On the fiscal policy of recent years

[Abstract] Since 1998, China's fiscal policy from a positive to stable, and from sound to active, experienced in the market economy the Chinese government under the exploration process. In this paper, a combination of horizontal and vertical mode, comprehensive survey of nearly a decade Fiscal policy background, the specific content of the policy effect, and to the deeper reason behind the policy to be analyzed in order to learn from experience.

[Keywords:] active fiscal policy, prudent fiscal policy, fiscal policy, the policy effect

First, the Asian financial crisis of the proactive fiscal policy.

(A policy context.

In 1997, the Southeast Asian financial crisis, shrinking international market demand, China's foreign trade of negative Economic growth, deflation. Home, a buyer's market caused by a more comprehensive inventory of goods, "soft landing" weak aggregate demand. Although the central bank has seven lower deposit and lending rates, in order to use monetary policy to expand demand for corporate lending, investment, consumption and investment demand are inelastic, policy failure.

(B policy content and results.

In 1998, for the above background, the Chinese government has adopted proactive fiscal policy, which mainly includes the following four areas:

1. Issuance of 100 billion yuan treasury bonds for farmland water conservancy, Transportation, telecommunications, urban infrastructure, urban and rural power grid, directly under the central grain storage, affordable housing, etc., to the state-owned commercial banks to issue 270 billion yuan of special treasury bonds to raise the state-owned commercial banks capital adequacy ratio and risk-resisting ability.

2. Adjusting the tax policy: involving real estate sales tax, deed tax, land value increment tax to give relief to value-added tax, sales tax, import tax, corporate income tax, foreign-invested enterprises and foreign enterprises and Research institutions, and so do the new transfer policy stipulates that the foreign-related tax policy to make the appropriate adjustments, to encourage foreign investment and restore people's savings deposit interest income tax charge, driving the residents immediate consumption needs.

3. Increase the income of low-income people: improve the social security "three lines", income government employees, retirees benefits, pension arrears by state-owned enterprises, increase their income through various channels.

4. The strategic adjustment of the national economy: direct investment in treasury bonds, the development of high-tech industries and transform traditional industries, and support the technological transformation of key industries and enterprises, promoting SOE reform and industrial structure optimization.

The effectiveness of the proactive fiscal policy are: to curb the slowdown in Economic growth and deflation, and promote Economic restructuring and upgrading, the unemployment rate rise slows down, more balanced regional Economic development, overall Economic growth achieved by the initiative were trends changes.

Second, the proactive fiscal policy to prudent fiscal policy changes.

(A policy context.

Second half of 2003, by the world economic recovery and China's accession to WTO and other factors, the Chinese economy has entered a new phase of a cyclical upturn. At this point, our economy underscores the deep structural contradictions: some industries blind expansion of investment in fixed assets, caused by coal Power supply Oil Transportation backward development of agriculture, rapid reduction of grain sown area, production falls short, CPI fluctuations, production, prices continue to climb. The proactive fiscal policy can not reduce the excessive fixed asset investment and inflation pressures. In this context , countries have adopted sound fiscal policies.

(B policy content and evaluation.

Sound fiscal policy, the contents of the following four points:

1. The deficit under control: appropriate to reduce the central government deficit, an appropriate degree, to prevent the re-emergence of inflation and deflation to expand.

2. Promote structural reform and institutional innovation: the appropriate scale of project finance debt reduction, change of project funds to rely on debt-led growth for the autonomous growth of the long-term economic growth.

3. Structural adjustment: adjustment of fiscal expenditure structure and bond funds into the project structure, the total fiscal expenditure will remain basically unchanged.

4. To increase revenue: on the one hand, no increase in the overall tax burden or a slight decrease on the basis of tax due are collected to ensure the steady growth of fiscal revenue, on the other hand, strict control of expenditure, improve the utilization of financial resources.

The substance of sound fiscal policy can be summarized in three points: First, the Government reduced the total expansion in and out, and second, focus on structural optimization, "has retained control" distinction and the third is to seize the opportunity to deepen reform, improve management. Visible the implementation of prudent fiscal policies to the central place of the proactive fiscal policy choice is objective, necessary and realistic. [Research Papers Download hi138.com]

Third, an active fiscal policy back in 2009.

(A policy context.

By the U.S. financial crisis, the international market is weak, weak external demand. The domestic export sector under great pressure, combined with investments on the decline, corporate profitability declined. China's economy has gone through 8 years of rapid growth, in 2008 reversed: the year the first 10 months for example, total retail sales of social consumer goods grew 22%, CPI rise 6.7%, so after deducting price factors, consumption growth weakened, when the first three quarters, China's export growth rate of 22.3% over the same period the export increment ratio in 2007 dropped 4.8 %.

(B policy content and results.

In 2009, the face of economic downturn, the Chinese government to regain an active fiscal policy, mainly in the following two aspects:

1. Expanding finance public expenditure: for the "three rural" spending, spending the people's livelihood, protection of housing and reconstruction spending, railways, roads and airports and other major infrastructure spending, etc., to promote local investment and consumption.

2. Tax and fee reduction policy: implementation of structural tax cuts, reform of the tax system to promote the implementation of export tax rebate policy, the implementation of preferential tax policies for independent innovation and SMEs, and promote fee reduction policy.

In the proactive fiscal policy stimulus, the situation in the slowing down of economic growth: 8.7% growth in 2009, strong domestic demand, exports turned up by the fall.

Four years of fiscal policy before and after contrast.

After a lapse of ten years, compared to twice a proactive fiscal policy, it is easy to see:

1. Ten years ago, China has experienced the Yangtze River flood and the Asian financial turmoil, decades later, China has experienced the earthquake and the subprime crisis led to the global financial tsunami hit.

2. In the two before the crisis, the Chinese economy have different degrees of overheating, macroeconomic policy tightening and the subsequent effect of the superposition of external demand slowed, leading to wide fluctuations in the economy.

3. Although the existence of policy differences between active and healthy, but in essence, combining the two: sound fiscal policy to address the proactive fiscal policy can not solve the problem arising is the overall goal of promoting economic growth in an adjustment . So, once again take the same proactive fiscal policy is to achieve sustained and rapid economic growth of China's policy protection.

4. The current domestic and international situation facing the more serious: the larger capital flows, foreign exchange reserves more, higher dependence on exports.

5. The current favorable conditions for more active: strength is more powerful, more adequate foreign exchange reserves, fiscal resources are more abundant, the currency remains strong.

6. The Government to implement the proactive fiscal policy, more experienced, more forceful. For example: the same is to increase the amount of treasury bonds, treasury bonds into alternate current phenomenon occurred, and this is not only defined the direction of investment, but also to estimate the exact size.

V. Conclusion.

China's market economy has only been established for 16 years. Therefore, in our government to re-examine efforts to promote economic growth, it must maintain an objective attitude: the pressure on the Chinese economy is actually the pressure of economic restructuring, the Government the use of financial means to regulate the economy experiences are worthy of recognition. [Research Papers Download hi138 \ Com]

References:

[1] Su, Chen Shaoqiang. China's current financial policy and trends. Shanghai Economic Research, 2005; 9.

[2] Ma Hongfan. The current international financial crisis and China's fiscal policy choices. ECONOMIC Research .2009; 7.

[3] Wang Yiming. The current economic forms of knowledge and policy recommendations. Macroeconomics .2008; 8.