Front-loaded efforts urged to stabilize growth

Minister of finance calls for good use of policy toolbox, well-planned support

China's proactive fiscal policy will stay front-loaded and work in a forward-moving manner to stabilize economic growth and facilitate businesses, a top government official said.

Liu Kun, China's minister of finance, noted in a published article on Saturday that a proactive fiscal policy will be loaded in advance and fully implemented.

"To have the proactive fiscal policy well-implemented for this year, efforts are needed to make good use of a policy toolbox and chart plans well in advance. Policies should be issued at the earliest possible time with funds allocated timely to generate economic activities and stabilize the economy," Liu said in the article.

Since late last year, the Ministry of Finance has been working relentlessly in carrying out fiscal policy tools in advance to support growth, particularly as the evolving COVID-19 pandemic generates impacts on the services sector, and challenges for steady growth proliferate.

Last December, the ministry allocated 1.46 trillion yuan ($229 billion) from this year's quota for local government special bonds in an effort to boost local infrastructure investment and steady economic growth.

In a recent press briefing, Xu Hongcai, vice-minister of finance, said that the issuance of local government special bonds in China has progressed much faster and came much earlier this year than in previous years. By the end of March, the country had front-loaded about 1.25 trillion yuan worth of the 2022 bond quota, or 86 percent of the total advanced quota.

Liu noted in the article that as the external environment is growing increasingly complicated and severe, support for market players needs to be intensified. Tax cuts and refunds will work in parallel to alleviate business burdens this year and the transfer payments to local governments will be stepped up.

Data from the National Bureau of Statistics showed on Monday that the Chinese economy grew by 4.8 percent year-on-year for the first quarter, beating market expectations.

Bai Jingming, former vice-president and a researcher with the Chinese Academy of Fiscal Sciences, said on Monday that first-quarter growth data showed that China's capability in macro policy maneuvers improved, and the front-loaded fiscal policy has delivered an impact.

"Last year's Central Economic Work Conference has requested efforts to front-load macro policies, which in retrospect is the right move, as the first quarter has been notably impacted by the COVID-19," Bai said. "Fiscal policies have been particularly well-loaded in advance."

He said the tax cut and tax refund moves are "particularly sizable", as the amount of tax cuts and refunds will come in at 2.5 trillion yuan in total this year.

"The tax cuts and refunds are critical for businesses this year. Due to the COVID-19 shock for the first quarter, these tax refunds will be a source of important liquidity for many businesses, whereas transfer payments to local governments will play an especially important role underpinning growth," Bai said.