Kyodo News Service: 

I have three questions. First, have you considered the international volatility raised by the Ukraine crisis while drafting the government work report of this year? Second, the deficit-to-GDP ratio this year is projected at 2.8%. What's the consideration behind this? Third, this year's government work report has not mentioned the dynamic zero-COVID 19 policy. Does it mean that there are possibilities for the country to adjust its virus control strategy? Thank you.

Xiang Dong:

I want to answer your first question briefly. We have taken various considerations into account while drafting this year's report.

Second, I would like to offer some details about your question concerning the fiscal deficit.

The work report says the proactive fiscal policy will be more effective, targeted, and sustainable. The deficit-to-GDP ratio has been cut appropriately in the recent two years. We mainly take the following factors into account.

First, China's proactive fiscal policies will remain unchanged though the deficit-to-GDP ratio was lowered moderately. According to the work report, it is projected that fiscal revenue will continue to grow in 2022. In addition, we also have available to us the surplus profits of state-owned financial institutions and state monopoly business operations from recent years turned over in accordance with the law and funds transferred from the Central Budget Stabilization Fund. This will make it possible for government to increase expenditures by more than two trillion yuan over last year, putting significantly greater fiscal resources at our disposal. We will implement a new package of tax-and-fee policies to support enterprises, with tax refunds and cuts totaling about 2.5 trillion yuan. Furthermore, this year, special-purpose bonds for local governments will total 3.65 trillion yuan, and a portion of special bonds carried over from last year will be available for further use. In addition, investment from the central government budget will reach 640 billion yuan, an increase of 30 billion yuan over last year. As a result, we will see that the proactive fiscal policy is more effective.

Second, it is conducive to boosting fiscal sustainability. The government set the deficit-to-GDP ratio in 2020 at more than 3.6% to address the COVID-19 pandemic, which was an extraordinary measure for an unusual time. As economic performance recovers stably, we moderately cut the deficit-to-GDP ratio in time, which is constructive to enhancing fiscal sustainability. We have also considered the need to leave policy space to address risks that could arise in the future.

Third, in cutting the deficit-to-GDP ratio to within 3%, we have signaled that China's economy and finance perform prudently, which can boost market confidence.

As for your third question, please refer to my answer to a similar question just now. Thank you.