According to the latest data released by the Ministry of Finance on Dec. 15, China's general public budget revenue fell 2.7 percent year on year in November, which was the sixth consecutive month of growth after deducting the higher base of profits handed over by certain state-owned financial institutions and central enterprises in the same period last year, reflecting the sustained and stable economic recovery.

At the same time, the national general public budget expenditure continues to recover, COVID-19 prevention and control, poverty alleviation, grassroots "three guarantees" and other key areas of spending has been effectively guaranteed.

Government revenues and expenditures continued to run smoothly

While the economy maintained its recovery, government revenue steadily rebounded. In November, revenue in China's general public budgets reached 1,095.6 billion yuan, down 2.7 percent year on year. After deducting factors such as the higher base of profits turned over by certain state-owned financial institutions and central enterprises in the same period last year, national revenue rose by around 6% in November.

"In the face of the unprecedented impact of the epidemic, the smooth operation of fiscal revenue and expenditure has not come easily. Thanks to the role of various macro policies, the national economy has continued to recover, government revenue has picked up steadily, and there has been a sound interaction between government revenue and economic development." Bai Jingming, a researcher at the Chinese Academy of Fiscal Sciences.

Statistics show that from January to November, China's general public budget revenue totaled 1.6489 trillion yuan, down 5.3% year on year, which was in line with the budgeted growth rate and 0.2 percentage point smaller than that from January to October. National tax revenues fell 3.7 per cent, narrowing the decline for the seventh consecutive month.

"Tax revenue is a barometer of the economy, and the continued improvement in tax revenue reflects the continued improvement in business efficiency and the enhanced vitality of the market." Li Xuhong, director of the Institute of Fiscal and Tax Policy and Application at the National Institute of Accounting in Beijing.

In terms of expenditure, from January to November, total expenditure in China's general public budgets reached 2,0784.6 billion yuan, up 0.7% from a year earlier, indicating a positive growth rate. This includes 2.975.7 trillion yuan of central government spending, down 2.3%; Local government expenditures will total 1,788.9 billion yuan, up 1.2%.

By subject, governments at all levels have strictly implemented the requirement of living on a tight budget, and spending on general public services and on urban and rural communities has dropped by 3.2% and 24%, respectively. At the same time, spending on epidemic prevention and control, poverty alleviation, social security and poverty alleviation at the community level was effectively guaranteed. Spending on public health directly related to epidemic prevention and control increased by 71%, while spending on social security, employment, housing and poverty alleviation increased by 9.8%, 9.5% and 9.2%, respectively.

Tax cuts and fees will play a key role

Since the beginning of this year, in response to the impact of the epidemic, China has issued and implemented seven batches of 28 preferential tax and fee reduction measures. Among them, there are emergency measures to support epidemic prevention and control and supply guarantee, measures to help industries that are more difficult to cope with the epidemic, and measures to support enterprises to resume work and production. These policies and measures, together with massive tax cuts and fees last year, are expected to add more than 2.5 trillion yuan to the burden of enterprises this year.

Experts believe that large-scale tax and fee reductions have played an important role in supporting epidemic prevention and control, helping enterprises tide over the difficulties and promoting economic recovery through strengthening phased policies and combining institutional arrangements to release large-scale tax and fee reductions and dividends and effectively hedging the impact of the epidemic.

It is reported that in order to ensure the effective implementation of tax cuts and fees, relevant departments have taken a series of active and effective measures to improve the timeliness and accuracy of policy implementation. On the one hand, we will increase transfer payments to local governments, strengthen their financial security capacity, and establish a direct mechanism to direct the new financial funds to cities and counties, and directly benefit enterprises and the people. On the other hand, strengthen the policy publicity and interpretation, optimize tax payment services, to help enterprises make full use of the policy.

On the whole, the policies of tax and fee reduction in response to the epidemic are relatively large, both in absolute terms and as a proportion of GDP. "This year, the policy of reducing taxes and fees has played a key role in supporting economic and social development, effectively reducing the burden on enterprises and stabilizing market expectations, and delivering tangible policy dividends to enterprises and the general public." Bai jingming said.

Transfer payments will be accelerated in advance

Allocate budgets for awards and subsidies for the mechanism of ensuring basic financial resources at the county level in advance, and allocate budgets for transfer payments to old revolutionary base areas in advance... Recently, the Ministry of Finance has made intensive transfer payments from the central government to local governments in advance of 2021.

According to the Ministry of Finance, in accordance with the principle of "as much as possible", the transfer payment has been made ahead of schedule. Except for special projects such as actual settlement, detailed policies and emergency relief, other transfer payment funds have been made ahead of schedule before October 31.

Statistics show that 6.38 trillion yuan has been allocated in advance for transfer payments from the general public budget. Of this amount, 6.21 trillion yuan has been released in advance for general transfer payments. In addition, 43.3 billion yuan in transfer payments from government-managed funds and 1.4 billion yuan in transfer payments from state capital operations were made ahead of schedule.

"The central government has made transfer payments to local governments ahead of schedule, which has enhanced the predictability of local government budgets and created favorable conditions for local governments to use fiscal measures to stabilize growth and ensure people's well-being." Bai jingming said.

It is worth noting that the issuance and use of special bonds throughout the country has been generally good, effectively playing a positive role in hedging against the impact of the epidemic, expanding effective investment and promoting the smooth operation of the macro economy. By November 30, China had issued a total of 3.55 trillion yuan of new special bonds, an increase of 1.42 trillion yuan year-on-year. "Giving full play to the efficiency of government funds and special debt funds will help promote economic growth and improve people's well-being." Li xuhong said.

Source: Ministry of Finance, PRC