More proactive fiscal policy to stimulate demand and growth

A two-day national fiscal work conference that concluded in Beijing on Tuesday proposed that China adopt a more proactive fiscal policy in 2025, and make sustained efforts to implement a "combination" of policies.

The conference said the country will increase its fiscal deficit ratio, arrange a larger scale of government bonds while optimizing spending structure and preventing and defusing risks in key areas.

The market generally expects that China's fiscal deficit ratio will be raised by a certain margin in 2025, and the scale of new special bonds and ultra-long-term special government bonds will continue to expand, to provide more support for stable growth and structural adjustment. The country's fiscal expenditure will be more precise, focusing on improving people's livelihoods, promoting consumption, and maintaining consumption sustainability. At the same time, the fiscal policy will focus more on defusing real estate risks to stabilize the market, and defusing local government debt risks.

A series of measures recently announced by the central authorities, from appropriately raising the basic pension for retirees to increasing financial subsidies for urban and rural residents' medical insurance, require the country to increase fiscal spending efforts. At the same time, the support of consumer goods trade-in also requires subsidy funds in the form of ultra-long-term special bonds, which are expected to effectively drive more social investment.

The conference also called for deepening the reform of the fiscal and taxation systems, focusing on resolving the tight fiscal balance and local debt risks in the short term, while seeking breakthroughs in reforms on the budget system, tax system and intergovernmental fiscal relationship.

Overall, multiple targets have been set for the fiscal work in 2025 with the aim of stabilizing growth, improving people's livelihoods and preventing risks. If well implemented, these reforms will promote high-quality development of China's economy.

21ST CENTURY BUSINESS HERALD