will be increased, along with an expansion of coverage.

Moving forward, we'll collaborate with relevant departments to promptly introduce related policies and ensure their effective implementation. We'll make sure that funds are distributed to students in a timely manner, allowing the policies to take effect quickly and enabling students to benefit as soon as possible. Thank you.

21st Century Business Herald:

In 2024, China issued 1 trillion yuan in ultra-long special treasury bonds to fund critical national strategies and enhance security capabilities in key areas. How will the funds from these ultra-long special treasury bonds be effectively managed and utilized? Thank you.

Lan Fo'an:

I would like to invite Mr. Wang to answer this question.

Wang Dongwei:

Thank you for your question. Issuing ultra-long special treasury bonds to support critical national strategies and enhance security capabilities in key areas is an important fiscal policy this year. With a focus on effective implementation, the MOF promptly established a dedicated task force to ensure smooth coordination and orderly progress. First, we worked to ensure effective fundraising. By considering project timelines and bond market demand, we strategically designed bond types and established a reasonable issuance pace to meet project requirements, while avoiding idle funds and reducing costs. As of September's end, 752 billion yuan of ultra-long special treasury bonds had been issued, with rates remaining generally stable. Second, we accelerated fund allocation, promptly allocating budgets and disbursing funds based on project lists. Third, we strengthened fund oversight. Recently, the MOF issued interim measures for supervising these funds, listing specific requirements such as establishing a full life-cycle management system, implementing separate account management, setting up a debt repayment reserve fund, and strengthening performance management. We will adopt more rigorous and more concrete measures to ensure that the bonds are effectively managed and utilized.

Moving forward, we'll complete the issuance of 1 trillion yuan in ultra-long special treasury bonds as scheduled, promptly allocating budgets and disbursing funds. We'll strictly enforce fund supervision by establishing a coordinated oversight mechanism with industry regulators and local finance departments. We'll enhance tracking and monitoring, prohibit misappropriation of funds, and promptly address any violations, ensuring that these funds are used safely, properly and efficiently. Thank you.

Shou Xiaoli:

Please continue to ask questions. I see many more hands raised, but due to time constraints, we will take the last two questions.

CCTV:

As we just heard, Mr. Lan mentioned the plan to issue special treasury bonds to supplement the core Tier 1 capital of large state-owned commercial banks. Could you please explain the specific policy considerations behind this decision, and how will it be implemented going forward? Thank you.

Lan Fo'an:

I'd like to invite Mr. Liao to answer your questions.

Liao Min:

Thank you for your questions. Large state-owned commercial banks act as the main force to serve the real economy and the ballast to ensure financial stability. Currently, the six large state-owned commercial banks — Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications, and Postal Savings Bank of China — are operating steadily overall, with stable asset quality and sufficient provisions. Their key indicators are all within a "healthy range" according to international best practices. Notably, owners' equity has continued to grow, reaching 15.1 trillion yuan by the end of June 2024, a 2.9% increase from the beginning of the year. Capital strength is relatively robust, with an average core Tier 1 capital adequacy ratio of 12.3% as of the end of June 2024.

Large state-owned commercial banks, along with other financial institutions, bear the critical responsibility of supporting high-quality economic development and implementing key tasks concerning technology finance, green finance, inclusive finance, pension finance, and digital finance. Capital is the lifeblood of commercial banks' sustainable operations and is fundamental to promoting the growth of the real economy, facilitating economic restructuring, and guarding against various risks. As we know, in recent years, some small and medium-sized local banks have replenished their capital. Under current circumstances, we believe it's necessary to support large state-owned commercial banks in further increasing their core Tier 1 capital through appropriate channels. This will not only improve banks' capacity for prudent management but also amplify the leverage effect of capital, boosting lending capacity and enabling greater support to the real economy. This will offer stronger backing for the sustained recovery of the macroeconomy and help bolster market confidence.

Authorized by the State Council, the MOF is responsible for the unified performance of the function of state-owned financial capital investors, which includes establishing mechanisms for capital replenishment and dynamic adjustment for state-owned financial institutions. The MOF, adhering to the principles of marketization and the rule of law as well as the approach of "coordinated advancement, phased implementation and tailored strategies," will actively raise funds through channels, such as issuing special treasury bonds, to prudently and orderly support large state-owned commercial banks in further increasing their core tier-1 capital. We believe that through this initiative, the operating and profit-making capabilities of large state-owned commercial banks will be enhanced, thereby promoting the steady and sustained development of the entire national economy.

I'd like to inform you all of the most recent developments: the initiative has been launched. The MOF, in conjunction with relevant financial regulatory authorities, has established an inter-departmental working mechanism to efficiently assist large state-owned commercial banks in expediting the completion of related tasks. We are now awaiting the submission of specific capital replenishment plans from each bank, and all work is progressing in an orderly manner. Furthermore, I'd like to clarify that large state-owned commercial banks, as listed banks, will disclose their specific capital replenishment plans promptly and in compliance with relevant regulations. Thank you.

Shou Xiaoli:

The last question.

China Daily:

The third plenary session of the 20th CPC Central Committee made important arrangements for deepening the reform of the fiscal and tax systems. Could you please tell us what specific measures the Ministry of Finance will introduce next? Thank you.

Lan Fo'an:

Thank you for your question. The question of reform is of significant concern to everyone, especially after the third plenary session of the 20th CPC Central Committee made important arrangements for deepening the reform of the fiscal and tax systems. The session clearly outlined reform requirements such as "improving the budget system," "making taxation systems more conducive to high-quality development, social fairness and the building of a unified market," "establishing a fiscal relationship between the central and local governments that features well-defined powers and responsibilities, and the appropriate allocation of resources, with an optimum balance between regions" and "improving the systems for managing government debt." The Ministry of Finance is diligently studying the guiding principles of the third plenary session of the 20th CPC Central Committee, considering the effective implementation of reform tasks as a top priority in the present and future periods and is steadily advancing forward. Throughout the reform's implementation, we will focus on properly handling the relationships between the government and the market, the central and local governments, efficiency and fairness, overall and local interests, and long-term and current considerations. We strive to transform the strategic deployment of comprehensively deepening reform into a powerful force for advancing China's modernization. Specifically, there are three points:

First, we will promptly introduce the implementation plan for reform. We will adhere to problem-oriented and goal-oriented approaches, ensuring that the accelerated advancement of reforms is integrated with our efforts to strengthen scientific management of public finances. We will actively respond to public and grassroots concerns, elaborating on specific task lists for each reform task outlined in the plenary session and clearly defining timelines and priorities. We have preliminarily developed an implementation plan for deepening the fiscal and tax system reform, which will serve as the "blueprint" for future reforms.

Second, we will accelerate the implementation of reform measures. We adhere to a phased and step-by-step approach to steadily promote reforms, planning as a whole deadlines for the implementation of various reform measures. We plan to roll out this and next year a batch of mature and tangible reform measures, especially fundamental institutional reforms that are crucial for top-level design. These include improving the budget system, refining the fiscal transfer payment system and establishing a government debt management system with Chinese characteristics that aligns with high-quality development. This will gradually establish a reform outcome system where fundamental institutional reforms take the lead, followed by successive measures in specific areas.

Third, we will emphasize the combination of top-level design and grassroots exploration. Building upon clear reform principles and directions, we encourage and support relevant parties to innovate reforms based on local conditions. We have organized pilot projects for zero-based budgeting reform in central departments and plan to initiate trials for scientific fiscal management in certain regions. We will tailor reform pilots' content based on the characteristics of different regions and departments. With full respect to a pioneering spirit, we'll summarize reform experiences, replicate and promote them in a timely manner so as to intensify reforms in line with the times.

Next, the MOF will continue to implement reforms with relentless perseverance to actively and steadily form a favorable pattern where fiscal macro-control is more targeted, the budget system is more sound, the tax system is more optimized, the fiscal system is more perfected and fiscal development is more sustainable. Efforts will be made to provide a more solid fiscal guarantee for building China into a great modern socialist country in all respects through a Chinese path to modernization.

Thank you!

Shou Xiaoli:

Thank you, Minister Lan, thank you to all of the presenters and thank you to all friends from the media for your participation. That concludes today's press conference. Goodbye!

Translated and edited by Xu Xiaoxuan, Yuan Fang, Zhu Bochen, Wang Qian, Yan Bin, Mi Xingang, Wang Yanfang, Guo Yiming, Xiang Bin, Liu Caiyi, Wang Wei, Chen Xinyan, Huang Shan, Li Huiru, Zhang Rui, David Ball, Rochelle Beiersdorfer, and Jay Birbeck. In case of any discrepancy between the English and Chinese texts, the Chinese version is deemed to prevail.