The Economic Daily:

We have noticed that both the central and local fiscal revenue growth has been decreasing this year, but the increase in fiscal expenditure has remained at a medium-high level. In the face of increasing income and expenditure pressures, what measures and actions will the financial sector take? Thank you.

Liu Kun:

This year, we implemented a larger scale of tax and fee reductions, reduced the burden on entities, maintained a high level of fiscal expenditure, supported the implementation of the country's major strategies, key reforms, and important policy measures. The pressure on fiscal balance is indeed relatively large. Judging from the budget revenue and expenditure this year, our expenditure has been relatively high, but there have been some new developments in the aspect of income. From the overall monitoring data, the central revenue budget's target increase is 5.1%. Now it stands at 3.5% in the current situation. In the next few months, there will be some income coming in, so our central budget can accomplish the goals set out in this year's budget report.

From the local perspective, the local budget is submitted by the local governments at all levels to the people's congress at their same level for approval. Some places may achieve lower outcomes than the budget targets approved. From the first half of the year, we have required all local governments to properly adjust the budget according to their actual situations. From a national perspective, this year's budget targets can be basically achieved, and are basically consistent with our expectations. You just asked what measures have been taken. We have taken four measures. After hard work, the budget expenditures in the first three quarters are in good condition, and the income and expenditure are basically balanced. The four measures are:

First, vigorously reduce general expenditure and effectively protect the expenditures of the "three guarantees" and key areas. In 2019, the central government took the lead in strict expenditure management. Except for fixed and key projects, the average reduction scale in the expenditures of other projects reached 10%. The local government has also increased the intensity of their reduction in general expenditure. According to the requirements, they will strive to reach more than 10% in reduction. What will the saved funds be used for? They will be mainly used to guarantee wages, guarantee daily operations, and guarantee peoples' basic livelihood.

Second, the central financial policy will enhance transfer payments and increase the level of guarantees for grassroots funds. In 2019, the central government's transfer payment budget for local governments exceeded 7.5 billion yuan, an increase of 9%. So if you compare the 9% with the revenue growth data, you would know that our transfer payments are very large. At the same time, we have strengthened the progress of budget releases. This year, transfer payments have been all issued for equalizing access to basic public services, helping old revolutionary bases, ethnic minority areas, border regions, and poorer areas, with the focus to aid regions with financial difficulties and areas affected greatly by tax cuts and administrative fee reductions. We would replenish local financial resources in a timely manner, alleviate the contradictions between revenue and expenditure, and enhance the financial support capabilities for the grassroots areas.

Third, we have also strengthened the seriousness of the budget. Except for emergency expenditures, such as disaster relief, no new expenditure policies would be issued. The policies that must be introduced will be resolved through future budgetary arrangements to prevent imbalances between revenues and expenditures. It is strictly forbidden for all departments to spend extravagantly and spend a lot of money, and the surplus funds will be returned in time and then be used in areas thaturgently needed financial support.

Fourth, we have arranged for local governments to add new debt ceiling and accelerated the issuing and use of local government bonds. From January to August, we added new local government bonds of 2895.1 billion yuan. The issuance progress has increased by 34 percentage points over the previous year. The bonds are expected to all be issued by the end of September. These funds will be fully distributed to actual projects by the end of October, creating a physical workload as soon as possible. For now, the use of bond funds has been smooth and good.

A reporter just asked about the relationship between local government bonds and investments. Local government bonds are divided into two parts, general bond and special bond. This year's budget arrangement for the local government special bond has increased by 800 billion yuan compared with last year. According to the budget law, local government bond has its applications limitations. First, the project it invests in must generate income. Second, it should be a construction-related investment. Eventually, it should become the capital expenditure with public welfare. So it can't apply to all aspects of investment.Thank you.