Macro Policy Orientations and Priorities

To achieve the abovementioned objectives, it is imperative that we maintain the continuity, consistency, and sustainability of macro policies and keep major economic indicators within an appropriate range. We will strengthen targeted, well-timed, and precision regulation on the basis of range-based regulation. We will continue to ensure macro policies alleviate difficulties of market entities and maintain necessary policy support for achieving this goal. We will avoid sharp turns in policy; instead, we will make adjustments and improvements based on new developments to reinforce the fundamentals of the economy.

We will continue to pursue a proactive fiscal policy, a prudent monetary policy, and an employment-first policy. We will make full use of reform policies, continue to refine the combined use of macro policies as the situation requires, and improve the timing, intensity, and efficacy of policies. This will allow us to realize high-quality development and to thereby get the 14th Five-Year Plan off to a good start.

§ We will enhance the quality, efficiency, and sustainability of our proactive fiscal policy.

In view of the effective containment of Covid-19 and gradual economic recovery, we have set the deficit-to-GDP ratio for the year at around 3.2%, slightly lower than that of last year. No Covid-19 bonds will be issued. As government revenue rebounds, total government expenditures will be higher this year than last. We will continue to give priority to increasing support for the efforts to ensure employment, living standards, and the operations of market entities.

Continued cuts will be made in central government expenditures, including considerable reductions to outlays on non-essential and non-obligatory items. General transfer payments to local governments, however, will be increased by 7.8%, which is significantly higher than last year. This will include growth of more than 10% in both transfer payments for equalizing access to basic public services and in rewards and subsidies to ensure basic funding for county-level governments.

We will make it a normal practice to directly allocate budgetary funds to prefecture- and county-level governments and place more funds under this mechanism. This year, 2.8 trillion yuan of central government funding will be allocated in this way to provide timely and strong fiscal support to these local governments. We should practice fiscal frugality in the best interests of the people. We should continue to tighten our belts, ensure continued increases in spending to meet basic living needs, and help energize market entities.

We will continue to implement and improve tax reduction policies, implement institutional tax cut policies, extend the duration of several temporary policies such as VAT relief for small-scale taxpayers, and adopt new policies on structural tax reductions to offset the impact of some policy adjustments.

The VAT threshold for small-scale taxpayers will be raised from 100,000 yuan to 150,000 yuan in monthly sales. On the basis of preferential policies already in force, we will further reduce income tax by half for micro and small enterprises and self-employed individuals on their annual taxable income below 1 million yuan.

§ We will keep our prudent monetary policy flexible and targeted and at a reasonable and appropriate level.

We will give even greater priority to serving the real economy, and balance the needs of promoting economic recovery and preventing risks. We will see that increases in money supply and aggregate financing are generally in step with economic growth in nominal terms, maintain a proper and adequate level of liquidity supply, and keep the macro leverage ratio generally stable. We will keep the RMB exchange rate generally stable at an adaptive, balanced level.

Further steps will be taken to address the financing difficulties of micro and small enterprises. We will continue the policy of allowing micro and small enterprises to defer principal and interest repayments on inclusive-finance loans, and increase support for inclusive finance via re-lending and rediscounting.

We will continue the policy of providing rewards and subsidies to reduce financing guaranty fees for micro and small businesses, and improve mechanisms for risk sharing and compensation for loan defaults. We will move faster to promote the sharing of credit information.

The assessing and evaluating of the performance of financial institutions will be improved, and we will ensure that those who have fulfilled their duties are not held accountable.

Banks will be encouraged to increase credit loans and first-time loans. We will extend the pay-as-you-go lending model, channel more funds into scientific and technological innovation, green development initiatives, micro and small enterprises, self-employed individuals, and new types of agribusiness, and provide targeted support for enterprises and industries enduring a sustained impact from Covid-19. Inclusive loans to micro and small businesses by large commercial banks will increase by over 30% this year.

New models for providing supply chain financial services will be developed. Appropriate reductions will be made to transaction fees levied on micro and small businesses. We will improve regulation over deposit rates, further lower loan interest rates in real terms, and continue to guide the financial sector in giving more to the real economy. This year, we must see that micro and small businesses have easier access to financing, and that their overall financing costs drop steadily.

§ We will continue to improve the employment-first policy to enhance its performance.

We will work to keep the employment situation stable. We will continue to provide adequate fiscal, tax, and financial policy support to businesses that do not cut jobs or only cut a small number of them. We will further reduce premiums for unemployment insurance and workers’ compensation, and expand the scope of time-limited policies aimed at helping businesses maintain payrolls, such as the refunding of unemployment insurance premiums. The duration of policies on work-based training organized by companies will be extended.

We will broaden channels for creating market-based employment, and leverage the role of business startups in boosting employment. The thresholds for obtaining employment will be lowered, and we will improve the national catalog of professional qualifications on a continuing basis, and relax or lift the years-of-experience requirements for taking qualification examinations for some license based professions.

We will support the development of new forms of employment and keep such employment well-regulated; and we will move faster to advance trials of occupational injury insurance. We will continue to subsidize contributions to social insurance made by workers in flexible employment, and allow people to access social security in the locality where they work even if they do not hold local residency.

We will work to ensure employment for key groups such as college graduates, demobilized military personnel, and rural migrant workers, improve policies on employment support for people facing difficulties like those with disabilities and members of zero-employment families, and help unemployed people find work.

We will expand the scope of use for vocational skills training funds, launch large-scale, multi-level vocational skills training programs, and complete the goals of the three-year initiative on providing vocational skills training and expanding enrollment in vocational colleges. A number of bases for training highly-skilled personnel will be opened. An initiative will be carried out to boost the quality of employment services.

We will use employment subsidies and other funds to support the development of labor, talent, and casual labor markets, so as to widen the avenues of employment and enable people who are willing and able to work to find more equitable job opportunities.

In addition, we will step up coordination and collaboration between macro policies, and promote synergy between fiscal, monetary, employment, industrial, investment, consumption, environmental, regional, and reform policies. We will fully leverage the key role of effective investment, improve the management of expectations, bolster market confidence, and pool resources and efforts in order to accomplish major, difficult, and urgent tasks.

Regarding reform policies, we will focus on boosting market dynamism, promote better interplay between an efficient market and a capable government, and move faster to push forward reforms that are conducive to a more efficient allocation of resources, to keeping everyone motivated, and to improving the quality and performance of development. We will stay problem-oriented as we carry forward reforms in key areas and sectors to enhance China’s innovation capacity, to advance balanced development, to improve the environment, to promote high-standard opening up, and to ensure that the fruits of development are shared by everyone.