Recently, the finance department of Guangxi issued the key points of deepening reform in 2023, taking "continuously strengthening the linkage between finance and finance" as a key task, and deploying the adjustment and improvement of the discount policy of "Guihuidai", the improvement of the government financing guarantee institution award and subsidy policy, the establishment of manufacturing technology innovation guidance fund and other specific work. Since the beginning of this year, many places, not only Guangxi, have taken the linkage of finance as an important step to stabilize the economy and precisely empower the development of the real economy and enterprises.

System layout enhances synergy

"Fiscal and financial coordination and linkage mainly use fiscal policy tools and monetary and financial tools to coordinate and linkage specific support areas and projects, so as to achieve twice the result with half the effort." Zhao Quanhou, a researcher at the Financial Research Center of the Chinese Academy of Fiscal Sciences, told the reporter that in the concrete practice, there are various ways of fiscal and financial linkage, mainly based on the objectives, requirements and implementation effects, not restricted to one box.

Zhao Quanhou, for example, fiscal policy instruments mainly include tax incentives, fiscal subsidies, fiscal compensation, fiscal discount, fiscal incentives, government procurement, government investment funds, government guarantees, policy insurance, etc. Monetary and financial instruments mainly include structural monetary policy, inclusive credit policy and so on. Financial linkage is aimed at certain policy objectives in these tools to optimize the combination.

In recent years, local governments have paid more attention to systematic planning and mechanism guarantee in the linkage of finance. For example, in 2022, the finance department of Shanxi, together with other departments, jointly issued the Implementation Opinions on Establishing a System of Fiscal and Financial Linkage Mechanism, proposing the establishment of 15 mechanisms to promote effective fiscal and financial linkage, including the establishment of regular communication, balance of fiscal fund storage, and cooperation of key projects supported by finance. We will improve mechanisms for the operation of local government bonds, targeted subsidies for inclusive finance, pooling and driving of funds, coordinated mobilization of guarantee funds, and guarantee of insurance funds, and promote sustained and in-depth linkage between finance and the public in various ways.

In 2022, Chongqing specially issued the Notice on Strengthening Fiscal and Financial Linkage to Support the Development of the Real Economy. By integrating and establishing Chongqing Industrial Investment Fund, implementing the risk compensation of rural property rights against mortgage financing, expanding the coverage of guaranteed loans for start-ups, implementing interest discount for loans to enterprises with cultural and travel difficulties and other systematic arrangements, Working together to help enterprises "raise well", "get loans" and "afford loans".

Xiamen classifies the major difficulties existing in local enterprises and systematically and pertinently introduces a combination of "fiscal + financial" measures. For example, a technological innovation fund will be set up to support enterprises in expanding investment, R&D and innovation through "fiscal plus bank loans". We will set up financing and credit enhancement funds for micro, small and medium-sized enterprises and use "fiscal plus guarantee" to improve financing difficulties. Emergency lending funds will be set up, and "fiscal + bridge financing" will be used to ease the short-term liquidity crunch of enterprises. We will increase support for export credit insurance and use "fiscal plus insurance" to hedge foreign trade credit risks.

In order to alleviate the problem of difficult and expensive financing for enterprises, the financial department of Henan Province has continuously applied five implementation plans to support enterprise development, including government procurement contract financing, emergency working capital pool for small and micro enterprises, provincial financing guarantee compensation capital pool, loan guarantee insurance, and financial support policy of "stabilizing foreign trade". In 2022, it raised 63.12 billion yuan for more than 4,800 micro, small and medium-sized enterprises.

Since the beginning of this year, Shandong has strengthened the market means to promote the positive interaction between finance, finance and enterprises. For example, 350 million yuan has been raised to implement equity investment in key core technology transformation projects and high-growth enterprises. We will support the establishment of a linkage mechanism between finance, banks and guarantee financing that covers the whole life cycle of enterprises. Enterprises can receive multiple financing support such as bank loans, financial discount interest and guarantee fee reduction for individual projects.

"The linkage of fiscal and financial policies is a vivid practice of the new development concept and an important outcome, an inherent requirement and an important path for high-quality development, and an important guarantee for building a new development pattern. Through the two-way linkage of fiscal distribution and financial service functions, we can provide strong support for high-quality economic and social development and common prosperity." Yu Mingxuan, director of the Center for Policy Science at Renmin University of China, believes that the linkage of fiscal and financial policies is a booster to better play the basic and important pillar role of finance in national governance. It is a forward-looking innovative measure and beneficial attempt, and an effective measure and long-term mechanism to solve practical problems in the real economy and livelihood projects.

Experts believe that the financial linkage is flexible and precise, and can be adjusted and optimized according to the actual situation. "In order to achieve the goal of inclusive finance, namely to solve the problem of financing difficulties for small and micro enterprises and farmers with weak credit, the government can reduce the tax cost of small and micro enterprises and farmers through tax rebate and fee reduction policies, enhance their profitability, enhance the enthusiasm of financial credit delivery, and reduce credit risks." Zhao Quanhou said that if the effect is not obvious, on the basis of tax and fee reduction, the government will provide government loan guarantee services through government financing guarantee institutions or funds supported by the government finance, share part of the credit risk and enhance the loan security of the lending institutions.

"If the effect is still not obvious, the fiscal can continue to 'increase'." Zhao gave an example of increasing tax incentives (such as income tax and value-added tax) for financial lenders to reduce their tax costs for such loans and further increase their willingness to lend. If it still feels that the lending institutions are not motivated, the finance ministry can give the necessary financial incentives to the lending institutions for the size of such loans.

Effectively working together to help enterprises

An important goal of financial linkage is to better relieve the worries of enterprises. "The linkage of fiscal and financial policies can improve the efficiency and level of financial services serving the real economy, improve the direction, path and intensity of support, so that the people can truly feel the actual results of solving problems." Yu Mingxuan said.

In order to help enterprises to solve the "thirst" of financing, all over the country to increase exploration efforts, with fiscal funds to attract more financial water. For example, Shenzhen's finance focused on supporting the real economy, raising the compensation ratio of risk compensation pool to 80% and the reguarantee sharing ratio to 60% respectively, and including the self-employed in the scope of reguarantee services. In 2022, it leveraged 457.5 billion yuan of bank loans and 17.3 billion yuan of new reguarantee loans with financial credit increase, benefiting more than 120,000 enterprises and self-employed people.

Beijing grants a certain percentage of discount interest or guarantee fee to the "first loan" business of small, medium and micro enterprises in Beijing registered in Beijing Loan Service Center, signed loan contracts and lent money between January 1, 2023 and December 31, 2023. At the same time, the rate subsidy will be given to the financing guarantee business of Beijing government financing guarantee institutions in 2023 when a single family loan is 10 million yuan or less, and the financing reguarantee business of small and micro enterprises in Beijing when a single family loan is less than 5 million yuan (including). 

The financial linkage has also injected stronger impetus into enterprises' scientific and technological innovation. Take Sichuan as an example. In 2022, the provincial finance of Sichuan allocated 100 million yuan to expand the scale of the risk capital pool and share the risk of loan losses according to a certain percentage. In total, the cooperative banks were leveraged to lend 4.62 billion yuan to 886 science and technology enterprises. Among them, it fostered and supported 64 listed and reserve listed enterprises, 34 gazelle enterprises, and 294 specialized, specialized and innovative enterprises, achieving 13 times the benefit of fiscal funds and reducing corporate financing costs by over 30% on average.

"The linkage of fiscal and financial policies can more accurately and effectively strengthen support for smes' innovation, support enterprises to establish research and development institutions and increase investment in innovation, and make precise efforts to cultivate more innovative enterprises with independent intellectual property rights and core competitiveness." Yu Mingxuan said.

Continuous release of comprehensive efficiency

At present, the financial linkage has become a powerful tool to serve regional development and support industrial recovery. "Since the establishment of the financial linkage mechanism, we have actively coordinated with our counterpart budget departments to open up channels for government, banking and enterprise cooperation through information push and project promotion. At the same time, we have made every effort to promote the two-way efforts of banks and enterprises to facilitate the flow of funds to major projects and the real economy, especially micro, small and medium-sized enterprises. We made full use of the important role of financial linkage in expanding investment, stabilizing the economy, improving efficiency and promoting economic transformation." Shanxi Provincial finance Department responsible person introduction.

Through the practice of exploring the linkage of finance and finance, we have made continuous innovations in the ways that the government supports emerging industries, agriculture and other key development areas, further improving the efficiency of the use of government funds. For example, Anhui provincial finance invested 50 billion yuan to set up the provincial guidance fund for emerging industries, giving full play to the leverage role of financial funds, and guiding more social capital to invest in the province's ten major emerging industries. At the same time, the minimum amount of angel fund and theme and function fund investment in Anhui Province will be reduced to 1 to 1.2 times of the amount of capital invested by the guide fund, and the scope of recognition of return investment will be relaxed.

Guangdong has made full use of funds, guarantees, insurance and other financial means to guide social capital to participate in the construction of Marine pastures. We supported the establishment of an agricultural supply-side structural reform fund, and by the beginning of 2023 had invested 1.227 billion yuan in fishery projects. The provincial finance will give 1.5% premium subsidy to aquaculture business entities of moderate scale that meet the "double control" standard. In the first quarter of this year, Guangdong aquaculture guaranteed loan projects 89, the loan amount of 117 million yuan.

"Through the guidance mechanism, expansion function and leverage effect, the linkage of fiscal and financial policies can energize the building of a new development pattern, promote green, low-carbon, high-quality development and scientific and technological innovation, and provide effective support for fostering new economy and new industries, invigorating rural revitalization, developing digital economy and advancing livelihood projects." Yu Mingxuan said.

The linkage of financial resources has further expanded the space and path for inter-departmental coordination, helped all parties to forge a common thread in stabilizing the economy and achieved new results, and further enhanced the governance capacity of the government. For example, the financial department of Shaanxi innovatively explored a new approach to the implementation of "insurance + futures", and implemented the pilot mode of "exchange + finance + financial institutions + farmers" with the joint participation of multiple parties. By vigorously seeking support funds from commodity exchanges such as Zhengzhou and Dalian, it actively guided futures companies and insurance institutions to make reasonable investment in the pilot work, and the insured farmers contributed their own money, so as to introduce more financial resources. While reducing the financial burden, we will provide more risk protection for the development of local agricultural industries.

"Kuaifu Loan" is a series of financial products launched by Fujian Province, focusing on small and micro enterprises, foreign trade enterprises and science and technology enterprises relying on the fiscal risk sharing policy. By integrating and setting up the risk sharing capital pool of policy preferential loans, the financial department in Fujian Province can share up to 50% of the possible risk losses of loans issued by financial institutions, and guide financial institutions to increase credit support for micro, small and medium-sized enterprises, forming an effective mode of "finance + science and technology + finance". As of April 10, Fujian "Kuaifu loan" products have been invested a total of 30.63 billion yuan, benefiting more than 10,000 enterprises.

Dong Dengxin, director of the Institute of Finance and Securities at Wuhan University of Science and Technology, said that finance and finance are two major policy tools to regulate economic and social development. From the macro level, the collocation and integration of fiscal policies and monetary policies mainly complement each other in terms of fiscal structure and monetary aggregate, so as to realize joint regulation and control. Entering the post-COVID-19 era, we need to further boost confidence in the real economy, boost consumption, stabilize employment and maintain growth. We need to unleash the combined efficiency of finance to ensure economic stability.

Source: Ministry of Finance of the People's Republic of China