Read in Chinese
Speakers:
Mr. Liao Min, vice minister of finance
Mr. Lin Zechang, director general of the Comprehensive Department of the Ministry of Finance (MOF)
Mr. Wang Jianfan, director general of the Budget Department of the MOF
Chairperson:
Ms. Shou Xiaoli, director general of the Press Bureau of the State Council Information Office (SCIO) and spokesperson of the SCIO
Date:
Jan. 10, 2025
Shou Xiaoli:
Ladies and gentlemen, good afternoon. Welcome to this press conference held by the State Council Information Office (SCIO), as part of the series "High-Quality Development Achievements of China's Economy." Today, we have invited Mr. Liao Min, vice minister of finance, to brief you on relevant developments and answer your questions. Also attending today's press conference are Mr. Lin Zechang, director general of the Comprehensive Department of the Ministry of Finance (MOF); and Mr. Wang Jianfan, director general of the Budget Department of the MOF.
Now, I'll give the floor to Mr. Liao for his brief introduction.
Liao Min:
Friends from the media, ladies and gentlemen, good afternoon. Thank you for attending today's press conference. And thank you all for your long-term interest in and support for our fiscal work. I would like to take this opportunity to brief you on the phased achievements of fiscal operations and policies in 2024, and the overall considerations for fiscal work in 2025.
In 2024, the finance departments, following the decisions and deployments of the Central Committee of the Communist Party of China (CPC) and the State Council, intensified existing and incremental policies to promote economic recovery and social stability.
First, the overall fiscal operation was stable and the budget was well implemented. September saw the implementation of a package of incremental policies and the stabilization of the macroeconomy. The growth rate of fiscal revenue turned positive for the month, improving month on month in October and November, while the data for December and the whole year is currently being compiled. In terms of expenditure, the finance departments strengthened resource coordination and maintained expenditure intensity. Key areas of expenditure have been well supported. Overall, a balance between revenue and expenditure can be achieved for the year.
Second, targeted policies were implemented, supporting the stable and healthy development of the economy and society. To promote consumption, in addition to implementing existing policies to support the building of commerce at the county level and other measures to expand domestic demand, we allocated 150 billion yuan ($20.62 billion) of ultra-long special treasury bonds in the second half of 2024 to support the trade-in of consumer goods. In particular, we increased subsidies for the scrapping and renewal of automobiles and trade-in of home appliances to ensure the discounts reach consumers directly. This is another good attempt to use large-scale central government funds for public consumption. In terms of expanding investment, three aspects need to be mentioned regarding bonds alone. Firstly, we issued a total of 4 trillion yuan of local government special bonds, including 3.9 trillion yuan newly issued in 2024 and 100 billion yuan carried over from 2023, with the scope of investment and project capital expanded. Secondly, we issued 1 trillion yuan of ultra-long special treasury bonds, of which 700 billion yuan was earmarked to support projects for implementing major national strategies and building security capacity in key areas. Thirdly, for the additional treasury bonds issued in 2023, most of the funds were used in 2024 to support post-disaster recovery and reconstruction, and to enhance disaster prevention and mitigation capabilities. In terms of ensuring people's livelihoods, we stepped up efforts to support low- and middle-income groups and special groups. For example, we raised the minimum monthly standards of basic pensions for urban and rural residents. The national scholarship and grant policies for college students were further improved and expanded, and living subsidies were also provided to people in difficulties. In terms of fostering new growth drivers, we vigorously supported technological innovation, promoted high-quality development of the manufacturing and modern service industries, accelerated the development of new quality productive forces, and facilitated industrial transformation and upgrading as well as the smooth transition between old and new growth drivers.
Third, we provided greater support for local governments to alleviate debt repayment pressure and enhance growth momentum. To support local debt risk resolution, we formulated and implemented the largest debt resolution package in recent years, with funds of 12 trillion yuan in total. Here is the latest update. The 2-trillion-yuan replacement quota for 2024 was fully issued on Dec. 18. The issuance of the 2-trillion-yuan replacement bonds for 2025 has already begun. This replacement policy has achieved three significant results. Firstly, local liquidity pressure was greatly alleviated during this period. The replacement policy helped to significantly reduce debt interest expenses, providing more room for local governments to support domestic demand. Secondly, debt transparency greatly increased. We officially announced for the first time that the hidden debt balance was 14.3 trillion yuan. The previous dual-track management of statutory debt and hidden debt has been gradually transitioned to the standardized and transparent management of all debts. The domestic and international communities, including major rating agencies and international organizations, have responded positively to these efforts. Thirdly, coordinated efforts were greatly enhanced to prevent risks while promoting development. With the systematic and holistic advancement of debt resolution efforts, local financial chains have been increasingly unimpeded, and development momentum has continuously strengthened. There has been a shift from the previous focus on risk prevention to a dual emphasis on risk prevention and development. Many areas have reported that with this timely policy, they have been less burdened and more motivated.
Regarding fiscal policies for 2024, I would also like to add that we have rolled out a package of incremental fiscal policies in order to implement the guiding principles of the meeting of the Political Bureau of the CPC Central Committee on Sept. 26. These policies mainly cover the following four aspects. First, increasing support for local governments to defuse debt risks. Second, issuing special treasury bonds to support major state-owned commercial banks in replenishing core tier-1 capital. Third, stepping up efforts to stabilize the property market and reverse its downturn. Fourth, increasing support and protection for key groups. At present, most of these policies have already been implemented, and there are two specific policy measures that are being actively advanced. One is the policy of using special bonds to support the acquisition of existing commercial housing for use as government-subsidized housing. We are working with relevant authorities to conduct research and refine measures. The other is the policy of issuing special treasury bonds to support major state-owned commercial banks in replenishing core tier-1 capital, enhancing their ability to serve the real economy. Currently, these banks are calculating and refining their plans to replenish capital, and we will expedite the implementation.
In 2025, the finance departments will implement a more proactive fiscal policy in accordance with the plans of the Central Economic Work Conference, continue to exert efforts and provide stronger support to effectively utilize the policies. This is an area in which many people are very interested. I can tell you that a more proactive fiscal policy can be expected in the future, which will mainly be reflected in three aspects — intensity, efficiency and seizing opportunities.
In terms of intensity, we will fully tap the potential of fiscal policy space, and strengthen counter-cyclical adjustments. We will raise the deficit-to-GDP ratio and increase the intensity of fiscal spending. We will increase transfer payments to local governments and enhance their fiscal capacity to ensure that basic living needs are met, salaries are paid and governments function smoothly. We will allocate a larger scale of government bonds, including ultra-long special treasury bonds and local government special bonds. In short, an intensified fiscal policy will be implemented to stabilize the economy.
As for the specific amount, which is of great interest to everyone, this can only be published after going through statutory procedures. Everybody can rest assured that a clear-cut fiscal policy in 2025 aimed at intensifying countercyclical regulation will be highly proactive. At the same time, the policy also takes medium- and long-term fiscal sustainability into consideration.
In terms of efficiency, we will emphasize optimization of the fiscal expenditure structure, placing greater emphasis on improving people's livelihoods, stimulating consumption and sustaining its momentum. We will provide greater support for stabilizing employment and boosting consumption by promoting the growth of residents' income, strengthening the social security system, developing new consumption sectors and improving the consumption environment. We will focus on accelerating the development of new quality productive forces, and increase support for fields such as education and talent, scientific and technological breakthroughs, rural revitalization, and green and low-carbon development. At the same time, we will steadily make the fiscal management more scientific, ensuring that every cent is used where it is needed most.
In terms of seizing opportunities, we will take measures early on, enhancing the forward-looking and targeted nature of the policies. We will accelerate spending and quickly convert it into actual expenditures, drive greater social investment and maximize the effect of fiscal policy. In this regard, we have fully considered the timeliness of counter-cyclical adjustment efforts.
In addition, we will deepen the reform of the fiscal and tax systems, boost efforts to prevent and defuse debt risks in key areas, and ensure steady operations and sustainable development of fiscal policy.
Finally, I would like to emphasize that in the face of new situations and problems in both internal and external environments, the fiscal policy has ample room for maneuver and tools at its disposal. We will closely follow developments both at home and abroad, conduct scientific planning and dynamic adjustments as appropriate, and implement policy tools sequentially as options for later use to provide strong support for economic and social development.
That's all for my introduction. My colleagues and I are now ready to answer your questions. Thank you.
Shou Xiaoli:
Thank you, Mr. Liao. The floor is now open for questions.
21st Century Business Herald:
Everyone is generally concerned about the state of fiscal operations. How do you view the fiscal revenue and expenditure situation in 2024? Have the budget goals set at the beginning of the year been achieved? Thank you.
Liao Min:
Thank you for your questions. At present, the annual fiscal revenue and expenditure data is being compiled. Based on the preliminary information we have, which I briefly introduced earlier, I will give you further analysis. The fiscal performance in 2024 can be summarized in three sentences:
First, the overall trend has improved. As we know, in the first nine months, national general public budget revenue decreased by 2.2% due to factors such as insufficient demand, negative PPI growth and revenue reductions from policy changes. However, starting in October, the implementation of a series of incremental policies effectively boosted social confidence, leading to an economic rebound and a positive shift in fiscal revenue growth, which steadily increased month by month. In the following months, the year-on-year monthly growth rate of national general public budget revenue remained positive and continued to rise.
Second, the goal of balancing revenue and expenditure can be achieved. On the revenue side, a recovery trend has been maintained, and annual fiscal revenue is expected to meet the budget target. On the expenditure side, national general public budget expenditure exceeded 28 trillion yuan, providing essential financial support for economic and social development, thereby ensuring a balanced budget for the year.
Third, key priorities have been effectively ensured. The structure of fiscal expenditure has been further optimized. For example, investment in essential livelihood services and key sectors has increased, ensuring sufficient funding for areas such as education, agriculture, forestry and water management, social security and employment, and housing support. In the first 11 months, spending on social security and employment exceeded 3.8 trillion yuan, while education expenditure surpassed 3.6 trillion yuan, totaling approximately 7.4 trillion yuan — about one-third of general public budget expenditure — providing significant support. Additionally, spending on agriculture, forestry and water management exceeded 2.2 trillion yuan. These figures show that fiscal support for key areas has remained strong.
These three points offer a brief overview of the situation regarding general public budget revenue and expenditure. Detailed data on annual fiscal revenue and expenditure will be released to the public in due course, following appropriate procedures. Thanks for your questions.
Phoenix TV:
We notice that the Central Economic Work Conference held at the end of last year proposed increasing the fiscal deficit ratio, which is expected to exceed approximately 3% in 2024. Could you please share how the deficit ratio will be arranged for 2025? What considerations are currently being taken into account? Thank you.
Liao Min:
Thank you for your questions. This issue has garnered significant public attention, as the fiscal deficit ratio remains a key focus. The Central Economic Work Conference has clarified that the fiscal deficit ratio will increase in 2025. I would like to share three key points of consideration.
First, there's the purpose of raising the fiscal deficit ratio. Increasing the deficit ratio will provide more momentum for this year's economic development. With a higher deficit ratio, there will be more fiscal space to expand spending and enhance counter-cyclical adjustments. As the deficit ratio increases, combined with the multiplier effect of fiscal policies, it will inevitably stimulate more bank lending and social capital investment, thereby boosting effective demand. More funds can be allocated to support employment, consumption and technological innovation, promoting economic structural adjustment and advancing high-quality development. This, in turn, fosters sustained and healthy economic and social growth.
Second, we need to consider the conditions for increasing the deficit ratio. We have significant capacity to borrow and increase the deficit. This was mentioned in previous press conferences. From a medium- to long-term perspective, China's economy still holds substantial growth potential. First, the government debt ratio is significantly lower than that of major economies and emerging markets, demonstrating that overall fiscal health is sustainable. Second, our government debt is backed by a substantial amount of high-quality assets, which provide both social and economic benefits. Furthermore, the current real interest rate on Chinese government bonds is noticeably lower than China's actual economic growth rate. As a result, government borrowing remains sustainable.
Third, let's discuss how to determine the deficit ratio. Determining the deficit ratio requires a comprehensive consideration of national development needs, macroeconomic growth potential, macro control, fiscal revenues and expenditures, and the medium- and long-term sustainability of public finances. We've conducted thorough discussions and analysis on this matter. In fact, it's common practice for countries worldwide to raise the deficit ratio in response to cyclical changes in the macroeconomy as a way to strengthen counter-cyclical adjustments.
As for the specific deficit ratio for 2025, we can only officially announce it to the public after completing the required legal procedures. While I can't provide specific data today, I assure you that the objectives, conditions and factors considered in raising the deficit ratio have all been thoroughly examined. Thank you.
Jiupai News:
In 2024, China's real estate market showed signs of stabilization, with property prices starting to level off. What fiscal policies are being considered to support this market? Thank you.
Liao Min:
This is an important question. Mr. Lin will address it. Thank you.
Lin Zechang:
Thank you for your question. On Sept. 26, 2024, a meeting of the Political Bureau of the CPC Central Committee emphasized the importance of stabilizing the property market and reversing its downturn. Various departments have introduced a series of policies, and the sector is gaining positive momentum in some cities, indicating that these measures are starting to take effect. Here, I'd like to provide a brief overview of the fiscal-related policies, focusing on two main aspects.
First, we have adjusted tax policies to lower the tax burden during the transaction and development stages. For example, we have optimized preferential deed tax policies for housing transactions. The statutory deed tax rate ranges from 3% to 5%. Previously, first-time homebuyers and second-home purchasers of units under 90 square meters were taxed at 1%, while units over 90 square meters faced a tax rate of 1.5% for first homes and 2% for second homes. However, these preferential policies for second homes did not apply in first-tier cities like Beijing, Shanghai, Guangzhou and Shenzhen. Under the latest policy, the applicable 1% tax rate has been extended from properties under 90 square meters to those under 140 square meters. Properties over 140 square meters are taxed at 1.5% for first homes and 2% for second homes. Additionally, these preferential policies now apply equally to first-tier cities.
Furthermore, we've eliminated the distinction between ordinary and non-ordinary housing for value-added tax and land appreciation tax purposes. This change particularly affects Beijing, Shanghai, Guangzhou and Shenzhen. Previously, residents in these cities were required to pay VAT when selling non-ordinary housing units that had been held for two years or more. With the elimination of this distinction, all housing transactions in these cities can now benefit from VAT exemptions.
These policy benefits are substantial. For example, second-home buyers purchasing a 120-square-meter apartment in non-first-tier cities can now save 50% on deed tax. In first-tier cities, where such preferential policies didn't exist previously, buyers can save up to two-thirds on deed tax for a similar property. These changes offer significant and tangible benefits for homebuyers.
Additionally, the State Taxation Administration has optimized its collection policies by reducing the minimum prepayment rate for land appreciation tax by 0.5 percentage points, which helps alleviate the financial pressure on real estate enterprises.
These policies aim to benefit both enterprises and individuals and have received a positive response from the market. Transaction activity has notably increased in core cities. According to statistics, in December, the sales area of new commercial housing in 100 key cities increased by approximately 17% month on month and 18% year on year. Moving forward, our focus will be on ensuring effective implementation of these policies to maximize their intended impact.
Second, we have explored expanding the use of special-purpose bonds to include two key areas related to real estate, both aimed at increasing effective demand. Within the newly issued special bond quota for 2025, local governments can allocate funds as needed for land reserves and the acquisition of existing commercial housing to be used as affordable housing. These policies, announced at the end of last year, are expected to yield progressive results throughout 2025.
Regarding land reserves, we support municipal governments in reclaiming and purchasing idle land. Additionally, areas with demand may also acquire new land reserves. We have established clear requirements for the management of special-purpose bonds, and local authorities have begun implementing them. This policy will help optimize the dynamics of land supply and demand, enhance the liquidity of real estate enterprises, and strengthen land reserves in key areas.
We are focusing on support for acquiring existing commercial housing to be used as affordable housing. Recently, we have been actively collaborating with the relevant industry authorities to advance this initiative. This effort has included extensive field research, organizing discussion forums to gather input from various stakeholders, and carefully considering the demands and needs of local governments. We will continue to collaborate with the relevant authorities to swiftly finalize the related policies. Once these policies are clarified, local governments will be able to implement them accordingly.
You may have noticed that in the fourth quarter of last year, several indicators of the real estate market showed improvement, and positive changes are gradually increasing. We believe that as policies continue to take effect and new development models for the real estate sector gradually take shape, the market will further stabilize and move toward recovery.
That's all I have to say about this topic. Thanks.
Bloomberg:
In recent years, the MOF has emphasized improving government debt transparency. Meanwhile, revenue from local special bond projects has been declining. Some scholars advocate for issuing general bonds instead of special bonds for project investments to reduce financing costs. What is the MOF's perspective on this? Thank you.
Liao Min:
Thank you to the Bloomberg reporter for the question. I would like to ask Mr. Wang to respond.
Wang Jianfan:
Thank you for your question. Government debt management is a critical aspect of fiscal policy and an important component of economic and social development. In recent years, the MOF, in collaboration with relevant parties, has continuously enhanced the government debt management system and optimized the composition of government debt. On the one hand, we have scientifically arranged the scale of fiscal deficits, increased central-to-local transfer payments, and optimized the issuance of local government general bonds to reduce interest burdens and enhance fiscal capacity at the local level. On the other hand, we have reasonably expanded the scope of special bonds, increasing their use for project capital in terms of scope, scale and proportion to stimulate effective investments.
To implement the decisions and arrangements of the CPC Central Committee and the State Council on strengthening the management of local government special bonds, the General Office of the State Council recently issued the Opinions on Optimizing and Improving the Local Government Special Bond Management Mechanism. This document outlines seven key areas and 16 specific measures to assist local governments in better utilizing special bonds to strengthen infrastructure, address shortcomings, enhance public welfare and expand investment. This document, released to the public on Dec. 25, establishes a new mechanism for managing special bonds. The new features of this mechanism can be understood in five aspects:
First, it introduces a "New List" for target areas. Since 2019, we have utilized a "positive list" to define the areas eligible for special bond allocation, which includes sectors such as transportation, municipal infrastructure, industrial park infrastructure and major national strategic projects. The recently issued opinions transition from "positive list" management to a "negative list" approach. The "negative list" identifies prohibited categories, including non-revenue-generating projects, administrative office buildings, wasteful prestige projects, performance-driven projects, general competitive industries, and regular expenses such as personnel costs. Special bonds are not permitted for these categories, while all other projects can receive support. This has given local governments greater flexibility to arrange projects according to their specific circumstances.
Second, the mechanism's "New Scope" expands areas designated for use as project capital. The areas where special bonds can be used as project capital have increased from the original 17 industries to 22. Five new sectors have been added, including infrastructure for emerging industries, health care, elder care and child care, freight hubs, and urban renewal, along with various sub-industries. Meanwhile, the maximum proportion of special bonds that can be used as project capital at the provincial level has been increased from 25% to 30%. This expansion in both scope and scale enhances local governments' ability to boost investment capacity and promote economic structural transformation.
Third, the mechanism introduces a "New Model" for project review. We have piloted a "self-auditing and self-issuing" approach in 10 provinces and the Xiong'an New Area, aimed at granting local governments greater flexibility and autonomy. This measure is designed to accelerate the issuance and utilization of bond funds, improve allocation efficiency, and strengthen local governments' primary responsibilities while mitigating legal debt risks. The specific approach is that in the pilot areas — 10 provinces and the Xiong'an New Area — special bond projects no longer require review by national ministries. Instead, once approved by the provincial government, projects can proceed to issuance. In other provinces, projects will still follow the original channels for submission, but improvements have been made to increase the frequency of project submissions to four times a year, providing one submission window each quarter. This gives local governments more options and the flexibility to refine their project proposals in a timely manner. Local governments will regularly submit projects, while national ministries will conduct periodic reviews to ensure quality and improve work efficiency. All provinces will implement a "green channel" for ongoing projects, meaning that ongoing projects that have already been approved and issued special bonds by national ministries do not need to be resubmitted. Once approved by provincial governments, these projects can proceed directly to issuance.
Fourth, the mechanism broadens the "New Sources" for repaying special bonds. Local governments are permitted to allocate fiscal subsidy funds over multiple years, in addition to special revenue and corresponding government fund revenues. They can also reallocate other project-specific revenues, project entity funds, and government fund income to ensure timely and adequate repayment of principal and interest. This approach aims to achieve regional balance among cities and counties within the province while effectively preventing repayment risks.
Fifth, the mechanism establishes "New Requirements" for the comprehensive management of borrowing, utilization and repayment. Special bond funds are now subject to exclusive account management and are earmarked for specific purposes, ensuring strict prevention of fund misappropriation or diversion. Asset accounting for new projects has been standardized, providing clear guidelines for how administrative institutions and state-owned enterprises should register and manage their assets. Existing project assets are categorized and managed, with detailed records maintained in comprehensive ledgers. Regions with the necessary conditions are encouraged to establish special bond repayment reserve funds. All "self-auditing and self-issuing" pilot areas are required to expedite the creation of repayment reserve system.
Next, the MOF will collaborate with the National Development and Reform Commission and other relevant departments to effectively implement policies. They will guide local governments in improving the management mechanisms for special bonds, ensure the effective management and utilization of special bond funds, fully unleash the effectiveness of these policies, and promote sustained economic recovery. Thank you.
Nanfang Plus:
The Central Economic Work Conference proposed implementing "more proactive fiscal policies." Could you please outline the fiscal policy arrangements for 2025? Additionally, what flexibility is there to enhance counter-cyclical adjustments in these fiscal policies? Thank you.
Liao Min:
Thank you for the question. The Central Economic Work Conference clearly stated that in 2025, more proactive fiscal policies will be implemented with ongoing and enhanced efforts. There's significant interest in how this year's fiscal policies will be more "more proactive." I've just given a preliminary introduction, so now I'll explain the meaning of "more proactive" by discussing four different aspects.
First, we'll increase the deficit ratio. To meet the needs of counter-cyclical macroeconomic regulation, we will increase the fiscal deficit ratio in 2025. Moreover, as our GDP continues to grow, the scale of the deficit will increase significantly. Total fiscal expenditure will be further expanded, and counter-cyclical adjustments will be intensified to provide strong support for the ongoing recovery and improvement of the economy.
Second, we'll expand the scale of debt. We'll issue larger-scale government bonds to provide greater support for stabilizing growth and adjusting the economic structure. We'll expand the scale of ultra-long-term special government bonds to provide stronger support for the "two major" projects concerning the implementation of major national strategies and the build-up of security capacity in key areas. We'll also use the special bonds to intensify and expand the implementation of the "two new" policies that encourage large-scale equipment upgrades and consumer goods trade-ins. We'll increase the quota for new local government special bonds and expand the areas of investment and the scope for their use as project capital. This will drive effective investment and support strengthening infrastructure, addressing weaknesses, and promoting development. In addition, we'll issue special government bonds to help major state-owned banks replenish their core tier-one capital. This will enhance their ability to provide credit to the real economy and support the sustainable expansion of effective demand and economic restructuring.
Third, we'll ensure key expenditures. We'll vigorously optimize the structure of fiscal expenditure, strengthen support for key areas, and place greater emphasis on improving people's well-being, promoting consumption, and enhancing future potential. In terms of improving people's livelihoods, we'll appropriately increase the basic pension for retirees, raise the basic pension for urban and rural residents, and enhance financial subsidy standards for urban and rural residents' medical insurance to boost residents' incomes. In terms of boosting consumption, we'll fully utilize fiscal and tax tools to support special initiatives aimed at stimulating consumption. We'll ramp up our efforts on trade-ins for consumer goods, innovate diverse consumption scenarios, and make consumption more enjoyable and convenient. To enhance future potential, we'll support and accelerate the development of new quality productive forces. We'll strengthen support for key areas such as education and technology, rural vitalization, green and low-carbon initiatives, and major regional strategies to promote steady and long-term economic growth.
Fourth, we'll improve capital efficiency. The allocation and use of fiscal funds will focus more on goal- and performance-oriented strategies. We'll accelerate the progress of fund allocation and disbursement to effectively manage and utilize valuable fiscal resources, achieving greater benefits with the same amount of money. We'll also continue to ensure that Party and government agencies promote frugality, oppose extravagance and waste, prohibit vanity projects, and allocate more funds to key areas and those in greatest need. At the same time, we'll continue to optimize new resources while revitalizing existing ones. We'll effectively utilize incremental funds while actively working to enhance existing assets, thereby improving the allocation efficiency of fiscal resources. In 2025, we'll strengthen coordination between fiscal and monetary policies, focusing on enhancing their combined and multiplier effects. By utilizing public funds, we aim to stimulate more credit and non-public capital investment, restore market confidence, and play a positive role in expanding domestic demand and supporting stable, healthy economic development.
Looking ahead, the MOF will further refine and improve its fiscal policies, implement them proactively, and leverage their effectiveness as soon as possible.
That's all I have to share. Thank you.
Red Star News:
My question is, two months ago, the Standing Committee of the National People's Congress approved a 6 trillion yuan debt resolution plan. What is the current progress under the phased implementation plan? Additionally, what are the next steps for advancing the implementation of the debt restructuring plan? Thank you.
Wang Jianfan:
First, I want to thank you for your interest in this policy. On Nov. 8, 2024, upon the Standing Committee of the National People's Congress's (NPC) approval of a 6 trillion yuan debt swap increase, we provided a detailed explanation of the policy rationale and implementation plans during a press conference held by the General Office of the NPC Standing Committee. Afterwards, we have coordinated with relevant parties to accelerate implementation and ensure the policy achieves its intended outcomes. Let me outline the key initiatives we have implemented.
On the one hand, we have moved swiftly to implement these policies so that they can bring benefits as soon as possible. On Nov. 8, the NPC Standing Committee approved the motion. On Nov. 9, after expedited approval procedures, we allocated the debt quotas to regions and directed them to step up efforts in issuing and utilizing funds. As Mr. Liao just explained, the 2 trillion yuan in replacement bonds allocated for 2024 was fully issued by Dec. 18, 2024, and most regions have now completed utilizing these funds. We've now entered 2025, and according to the motion approved by the NPC Standing Committee, an additional 2 trillion yuan quota is available for this year. Various regions have already begun the issuance process.
On the other hand, we have enhanced oversight, ensured accountability and strictly prevented any deviation in policy implementation. We have directed localities to properly utilize these policies, enforced strict discipline in debt replacement procedures, and prohibited bond fund misappropriation. This ensures these beneficial measures achieve their intended outcomes while preventing any misuse or wasting of these supportive funds.
The debt replacement policies are now showing positive results in easing financial constraints and reducing burdens. Various localities have seen their average debt replacement costs decrease by more than 2 percentage points, with some regions experiencing reductions exceeding 2.5 percentage points, significantly easing their principal and interest payment burdens. Some regions have prioritized replacing maturing open market bonds and non-standardized debts involving many stakeholders, which has significantly improved their local financial environment. At the same time, the implementation of debt replacement policies has created additional space for localities to boost domestic demand. With improved liquidity in local funding channels, governments can better support investment, consumption and technological innovation. This promotes stable economic growth and structural optimization while strengthening long-term development potential.
Moving forward, the MOF will continue working with relevant parties to ensure thorough policy implementation, following the decisions and arrangements of the CPC Central Committee and the State Council.
First, we will continue strengthening guidance to localities and ensure thorough implementation of debt replacement requirements. We will guide localities to fully and effectively utilize central government support policies, promptly conduct research and address new issues emerging during the debt resolution process, and promote successful local practices for others to learn from. We have established dedicated platforms to share successful practices for accelerating the resolution of existing hidden debts.
Second, we will implement comprehensive oversight throughout the bond funding process and ensure compliant use. We'll guide localities to establish ledgers for existing hidden debt replacement, maintain complete and accurate records of bond issuance, utilization and debt service, and ensure all funds are subject to distinct account management, separate accounting and closed-loop operation.
Third, we must firmly prevent the accumulation of new hidden debts while working to fully resolve existing obligations. We'll maintain a "zero tolerance" stance through tough oversight, strengthen interdepartmental regulatory coordination, and seriously address issues such as illegal borrowing and fraudulent hidden debt resolution. We will accelerate the reform and transformation of financing platforms and resolutely block illegal and irregular local borrowing channels to promote sustainable development. Thank you.
Economic Daily:
Providing public services and ensuring public welfare are the most fundamental functions of public finance. Could you share the achievements of fiscal measures in promoting stable employment? What additional measures will be adopted? Thank you.
Lin Zechang:
Thank you to the Economic Daily reporter for the questions. Employment is indeed a matter of significant public concern. It affects not only individual households but also the broader economy, serving as both the foundation of people's livelihoods and a crucial basis for increasing personal income and boosting consumption. The CPC Central Committee and the State Council have consistently prioritized employment stability, viewing it from a strategic perspective. The MOF has made promoting employment a top priority and worked with relevant departments to implement a series of policies and measures to maintain overall employment stability. Let me outline the four main aspects.
First, we have effectively utilized transfer payments to help local governments maintain employment stability. In 2024, the central government allocated 66.7 billion yuan in employment subsidies to help local governments enhance their public employment service systems and address structural employment challenges.
Second, we have stepped up our efforts to implement policies that stabilize employment, and encouraged enterprises to create more job opportunities. We have continued to implement structural tax and fee reduction policies, and maintained policies on the phased reduction of premiums for unemployment insurance and work-related injury insurance, and policies of refunding unemployment insurance premiums to enterprises that make no or minimal cuts to staff members, supporting enterprises in stabilizing and expanding employment. In the first three quarters of 2024, these policies delivered more than 150 billion yuan of benefits to enterprises. At the same time, we have actively leveraged the role of government financing guaranty in stabilizing employment. In 2024, the scale of the re-guarantee business of the national financing guaranty fund reached 1.41 trillion yuan, an increase of 7.6% year on year, with the vast majority used to support labor-intensive small and micro enterprises and self-employed individuals, covering multiple industries such as light industry and textiles, accommodation and catering, postal and warehousing, wholesale and retail, and construction, benefiting approximately 12 million jobseekers.
Third, we have implemented policies to encourage entrepreneurship and promote job creation through business startups. For example, a one-time entrepreneurship subsidy is provided to college graduates who are eligible, jobseekers facing difficulties in securing employment and migrant workers who start their own small and micro enterprises or engage in self-employment for the first time. Another example is that key groups such as migrant workers who start businesses in their hometowns, as well as small and micro enterprises that employ jobseekers from these key groups, can apply for startup guaranteed loans, with subsidized interest payment. Additionally, we have continued to support the implementation of programs on innovation and entrepreneurship education for college students to cultivate and enhance the innovation and entrepreneurship abilities of college students.
Fourth, we have increased support for key groups to maintain overall stability in employment. One measure has been to provide a one-time subsidy to enterprises of up to 1,500 yuan per person for hiring fresh graduates or college graduates who have not been employed within two years after leaving school, encouraging enterprises to provide more jobs for young people. In the first three quarters of 2024, a total of 900 million yuan was distributed to 170,000 enterprises, benefiting 620,000 college graduates and other young people. Another measure has been to support an increased number of posts offered by the "Go West" program and continue to implement grassroots service projects such as the program encouraging college graduates to take community-level posts in education, agriculture, health care and poverty relief, and special employment programs enabling college graduates to serve as teachers in rural compulsory education schools and guide college graduates to work at the grassroots level. In addition, we have made greater efforts to provide vocational skills training for key groups, such as migrant workers and those who have been lifted out of poverty, and strengthened assistance for those in difficulties such as people with disabilities and members of zero-employment families to secure jobs.
Next, the MOF will continue to strengthen investment and support to maintain employment stability and ensure the people's well-being, and implement and improve policies and measures.
First, we will continue to implement policies for stabilizing employment and promoting job creation. We will maintain policies to stabilize and increase employment, such as policies on phased reduction of premiums for unemployment insurance and one-time subsidies for increasing employment, to continuously lower enterprises' operating costs.
Second, we will introduce new measures conducive to increasing employment. According to the decisions of the CPC Central Committee, the MOF will cooperate with relevant departments to prioritize supporting the development of key areas, including the cultural and tourism industry, other modern service industries, and the foreign trade sector. With more stable and improved development of these industries, more jobs will be created.
Third, we will better drive micro and small enterprises to provide more jobs. We will actively make good use of policy tools such as rewards and subsidies for guaranteed loans for business startups and government financing guaranty systems, and channel bank loans and other financial support for micro and small enterprises to better promote their development, and thereby enhance their ability to create more jobs. Thank you.
Shou Xiaoli:
Due to the time limit, we will have one last question.
CCTV:
We know that the Central Economic Work Conference held at the end of last year identified supporting the expansion of domestic demand as the primary key task. As such, what specific measures will we take in this regard? Thank you.
Liao Min:
Thank you for your question. At present, expanding domestic demand is a buzzword when it comes to analyzing China's macroeconomic issues. In fact, expanding domestic demand is related to both economic balance and stability and economic security. It is a strategic move in the sustainable development of our economy. China has a huge domestic market, with significant potential for both consumption and investment, which can be converted into momentum for economic recovery and growth. Domestic demand includes both investment and consumption. In 2025, the MOF will follow the decisions and deployment of the CPC Central Committee and the State Council, intensify efforts to support boosting consumption, improve investment efficiency, and take comprehensive steps to expand domestic demand. I will introduce the work from the following main aspects.
The MOF will take multiple measures and increase support to boost consumption. First, consumption is a function of employment and income, and promoting consumption contributes to stabilizing and improving the macroeconomy. The major purpose of counter-cyclical macro regulation is to increase employment and incomes among residents through multiple channels, thereby enhancing actual spending power. Second, we will support further expansion of the trade-in policy for consumer goods by widening its coverage, optimize the subsidy application process, and improve the recycling system to guide and stimulate more spending on big-ticket items that people need, thereby delivering greater benefits to consumers. Third, China has diverse consumption potential. We will make good use of fiscal policies to actively support the development of new industries such as the elderly care service industry and cultural tourism. We will support the improvement of related infrastructure, raise public service standards, and support the cultivation of more new consumer industries and consumption scenarios based on changing spending habits and adjustments to the economic structure. Fourth, we will roll out trials on the modern commercial distribution system, promote the implementation of a new round of actions to shore up weak links in national comprehensive freight hubs, expand the demonstration scope of the digital transformation and upgrading of highway and waterway transportation infrastructure, and reduce logistics costs, so that consumers can receive more benefits.
While directly introducing policies to support consumption, we also remain committed to supporting the expansion of effective investment. This is conducive to promoting economic growth and fostering new industries and consumption scenarios, thus driving the expansion of employment and increasing residents' incomes, fundamentally boosting overall consumption, and unleashing the potential of domestic demand.
To be specific, it is necessary to take coordinated steps to make good use of government investment funds, focus on key areas and weak links to increase investment, and improve investment efficiency. In addition to increasing the issuance of ultra-long-term special treasury bonds and the issuance and use of local government special-purpose bonds that I mentioned earlier, the central government budget for investment will also be appropriately increased, with reasonable distribution and priorities. In terms of implementation, we will make reasonable arrangements for bond issuance according to procedures, expedite the allocation of funds, promptly break them down into specific projects, and form physical workloads as early as possible. This will effectively leverage government investment to effectively drive more bank credit and social investment, promoting the stabilization of the economy.
As the Spring Festival approaches, my colleagues and I, on behalf of the MOF, would like to extend early new year greetings to everyone here today. Thank you for your interest in the financial work. Thank you.
Shou Xiaoli:
Thank you, Mr. Liao, and thanks to all the speakers and friends from the media. Today's briefing is hereby concluded. Goodbye.
Translated and edited by Chen Xinyan, Yan Bin, Liu Caiyi, Cui Can, Xiang Bin, Wang Xingguang, Xu Kailin, Wang Wei, Li Huiru, Fan Junmei, Liu Sitong, Mi Xingang, Wang Yiming, David Ball, and Jay Birbeck. In case of any discrepancy between the English and Chinese texts, the Chinese version is deemed to prevail.
