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The meaning of proactive fiscal policy

The proactive fiscal policy proposed and implemented by our government has its specific economic and social background and policy implications.

First, active fiscal policy is in the comparative sense of the policy effect. Since the reform and opening up, due to various reasons, the proportion of my country's fiscal revenue in GDP and the proportion of central fiscal revenue in total fiscal revenue have continued to decline. The national fiscal macro-control capability has tended to weaken, and the "food finance" has become unsustainable. Dilemma. Faced with the new situation and new problems that emerged after China's economy successfully achieved a "soft landing", including insufficient demand, weak investment and economic growth, especially in the face of the impact and impact of the Asian financial crisis, my country's fiscal policy must be transformed from a weakening of the regulatory function as soon as possible to emerge from the predicament and play a more direct and positive role in promoting and stimulating economic growth. This is the main meaning of "more active" or proactive fiscal policy.

Secondly, proactive fiscal policy is based on the urgent needs of my country's structural adjustment and social stability. With the deepening of reform and opening up and the continuous improvement of marketization, the structural contradictions in my country's social and economic life have become increasingly prominent, becoming serious obstacles to expanding domestic demand, opening up markets, and promoting sustained, rapid and healthy economic development under the new situation. As the most important means of structural adjustment, fiscal policy should obviously play a more active role in my country's structural optimization and structural adjustment than before. In addition, due to the widening gap in social income distribution, the increase in the number of laid-off and unemployed people during the reform of state-owned enterprises, and the increasing emergence of urban poverty, fiscal policy, as the only means of social redistribution, must also play a role in promoting social equity and ensuring social stability. The most important adjustment function. This is irreplaceable by market mechanisms and other policy means. The changing situation and urgent objective needs force China's fiscal policy to come to the forefront and give full play to its due positive role.

Third, active fiscal policy is not a policy type, but a choice of policy measures. Chinese and foreign economic theories show that fiscal policies under modern market economy conditions can be roughly divided into three types: expansionary fiscal policy, contractionary fiscal policy and neutral fiscal policy. For example, the "Roosevelt New Deal" in the United States in the 1930s and its supporting expansionary fiscal policy that has been implemented for at least 10 years; the expansionary fiscal policy pursued by Japan since the 1960s, etc., all have this kind of policy. characteristics and policy orientations. The active fiscal policy currently implemented in our country is just a response fiscal policy measure taken under the general direction of moderately tightening fiscal policy and based on changed new situations, new problems and some unexpected external factors. Not a policy type.

[Edit this paragraph] The nature and characteristics of active fiscal policy

(1) The stages of the policy. Active fiscal policy is a phased or temporary policy adopted within the limits allowed by the policy environment under special circumstances such as insufficient demand, weak investment, exports and economic growth, and the intensifying impact of the Asian financial crisis. moderate expansion policy. It can also be said that this is a conditional policy choice made under the conditions that the domestic economy has urgent needs and policy implementation is realistically possible. The so-called objective needs here refer to the need to expand domestic demand to maintain moderate economic growth. It is a policy choice that must be made when the implementation and operation channels of monetary policy are partially blocked, and its ability and effect to stimulate demand are limited. The so-called policy environment is permissive, which means that although the national fiscal revenue and expenditure situation is relatively severe, when banks have a large "deposit gap", there are abundant funds, and companies are cautious about lending due to strengthening restraint mechanisms and other reasons, the fiscal system can pass Implement a proactive fiscal policy focusing on a moderately expanded national debt policy to achieve the purpose of expanding demand and stimulating the economy. Once this policy environment changes, fiscal policy options will need to be considered separately.

(2) Policy orientation.

Judging from the actual situation in our country, when the transformation of government functions has not yet been fully implemented, the transformation of enterprise mechanisms has not yet been completed, and institutional and structural contradictions are still very prominent, it is not appropriate and impossible to implement a comprehensive expansionary fiscal policy, but can only implement both Fiscal policies that are conducive to increasing investment, opening up markets, expanding domestic demand, adjusting and optimizing structures, and promoting the deepening of institutional reform are directional fiscal policies that should be implemented. It is precisely in view of this that my country's active fiscal policy has chosen the direction of adjusting the structure, improving the investment environment, enhancing the potential for economic growth and industrial driving effects, and focusing on the construction of social infrastructure.

(3) Complexity of policies. Expanding domestic demand is multi-faceted and multi-level. Therefore, the use of active fiscal policy is not limited to expanding fiscal investment in infrastructure. It is aimed at expanding demand and focuses on multiple policy measures. Comprehensive application reflects the compound nature of the policy. Briefly speaking, in addition to issuing an additional 100 billion yuan of treasury bonds to state-owned commercial banks for infrastructure construction, 270 billion yuan of special treasury bonds were also issued to improve the capital adequacy ratio of state-owned commercial banks; by adjusting the expenditure structure of the central government, Free up 18 billion yuan to be used exclusively for basic living security for laid-off employees of state-owned enterprises, on-time and full payment of pensions for retirees, flood fighting and disaster relief, etc., that is, through fiscal transfer expenditures to stimulate consumption and investment; the amount was increased in batches The export rebate rate for some products has been adjusted, and the tax policy for imported equipment has been adjusted, and the tariff rate has been reduced. Foreign investment projects and domestic investment projects encouraged by the state are exempted from tariffs and import-link increase taxes within the prescribed scope, so as to promote and enhance Foreign economic and trade needs.

[Edit this paragraph] Policy Orientation of Active Fiscal Policy

The reasonable determination and timely adjustment of fiscal policy principles or policy orientations have a profound impact on the realization of policy goals and the quality of policy effects. has a decisive influence. In this regard, my country has been and is implementing active fiscal policies and appropriate monetary policies, and we should pay attention to and strive to achieve the following "balances" or "combinations":

First, in In selecting policy priorities, we should combine increasing investment scale with stimulating and expanding final consumer demand. Under the traditional planned economy-seller's market-shortage economic conditions, we have always been accustomed to focus on stimulating the economy on investment and production, that is, on increasing product supply, because supply constraints are always the main contradiction. aspect. However, under market economy-buyer's market conditions, the focus that needs stimulation is consumer demand, and effective demand is the main aspect that restricts the development of the national economy. Of course, stimulating investment and production also increases demand, but this is only intermediate demand. How much role it can play in economic growth and whether it can improve economic efficiency depends on the final demand. The fiscal and monetary policy orientation that will help expand domestic demand under the new situation must organically combine increasing investment and production with stimulating final consumption.

Second, in terms of grasping the strength of the policy, the moderate expansion of the total amount should be combined with the adjustment and optimization of the structure. Because the nature of the current problem is neither a simple economic crisis and economic depression caused by overproduction, nor a simple lack of total demand, but a period of transition in the economic system and economic development (growth) model, when an economic soft landing has been successfully achieved. , the emergence of transitional difficulties in a situation of high growth and low inflation, mainly due to basic reasons such as transition "analgesia" and institutional and structural obstacles. It is precisely because of this characteristic and nature that when the system transformation has not yet been completed, the structural contradictions are very prominent, and the macro-control system adapted to the market economy is still very imperfect, if the overall loosening of the aggregate expansion policy is unilaterally emphasized and implemented, then It is very likely to induce a new round of inflation and increase the difficulty of structural adjustment. This will not only not contribute to the coordination and effective growth of the current economy, but will also hinder the subsequent sustained and healthy development of the economy, the optimization of the industrial structure, and the Solving basic employment problems will cause more troubles and delayed obstacles.

Third, in grasping policy trends, support for the state-owned economy should be combined with encouraging the development of the non-state-owned economy.

Because no matter in terms of its development needs, development possibilities and huge potential, or in terms of its huge role in promoting economic growth, increasing national tax revenue, solving employment problems, etc., the development of the non-state-owned economy has a significant impact on the expansion of the economy. Domestic demand and achieving economic growth goals all have important influence and significance. However, judging from the actual situation, there are indeed many practical obstacles and difficulties in the development of the non-state-owned economy. There are some policy issues in finance, taxation, credit, etc. that need to be studied and solved urgently.

Fourth, when considering the policy effects, the current policy effects of expanding domestic demand should be combined with the long-term policy effects. Because, since insufficient demand will be an important factor restricting my country's subsequent economic development, the solution to the problem cannot only focus on the immediate and ignore the long-term. In the analysis and estimation of policy orientation and policy effects, short-term and long-term, current and future must be considered. be considered as a whole.

[Edit this paragraph] Timely adjustment of active fiscal policy

Since active fiscal policy is not a long-term policy choice, there must be a problem of policy adjustment or policy conversion , this is what we must prepare in advance. The key to the problem is whether factors and conditions that can replace the current “pull” or “push” of fiscal policy can emerge or be found. That is to say, it is necessary to gradually change the situation of focusing on the implementation of active fiscal policies to stimulate economic growth, and use other thrusts to replace or replace them, thereby creating conditions for the "fading out" and transformation of active fiscal policies. I believe that in the medium to long term, such factors or pulls include the following aspects:

1. Market and consumption substitution. That is to say, the current focus of fiscal and monetary policies should be on further opening up the market and stimulating final consumer demand, and gradually reduce the dependence of economic growth on expanding the scale of government investment. There are many measures to choose from in this regard, such as promoting bank consumer credit in an orderly manner; appropriately increasing the proportion of fiscal expenditures to stimulate residents' consumption needs, especially increasing the amount of fiscal transfer expenditures for low-income people; effectively reducing the burden on farmers and increasing The income of rural areas and farmers will lay the foundation for developing huge rural markets, etc.

2. Substitution of private and corporate investment. Social funds are always flowing and transforming into each other. In order to achieve the predetermined economic growth target, in addition to the provision of certain social public products and public services, which mainly rely on state financial investment, the increase in private and corporate investment can provide the government with the purpose of stimulating economic growth. Create conditions for timely exit from investments. In this regard, our country has great potential. For example, it is a very considerable figure to reduce the heavy non-tax burden of enterprises as soon as possible, and to change the investment potential of some enterprises where the costs are greater than the tax status. At the same time, as long as there is good guidance and appropriate policies, there is much to be done to activate the utilization mechanism of my country's huge savings deposit balance and hot money. Another example is making full use of economic means such as fiscal interest discounts, fiscal equity participation, and fiscal guarantees to fully mobilize and absorb social funds to participate in investment in social infrastructure, high-tech industries, and real estate development, which has the effect of "four or two lifting a thousand pounds".

3. Export demand substitution. Although the international economic situation is turbulent and there are many uncertain factors, the energy that can be generated by deepening the reform of China's foreign economic and trade system, strengthening structural adjustments, improving policy incentives, and improving the international competitiveness of products cannot be underestimated. Under the impact of the Asian financial crisis, my country's achievements in attracting foreign investment last year are a powerful proof.

[Edit this paragraph] Empirical analysis of active fiscal policy risks

Active fiscal policy risks refer to the possibility that the expected goals of active fiscal policy cannot be achieved or fail. The performance of its risks can be roughly divided into two aspects: one is policy decision-making risk, and the other is policy implementation risk. This shows that the risks of active fiscal policy are not limited to a certain link, but run through the entire policy process. Generally speaking, the reasons leading to the risks of active fiscal policy can be summarized as the following aspects:

(1) Deviations in determining the goals of active fiscal policy.

The determined policy goals are seriously out of touch with reality, or the fiscal policy goals are out of touch with the national economic development goals, or the fiscal policy goals themselves are ambiguous, which will bring corresponding policy risks. (2) In the process of fiscal policy decision-making and implementation, due to insufficient information, information asymmetry and future uncertainties. (3) The level and ability of fiscal policy decision makers and executors also affect the risk level of active fiscal policy. (4) Improper selection of fiscal policy tools and lack of organic coordination between policy tools. (5) Fiscal policy seriously lags behind and fails to make corresponding adjustments as economic conditions change. (6) The role of fiscal policy is too large or too small. (7) In the process of implementing fiscal policies, due to obstruction by specific interest groups or deviations in policy implementers’ understanding of policies.

The above is only an abstract analysis of the meaning, performance and causes of proactive fiscal policy risks from a purely theoretical perspective. The analysis of China’s proactive fiscal policy risks cannot stop here, but must be closely related to China’s proactive fiscal policy. Policy practice will be analyzed in detail. On August 29, 1998, the Fourth Meeting of the Standing Committee of the Ninth National People's Congress passed the "State Council's Proposal to Submit for Review the Ministry of Finance's Plan for the Issuance of Additional Treasury Bonds to Accelerate Infrastructure Construction and the Adjustment Plan for this Year's Central Financial Budget (Draft)" ”, it was decided that the Ministry of Finance would issue an additional 100 billion yuan of treasury bonds to state-owned commercial banks to be used exclusively for infrastructure construction and would never engage in general industrial projects. According to this principle, the national debt fund projects arranged that year mainly include: farmland water conservancy and ecological environment construction; construction of railways, highways, telecommunications and some important airports; urban environmental protection and urban infrastructure construction; construction of a national grain reserve with a storage capacity of 50 billion kilograms. ; Rural power grid transformation and construction projects, urban power grid transformation; increase investment in the construction of public security, law and judicial facilities; issue 270 billion yuan of special treasury bonds to wholly state-owned commercial banks to replenish their capital; adjust export rebate rates for some commodities and tax policies for imported equipment. In 1999, the central government decided to continue to implement proactive fiscal policies in order to further expand domestic demand and encourage exports. In terms of the application of policy measures, it not only issues more treasury bonds to banks to expand investment, but also increases residents' income to promote consumption; it not only strengthens infrastructure construction but also supports technological transformation of enterprises. In 2000, the main contents of the proactive fiscal policy included: first, issuing 100 billion yuan of long-term treasury bonds, focusing on infrastructure construction and enterprise technological transformation, and tilting it towards the central and western regions, with more than 60% of treasury bond investments used in the central and western regions; 2. The first is to continue to implement various policies and measures to adjust income distribution introduced in 1999 to ensure the stable income growth of urban residents; the third is to further use taxation and other means to encourage investment, promote consumption, and increase exports. In accordance with the spirit of the central government, proactive fiscal policies will continue to be implemented in 2001. The main policy measures include continuing to increase investment in existing government bond-funded projects, increasing the development of the western region, and strengthening the construction of the social security system.

Judging from the effects of the proactive fiscal policy implemented in the past three years, the implementation of the proactive fiscal policy boosted economic growth by 1.5 percentage points in 1998, 2 percentage points in 1999, and 2 percentage points in 2000. 1.7 percentage points (China’s official estimate). In 2000, the GDP growth rate was 8%, an increase of 0.9 percentage points over the previous year. This shows that in 2000, my country's national economy has made an important turn towards a virtuous cycle. While achieving results, we have to clearly realize that although the national economy has rebounded significantly in 2000, the foundation for economic recovery is not yet solid, and our country's economic competitiveness is still relatively weak; the problem of insufficient effective demand has not yet The enthusiasm of private capital investment has not been fully mobilized, and the potential of consumer demand growth has not been fully tapped; the operating mechanism of state-owned enterprises has not been fundamentally changed, and the economic efficiency of enterprises has not been significantly improved. Many enterprises are very difficult to operate. Employment pressure has further increased; the foundation for agricultural development is weak, farmers' income growth is very slow, and the problem of overburden on farmers has not been well solved; the irrational industrial structure has not been fundamentally changed, and the degree of informatization in economic and social development is relatively low. Low; the sustainable development of the national economy lacks a solid foundation.

Combining these two aspects together will help stimulate the investment enthusiasm of enterprises and other economic entities and expand investment demand. However, in the context of overcapacity, in order to improve investment efficiency and enable investment to better play its role in stimulating economic growth, government policy guidance must be used to make investment funds flow more towards the "shortcomings" of economic and social development, such as Industries such as "agriculture, rural areas and farmers", energy conservation and environmental protection, affordable housing, independent innovation and high technology. The investment environment should be improved, industry and market barriers should be eliminated, and private capital should be given "national treatment" so that it can participate fairly in investments in finance, education, medical and other fields in compliance with laws and regulations. Certain aggregate-type monetary policy measures should be given a structural control function. Just take the deposit reserve ratio as a regular policy control tool of the central bank as an example. The "one-size-fits-all" deposit reserve ratio should be changed and a differential deposit reserve system should be implemented. For areas where major commodity grain bases are located and economically backward areas with relatively poor financial resources, relatively low deposit reserve ratios can be implemented. Doing so can not only enhance the pertinence and effectiveness of policy regulation, but also help promote the coordinated development of inter-regional economies and implement the Scientific Outlook on Development.

Consumption is mainly restricted by the income of workers, so the role of monetary policy in stimulating consumer demand is limited. In terms of expanding consumer demand, the fulcrum of monetary policy should be to strengthen financial support for small and medium-sized enterprises in credit, settlement and other aspects, and promote small and medium-sized enterprises to provide more employment opportunities to stimulate consumption. At the same time, monetary policy should be closely coordinated with macro policies such as industrial policy, income policy, and fiscal policy to form a synergistic force to stimulate consumer demand.