Saturday, March 5, 2016

Xinhua News Agency read record national deficit ratio 3 necessity feasibility

In the Government work report Premier Li keqiang 5th disclosure in 2016, should substantially increase China's proactive fiscal policy, proposed fiscal deficit of 2.18 trillion yuan, an increase of 560 billion yuan over last year, the deficit ratio increased to 3%.

This highest since new China was founded in 1949, the size of the deficit, deficit rate touched for the first time the EU's so-called "3% of the international warning line".

Why the current is amplified the deficit? Financial risk? How to make good the deficit? Reporters interviewed about authority figures.

Afterburner amplification deficit of active fiscal policy

According to the Government work report, 2016 deficit of 1.4 trillion yuan in the central budget, local government deficit of 780 billion yuan. Where the arrangement is not included in the deficit 400 billion yuan of special bonds, replacement continues to issue local government bonds.

"This year the huge increases in fiscal deficits, is the essence of active fiscal policy efforts. "CPPCC Member Zhang Lianqi said. He noted that 8 years of international financial crisis, China faces greater challenges of economic growth, the economic downturn under a lot of pressure. In this case, need to be incremental and expanded the deficit through tax cuts to stimulate the economy within the power.

Active fiscal policy to expand further, and hallmark is greater tax cuts reduced fees. According to the Government work report, May 1, 2016, will change from full implementation of camp increased, the scope expanded to construction, real estate, finance, service industries, new real estate and all enterprises included into the scope of deduction of VAT, tax reduction does not only ensure that all industries increased.

Meanwhile, establishment of Government funds will be canceled, stop sign and merge a number of Government funds, expanding the scope of water conservancy construction funds are exempt from. 18 administrative fees up from small micro-enterprise extends to all businesses and individuals.

According to the report, a series of tax reduction initiatives, to reduce burdens for enterprises and individuals this year of more than 500 billion yuan.

Tax reduction at the same time, active fiscal policies will also be more effective. Director of the Research Institute of fiscal science, said Liu Shangxi, China, a clear sign is appropriate to increase the necessary government expenditure and government investment, increase the vulnerability of people's livelihood support.

The size of the deficit of 2.18 trillion yuan this year, meant the Government paid out much higher than the income of money, businesses and individuals will get more government funding, and stimulating market vitality, enhance the development of power. Wang Sicong dialogue a lot of rich followed me

Deficit and the Government debt ratio in the world, China still relatively low

3% has been the EU economy as a measure of a country's financial risk warning line. China's budget deficit this year of up to 3%, touching the EU line, means that the financial risk?

"China's fiscal deficit and the Government debt ratio is relatively low in the major economies of the world, such an arrangement is necessary, feasible and safe. "Prime Minister Li keqiang said in the report.

Press queries over the data revealed, China's budget deficit has been kept low. Since reform and opening up, China's deficit ratio is always maintained at 3%, after the outbreak of the Asian financial crisis of 1998 budget deficit of 96 billion yuan, deficit ratio exceeded 1%. Following years budget deficit has been high, 2000 deficit ratio had reached 2.9%.

After 2005, with the implementation of prudent fiscal policy, China's deficit reduced. 2008 reset active fiscal policy, deficits have been expanding, active fiscal policy Afterburner effect. From 2012 to 2015, China's fiscal deficit, 2.1%, 1.5% and 2.4%, respectively.

And in recent years from the effects of cyclical fluctuations of the world economy, deficits in major developed countries often exceeded 3%, such as the 2014 United States deficit rate of 4.1%, United Kingdom 5.7%, France 4%, Japan 8.8%.

Said Liu Shangxi, many people are concerned that China's fiscal deficit reached 3% of the so-called "international line" risks, such worries are unnecessary. Standard is the EU Maastricht Treaty 3% the original financial discipline, not scientific standards, in order to measure the level of deficit, China is not. Cordon of States in determining deficits should be based on the country's economic development, and domestic prices, debt, fiscal policy and other considerations.

Additional deficits will make up for the fiscal reduction and spending

How to use for the issuance of deficit, Assistant Finance Minister Xu Hongcai introduced, expanding the deficit, increased financial expenditures at the same time, mainly used to compensate for the tax cut reduced fees financial reduction protects the Government should bear the responsibility.

The national people's Congress, Finance Minister Yu Guoan, Shandong province, said that 2016 year strengthening the supply side of structural reform needs clear fee policies through more tax cuts to stimulate entrepreneurship and innovation potential of the whole society and strive to dissolve excess capacity and reducing cost and increasing efficiency, and efforts to improve the supply of products and services, and promote a series of reforms behind these needs the financial sector to provide financial support.

As the Government work report, the Central Government will arrange for special awards and subsidies of 100 billion yuan to support steel, coal and other difficult industry capacity, focus on employee shunt placement; make up the fields of infrastructure and livelihood of many short Board, 2016 will also launch a number of railways, electricity, nuclear power, urban transit and other "Thirteen-Five" planned major projects, investment increased to 500 billion yuan in the central budget.

Xu Hongcai said in 2016, further expanding the scale of fiscal deficits and debt, from the level of economic development, the Government debt situation and the relationship between assets and liabilities, overall government debt risk control of China. Judging from the debt balance in 2015, Chinese local government debt outstanding at the end of 16 trillion yuan, plus the Central balance 10.66 trillion yuan, accounting for about 39.4% of GDP.

Said Liu Shangxi, China's government debt is mainly used for urban construction, land purchase, transportation, affordable housing, educational, health, forestry, water conservancy, ecological construction and other infrastructure, public project, forming a massive debt as debt guarantees corresponding of the assets, thereby reducing the risk of debt.

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