At the meeting on coVID-19 prevention and control as well as the deployment of economic and social development, General Secretary Xi Jinping stressed that proactive fiscal policies should be more proactive and proactive, and policies such as fiscal interest discount, large-scale fee reduction and tax holding should be implemented to enterprises as soon as possible. This is a major decision and deployment made by the CPC Central Committee to scientifically grasp the development trend at home and abroad, profoundly analyze the impact of COVID-19 on the economy, and take charge of overall economic and social development. It points out the direction and path of this year's fiscal policy and provides fundamental guidance. In 2020, we will make our proactive fiscal policy more proactive, improve its quality and efficiency, and step up counter-cyclical adjustment. We will do a good job in ensuring stability, ensure full implementation of the task of ensuring poverty, and ensure that we achieve the decisive battle against poverty and complete the building of a moderately prosperous society in all respects.

First, A more proactive fiscal policy is an objective need for economic and social development

A more proactive fiscal policy is an inevitable requirement for completing the building of a moderately prosperous society in all respects. At present, China's economy has shifted from a stage of rapid growth to a stage of high-quality development. The principal social contradiction has been transformed into one between unbalanced and inadequate development and the people's ever-growing needs for a better life. This year is to build a well-off society in an all-round way and much starker choices-and graver consequences-in planning final years, more positive and promising a proactive fiscal policy will be conducive to solve the livelihood of the people in the field of outstanding short board, resolutely fight the epidemic prevention and control war, playing against and dissolving of significant risk of good battle, precision out of poverty, pollution prevention, provide solid support to build a well-off society in an all-round way.

More proactive fiscal policies are needed to hedge against downward economic pressure. At present, China's economic and social development is still facing greater uncertainty, the economic downward pressure is still increasing. A proactive fiscal policy more positive and promising by properly increasing deficit, special Treasury bonds issued against epidemic diseases, and increasing local government special bonds, consolidate and expand the tax cut JiangFei effect, etc., will help further promote the supply side structural reforms, excavate potential in domestic demand, stimulate market vitality, cultivating endogenous power, effectively cope with short-term impact and challenges, in the economic operation of the sustainable and healthy development of economy society.

A proactive fiscal policy is more proactive and effective. It is essential for public finance to better play its role as the foundation and an important pillar of national governance. The COVID-19 outbreak has had a huge impact on revenue growth. Fiscal revenue showed negative growth in the first quarter of this year, and it is expected that the revenue in the general public budget for 2020 will be lower than that of the previous year. At the same time, we will coordinate epidemic prevention and control with economic and social development, make every effort to achieve the decisive battle against poverty and complete the building of a moderately prosperous society in all respects, and maintain certain intensity of government expenditure. A proactive fiscal policy will be more proactive, which will help ensure the overall prevention and control of the epidemic and economic and social development, ensure people's employment, people's livelihood, market players, food and energy security, stability of industrial and supply chains, and community-level operations.

Second, the active fiscal policy is more active and effective

The proactive fiscal policy should be more proactive, improve quality and efficiency, step up counter-cyclical adjustment, and effectively hedge the impact of the epidemic. We will improve the structure of government expenditures and comprehensively implement performance-based budget management. We will make good use of special bonds issued by local governments to prevent and defuse hidden debt risks.

1. Do "addition" well and stick to the "more positive" orientation. First, we will increase the deficit, send a clear and positive signal, ease the gap between government revenue and expenditure, stabilize it and boost market confidence. Second, we will cut taxes and fees to hedge against business difficulties. Third, increase government investment to hedge against downward economic pressure. We will increase government investment through special Treasury bonds and special bonds issued by local governments, leverage the role of government investment, and effectively support efforts to strengthen weak links, benefit the people, promote consumption, and expand domestic demand. Fourth, increase transfer payments to hedge the fund needs of the grassroots "six guarantees". We will further increase transfer payments to local governments, give preference to areas more affected by the epidemic in their distribution, and implement policies such as the early-deployment system for Treasury funds and the periodic increase in the proportion of fiscal funds retained in order to increase the cash flow retained by local governments. Fifth, we need to balance the budget and hedge against the impact of the epidemic. We will make full use of existing government funds and assets, increase the amount of funds transferred to the central Budget Stabilization Fund, and reduce regular expenditures to effectively hedge against the impact of the epidemic.

2. Do a good job in multiplication and stick to the goal of improving quality and efficiency. We will further tap potential in the interior and effectively improve the efficiency of allocating and using financial resources. We will adhere to the basic principle of determining expenditures based on revenue and use the zero-based budget concept to determine expenditures scientifically. We will further improve the structure and manner in which government funds are used. We will focus on areas such as advanced manufacturing, improving people's well-being, and weak links in infrastructure that benefit both supply and demand and have a multiplier effect. Strengthen performance management, put money to good use, prevent interception and misappropriation.

3. Do a good job in reducing the number of government employees, and keep the government on a tight budget. The central government departments took the lead in tightening up and strictly controlling all kinds of regular expenditures. Local governments will continue to reduce spending on official overseas visits, official vehicles, and official hospitality. They will strictly control travel expenses for meetings and meetings, and prohibit the construction or expansion of government buildings.

4. Doing a good job in division and preventing and defusing risks and hidden dangers of government debt. We will improve the mechanism for monitoring local government debt on a regular basis, strengthen oversight and accountability, properly handle risks of high-risk local financial institutions, prevent domestic risks from overlapping with imported risks from outside, and ensure that systemic and regional risks do not occur.

Third, we will adopt a proactive fiscal policy

In pursuing a more proactive fiscal policy, we must focus on supply-side structural reform, do a good job in ensuring stability, fully implement the tasks of ensuring social security, and make greater progress in high-quality economic development so as to improve people's lives.

1. Protecting market players, focusing on supporting small, medium and micro businesses and industries that have been hit hard by the epidemic. To keep the market is to keep the economy basic dish. We will fully implement all policies and measures to reduce taxes and fees, further introduce targeted, intensive, and phased policies to support and assist enterprises, and speed up the resumption of work and production of all types of enterprises and the normal economic and social operations. First, we will step up efforts to reduce taxes and fees. Through institutional arrangements and phased policies, we will focus on reducing the tax burden on small, medium, and micro businesses, individual businesses, and enterprises in industries with difficulties. We will continue to implement the system of lowering value-added tax rates and corporate pension insurance rates, and appropriately extend the period for implementing some of the phased tax and fee reduction policies introduced earlier. Second, reduce the production and operation costs of enterprises. We will reduce or exempt rents on state-owned properties, and encourage all types of property owners to reduce or defer rent. The government financing guarantee industry halved fees, reducing the rate of comprehensive financing guarantee to less than 1 percent. Third, we will continue to stimulate the vitality of market entities. We will support efforts to build a full-chain and specialized public service platform, implement preferential tax policies to encourage the development of venture capital, and actively implement the policy of reducing financing guarantee fees, awards and subsidies for small and micro businesses.

2. Making ensuring employment a top priority and doing everything possible to stabilize and expand employment. Employment is fundamental to people's wellbeing, and the policy of giving priority to employment should be strengthened across the board. First, we will make good overall use of employment subsidies, action funds for improving vocational skills and unemployment insurance funds, adjust and accelerate the use of special awards and subsidies for industrial enterprise structural adjustment, and support enterprises in stabilizing existing jobs. Second, we will focus on supporting efforts to find jobs for college graduates, rural migrant workers, ex-servicemen and other key groups, and promote employment and entrepreneurship through multiple channels. Third, we will strengthen basic living allowances and re-employment services for the unemployed and expand the coverage of unemployment insurance.

3. Supporting innovative development and industrial upgrading, stabilizing the basic supply chain of foreign trade and foreign capital, and ensuring the stability of industrial and supply chains. We will adhere to the principle of consolidating, strengthening, upgrading, and improving economic performance. We will give full play to the advantages of fiscal and tax policies in structural control, break through the "blocking points" in the industrial and supply chains, fill the "breaking points", encourage enterprises to turn around as soon as possible, and enhance the quality advantage of China's economy. First, we will promote high-quality development of the manufacturing sector. We will guide capital and resources to focus on key strategic areas and move the industrial chain up to the medium-high end. We will continue to support the exploitation and utilization of unconventional natural gas such as shale gas and coal bed methane, support the healthy development of renewable energy, and promote the adjustment of energy mix. Second, we will support scientific and technological innovation. We will increase support for research on COVID-19 vaccines and drugs, improve institutions and mechanisms that encourage basic research and original innovation, set up national laboratories, and carry out trials to grant researchers the ownership or long-term use of their scientific and technological achievements. Third, we will stabilize foreign trade and foreign investment. We will continue to support and guide the development of comprehensive pilot zones for cross-border e-commerce, and accelerate the development of new growth areas for foreign trade. We will establish a sound system for promoting public services for foreign investment and guide orderly outbound investment cooperation.

4. Support the implementation of the rural revitalization strategy, and ensure the supply of food and important agricultural products to ensure food security. Food security is an overall and strategic issue concerning economic and social development. First, we will establish and improve policy systems and institutions to support the implementation of the rural revitalization strategy and promote integrated development between urban and rural areas and between regions. Second, we will enhance China's capacity to ensure food security. We will strengthen the protection of farmland and develop water conservancy projects, deepen reform of the grain purchase and storage system, improve the minimum purchase price policy for rice and wheat, and the mechanism for market-based purchase of corn and soybeans and producer subsidies. Third, we will implement policies to support the resumption of pig production to stabilize and ensure the supply of pork in the domestic market.

5. Ensuring financial support to win the battle against poverty and further ensuring and improving people's wellbeing We will ensure that the basic needs of people's lives are met, and ensure that people's lives are inclusive, basic and affordable. First, we will resolutely win the battle against poverty. We will further increase government funding for poverty alleviation, with the focus on the "three regions, three states" and other areas with deep poverty, areas under war supervision and areas heavily affected by the epidemic. We will continue to implement the policies for integrating agriculture-related funds in poverty-stricken counties, helping the poor by industry, and helping the poor by employment. We will accelerate the establishment and improvement of mechanisms to prevent poverty. Second, we will support the development of fair and quality education. We will further improve the structure of spending on education, consolidate the mechanism for ensuring funding for compulsory education in urban and rural areas, and make it difficult for children of migrant workers in cities to go to school. Third, we will advance the healthy China strategy. We will consolidate and improve the mechanism for the direct settlement of hospitalization expenses incurred by patients in other places, steadily improve the overall planning of medical insurance funds, continue to support the deepening of the comprehensive reform of public hospitals, strengthen the public health system, and promote the establishment of a system for preventing and treating major coVID-19 cases in peacetime and in wartime, as well as a system for providing emergency supplies. Fourth, we will steadily improve old-age security. We will accelerate national pooling, increase central adjustments to basic pension funds for enterprise employees, continue to transfer part of state capital to social security funds, and ensure that basic pensions for retirees are paid on time and in full. We will vigorously develop community elderly care programs. Fifth, we made every effort to ensure basic living standards for people in need. We will support local governments in providing subsistence allowances, assistance and temporary assistance to people living in extreme poverty. Eligible unemployed persons who did not participate in unemployment insurance shall be brought into the scope of assistance and protection such as subsistence allowance according to regulations. We promptly launched a mechanism to increase social assistance and social security benefits when prices rise, and worked hard to reduce the impact of rising prices on the basic lives of people in need.

6. We will increase financial support to local governments, ensure that the bottom line of ensuring wages, operating standards, and basic living standards is met, and ensure normal operation at the community level. The central government will make overall planning for the increase in the deficit, carry forward funds from previous years, and reduce the financial resources made available by reducing expenditures at the same level, increase financial support to local governments, and effectively ensure the operation of communities. We will actively innovate the way government funds are allocated to ensure that they reach the city and county level and the people's livelihood. In addition, we will implement various fiscal and tax policies to support the economic and social development of Hubei province, and accelerate the resumption of work and production, the resumption of cities and industries, and the stable operation of industrial and supply chains, so as to promote the comprehensive economic and social recovery of Hubei Province.

Source: Ministry of Finance, PRC