Nation gears up for 2022 with fiscal support, industrial strength

BEIJING－With a flurry of economic sectors in China reporting stellar growth for 2021, the country is gearing up for the Year of the Tiger with stronger financial support.

Fast expansion in the manufacturing sector last year, together with recent moves from China's monetary and fiscal authorities propping up the real economy, will all lend impetus to economic growth in the new year, officials said.

Industrial strength

China's industrial sectors once again demonstrated strength and resilience amid the COVID-19 pandemic that wreaked havoc in global industrial chains in 2021, with profits of the country's major industrial firms surging 34.3 percent year-on-year, official data showed.

Rapid development in emerging industries has led to the industrial structure upgrade and contributed significantly to the annual profit rise of this sector in 2021. Last year, the high-tech manufacturing sector maintained rapid profit growth, rising 48.4 percent from the previous year.

In 2022, China will see the core competitiveness of its manufacturing sector further enhanced and the real economy more dynamic, said Zhu Hong, a senior statistician with the National Bureau of Statistics.

Favorable policies supporting relevant enterprises will be rolled out as the next step, Zhu said, expressing hopes for greater market vitality and effectiveness of the industrial economy this year.

Greater fiscal support

With its fiscal revenue growth last year, the Chinese government is expected to lend steam to the real economy through subsidies on a larger scale. Tax and fee cuts will be given "a vital role" in promoting stable and sound economic development in 2022, said Xu Hongcai, the vice-minister of finance.

China's fiscal revenue rose 10.7 percent year-on-year to hit 20.25 trillion yuan ($3.18 trillion) in 2021, almost doubling the 11.73 trillion yuan in 2012, official data showed.

In the past year, the country's fiscal spending edged up 0.3 percent year-on-year to 24.63 trillion yuan, and the total tax and fee cuts amounted to about 1.1 trillion yuan.

Scrapping the tax burden on market entities has become a national policy to sustain economic growth amid domestic and external uncertainties. In terms of future moves in 2022, the country will tailor the tax and fee cuts to the needs of market entities and slash more of the tax burden, Xu said.

Detailing the measures, Xu said China will extend the tax and fee cuts due at the end of 2021 for small, micro and individual businesses to further ease their operating pressure.

In the meantime, the central government will step up transfer payments to local governments, especially in poor and underdeveloped regions, while the use of local government bonds will be maximized to shore up the construction of major projects.

The tax and fee cut measures will be "more precise and sustainable" in 2022, Xu added.

Bigger policy toolbox

Vowing to open the monetary-policy toolbox wider, Liu Guoqiang, deputy governor of the People's Bank of China, said the country's central bank will also contribute to future high-quality economic growth by forging a suitable financial environment in 2022.

Fresh moves came in late January as the central bank cut the interest rates of its medium-term lending facility loans and reverse repos by 10 basis points, amid the country's efforts to lower lending costs for businesses and further shore up economic growth.

Wen Bin, chief analyst at China Minsheng Bank, said the move at the beginning of this year meets the country's requirement to make monetary policy perform in advance, and the degree of such reductions signifies strengthened counter-cyclical adjustments.

The country's multiple financial policy tools have remained active in bolstering the real economy over time, particularly under the current triple pressure of demand contraction, supply shocks and weakening expectations in an increasingly complicated external environment.

For its work in 2022, the central bank will use various monetary policy tools to maintain liquidity at a reasonable and ample level, ensure stable credit growth, and guide financial institutions to increase credit supply to ensure the money supply, while social financing expansion will basically match the nominal economic growth rate, Liu said.

Xinhua