Chairperson:

Thank you, Mr. Ning. Now let's welcome Mr. Liu who will give us an introduction.

Liu Kun:

Ladies and gentlemen, media friends, good morning. First of all, on behalf of the Ministry of Finance, I would like to express our heartfelt thanks to all our media friends for your continuous concern and support towards China's financial undertakings. The 70 years since the PRC's founding is a time marked by growing national strength, substantial economic progress, and the continuous improvement in people's living standards. This is also a time when profound changes took place in the country's financial landscape. In particular, since the 18th CPC National Congress, the CPC Central Committee with Comrade Xi Jinping at its core guided our direction and made strategic plans, making historic achievements in our nation and bringing historic changes to the cause of the Party and the country. National finance played an active role along this path of development.

First, China's financial strength grew continuously. Over the past 70 years, China's fiscal revenue increased from 6.2 billion yuan in 1950 to 18.34 trillion yuan in 2018. This marked an average annual growth rate of 12.5% and an increase of nearly 3,000 times. That is to say, the daily fiscal revenue today is almost eight times of that of the whole year of 1950. The continuous expansion of the fiscal "pie" provided a solid financial guarantee for China's economic and social development over various periods.

Second, the public finance system gradually improved. Over the past 70 years, China made a historic leap from production and construction-oriented finance to public finance. The fiscal system also transitioned from unified revenue collecting and spending to dividing revenue and expenditure between the central and local governments. These changes show that China's fiscal system has an increasingly prominent public nature and fairness.

Since the 18th CPC National Congress, we made further adjustments to balance the allocation of financial resources. We promoted equal access to basic public services in line with the needs of the central and local governments at all levels, and allow people to enjoy the fruits of reform and development. In 2018, revenue in the central government's general public budget accounted for 46.6% of the national revenue, but the expenditures in the central government's general public budget accounted for only 14.8% of the national expenditure. That is to say, more than two-thirds of the revenue in the central government's general public budget was handed over to local governments. In 2019, the central government allocated 7.54 trillion yuan in transfer payments to local governments from its general public budget, including 6.78 trillion yuan in general transfer payments and 763.59 billion yuan in special transfer payments. The transfer payments were mainly used to promote coordinated development among regions and support the provision of public services and undertakings related to the people's wellbeing.

Third, fiscal policies have played an increasingly stronger role. Over the past 70 years, we have given full play to the role of fiscal policies in regulating economic operations, and established and improved on a system of regulation through fiscal policies, which meets the needs of different economic operations in a socialist market economy. Since the 18th CPC National Congress, we have stayed committed to the general principle of pursuing progress while ensuring stability, adhered to the new development philosophy, and earnestly implemented proactive fiscal policies. These moves have played an important part in promoting the steady and sustainable development of the Chinese economy. In 2019, we implemented more proactive fiscal policies and expanded government spending appropriately. The government deficit nationwide is now 380 billion yuan larger than that of 2018, and the value of special bonds issued by local governments are 800 billion yuan higher than that of 2018. On top of the 1.3-trillion-yuan tax cuts in 2018, we continued reducing the tax burden on companies by 2 trillion yuan. Meanwhile, we strengthened policy coordination, maintained spending in some areas while making cuts in others. We have also made more forward-looking, targeted and effective regulations, and kept the economy operating within a proper range.

Fourth, the reform of the fiscal and tax systems has continued to deepen. Over the past 70 years, fiscal reform always played a fundamental and supportive role as a "breakthrough" and "forerunner" in promoting economic restructuring. In 1950, China carried out unified national fiscal and economic policies as well as unified revenue collecting and spending. In 1980, China instituted the system of "eating from different pots," dividing revenue and expenditure between the central and local governments. The country implemented the fiscal self-responsible mechanism for governments at different levels in 1985 and reformed the fiscal contracting system in 1988. It carried out the tax distribution system reform in 1994, and continued pushing forward reforms in later years to improve the fiscal system, tax system and government budget system.

Since the 18th CPC National Congress, we have continuously deepened the reform of the fiscal and tax systems to modernize China's governance system and capacity. First, we introduced a reform plan on the sharing of fiscal duties and spending responsibilities between central and local governments in basic public services, as well as six reform plans on diplomacy, medical care and transportation. This was done in accordance with the requirements of "accelerating the establishment of a modern fiscal system and a fiscal relationship between central and local governments featuring clear responsibilities, coordinated allocation of fiscal resources and balanced regional allocation." We further made clear the division of the revenue between the central and local governments, and reformed and improved the system of transfer payments from the central government to local governments. Second, we improved the government budget system composed of the "Four Budgets," implemented medium-term fiscal planning and management, and established a cross-year budget balance mechanism. This was done in accordance with the requirements of "establishing a comprehensive, standardized, transparent, scientific and effective budget system and implementing all-round performance-based management." We also strengthened debt management and risk prevention and control of local governments, and practically established a "closed-loop" management system covering all aspects of debt management. We strengthened the management of budget preparation and implementation, and made budgets more transparent. We also implemented all-round performance-based budget management, and established the system covering all aspects of budget management. Third, we deepened the reform of value-added tax, established a personal income tax system that is based on both adjusted gross income and specific types of incomes, improved the consumption tax system, conducted  the reform to apply ad valorem rates to mineral resource tax and introduced environmental protection tax. We also introduced a reform plan for improving the local tax system, and actively promoted relevant tax legislation. This was done in accordance with the requirements of "deepening the tax system reform and improving the local tax system." Meanwhile, we vigorously supported and advanced reforms in state-owned assets and enterprises, finance, science and technology, agriculture and other areas. We also offered public services in innovative ways, steadily improved fiscal governance, and made positive progress in building a modern fiscal system.

Finance is the foundation and an important pillar of national governance. We will uphold the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, resolutely implement the decisions and plans of the CPC Central Committee and the State Council, work hard and overcome difficulties, push forward fiscal reform and development. In so doing, more fruits of reform and development can reach all Chinese people in a more equitable way. Thank you.