Beijing Daily:

At present, faced with the downward economic pressure in China, I would like to ask, what progress has been made recently by the steady-growth-oriented fiscal and taxation policies? And what measures will be taken going forward? Thank you.

Xu Hongcai:

Thank you for your questions. Since the beginning of this year, the MOF has earnestly implemented the spirit of the Central Economic Work Conference. In accordance with the arrangements of the Report on the Work of the Government, we will prioritize stability while pursuing progress and focus on stabilizing crucial links such as employment, investment, market entities, industrial chains and supply chains. We will step up efforts in multiple aspects, implement comprehensive policies and make these policies produce effects sooner, so as to help achieve a stable macroeconomic performance. In addition, we will launch a set of new policies for cutting taxes and fees to further alleviate burdens on companies and increase the momentum of market entities. We plan to maintain an appropriate level of spending intensity, further optimize the financial expenditure structure, comply with the requirement that government should keep its belt tightened and keep spending low to benefit the people, and strengthen guarantees of key fields and the basic well-being of people. Meanwhile, we will arrange the issuance and use of special local government bonds in a reasonable manner, guarantee the construction of key projects, strengthen central government's transfer payments to local governments and guide the flow of financial resources toward lower levels of government to support the grassroots level in achieving the "three guarantees." At present, we are accelerating the implementation of various kinds of policies and anticipating more effects produced by these policies.

First, we have accelerated the implementation of new combined supporting policies through tax and fee cuts to invigorate market entities. We have expedited VAT credit refunds, giving priority to micro- and small-sized companies. The issuing of VAT credit refunds to micro- and small-sized companies has been in place since April. Meanwhile, the refunding of outstanding VAT credits to medium-sized companies, which was scheduled for July, has started ahead of time in May. The taxation department is currently working on this. Refunding outstanding VAT credits to large companies, which was scheduled for October, will start in June to ensure the policies bring benefits to enterprises as soon as possible. We have raised the additional tax deduction coverage for R&D costs for small- and medium-sized sci-tech enterprises. A raft of favorable tax and fee policies have been carried out in an orderly manner, including an exempting VAT payments for small taxpayers. Just now, Mr. Wang Daoshu said thatthe country has reduced taxand feeburdens and increased cash flows for enterprises by more than 1.6 trillion yuanso farthis year. The central government has arranged special transfer payments to support local efforts in reducing taxes and fees and ensuring people's livelihoods. I also mentioned that a total of 1.2 trillion yuan of special transfer payments from the central government has been arranged in addition to general transfer payments, with 800 billion yuan from this year's budget having already been allocated in batches.

Second, we have promoted the issuing and utilization of special-purpose local government bonds to stimulate and expand effective investment. This year, the ceiling amount of special-purpose bonds for local governments is 3.65 trillion yuan. After 1.46 trillion yuan of a special bond quota was front-loaded last December, all remaining bond quota issued for project construction was allocated by March. By May 15, local governments had issued 1.5 trillion yuan in special-purpose bonds, up 1.3 trillion yuan from the same period last year. Authorities are accelerating the issuing of the remaining bond quota for this year. By the end of April, the issued bonds had supported more than 11,000 projects and 120 billion yuan of special bonds had been used to fund major projects, providing strong support for expanding effective investment and maintaining stable macroeconomic performance. What I want to emphasize here is that special-purpose local government bonds are placed under budgetary management for government-managed funds instead of the general public finance. In contrast with general bonds included in the deficit, special bonds are characterized by principal and interest repayments with the yield of the programs they are issued for, so that they can restore balance to financing.

Third, we have increased policy support to help businesses tide over difficulties. In terms of business size, we have focused on boosting assistance to micro- and small-sized enterprises. Support policies, such as tax and fee cuts and inclusive finance, have been weighted more heavily toward such enterprises to help them reduce costs. In terms of industries, we have strengthened efforts to assist sectors heavily hit by COVID-19, such as logistics and catering, providing them more preferential tax policies and alleviating the pressures brought about by social insurance contributions. Local governments have also been encouraged to proactively allocate funds to provide subsidies for enterprises and self-employed workers struggling with rent, utility bills, guarantee fees and COVID-19 prevention costs.

China secured a stable economic performance in the first quarter of this year. At the recent meeting of the Political Bureau of the CPC Central Committee, General Secretary Xi Jinping put forth clear requirements that China should step up macro policy adjustments and make solid efforts to maintain stable economic performance, and work hard to achieve this year's economic and social development goals. To fully implement the decisions and plans of the CPC Central Committee, the MOF will promptly design incremental policy tools, enhance well-timed regulations, maintain an appropriate lead time and redundancy of target-oriented policies, and bolster the role of public finance in adjusting macroeconomic performance. By doing so, we will stabilize the economy, ensure the achievement of the year's economic and social development goals, and keep the economy running within a reasonable range. Thank you.

Shou Xiaoli:

Thank you to the three speakers as well as friends from the media. Today's press conference is hereby concluded. Goodbye.

Translated and edited by Yuan Fang, Zhang Rui, Zhou Jing, Huang Shan, Xu Kailin, Wang Yiming, Wang Wei, Gong Yingchun, Ma Yujia, Yang Xi, Wang Yanfang, Qin Qi, Li Xiao, Li Huiru, He Shan, Wang Qian, Zhu Bochen, David Bal and Jay Birbeck. In case of any discrepancy between the English and Chinese texts, the Chinese version is deemed to prevail.