Active Fiscal Policy Set to Become More Active: China’s Finance Minister


A report from the People’s Daily says that the Chinese central government “has already confirmed that active fiscal policy will become even more active,” as well as flagged further “larger-scale” tax reduction.

Chinese finance minister Liu Kun (刘昆) cautioned, however, that the phrase “active fiscal policy will become more active” should “absolutely not” be interpreted as “vigorous, irrigation-style stimulus,” but instead refers to “more effective, flexible and anticipatory policies which plays a greater role in expanding domestic demand and making structural adjustments, and the driving of high-quality economic growth.”

The finance minister highlighted several areas of emphasis for China’s active fiscal policy, including:

  • Further tax and fee reductions, including “comprehensive implementation of tax and fee reduction policies that have already been released,” as well as research into further large-scale tax reductions.
  • Expediting consumption, by means of “improvements to income allocation systems that are of benefit to raising the consumption capability of households,” as well as other policies that increase household incomes and spur household consumption potential.”
  • Vigorous support for major projects as confirmed by the central government, and strengthening of “weak links” in economic and social development.

Liu said that “looking at the execution situation, this year the effects of active fiscal policy have been expressed in the form of accelerated bond issuance and budgetary execution to ensure that local governments accelerate fund usage, in addition to vigorous tax and fee reductions.”

According to official government data as of 26 September China had issued 91.8% of the new local government standard bonds planned for the year, as well as 85% of the new local government special bonds.