What signals does the current long-term benefits of issuing trillions of yuan of additional national debt interest release?
2023-10-26
The sixth meeting of the Standing Committee of the National People's Congress voted and passed a resolution on the 24th, specifying that the central government will issue an additional 1 trillion yuan of 2023 treasury bond in the fourth quarter of this year, all of which will be allocated to local governments through transfer payments, and focus on supporting post disaster recovery and reconstruction and making up for the shortcomings in disaster prevention, mitigation and relief. According to the needs of the objective situation, adjusting the budget, issuing additional treasury bond, and raising more funds to support economic and social development are important measures to implement a proactive fiscal policy. Before that, China has issued additional treasury bond or special treasury bond several times, which has achieved positive results. This additional issuance of treasury bond shows a series of important characteristics in terms of strength and investment orientation. Firstly, the scale of funds is relatively large. After the issuance of an additional 1 trillion yuan of treasury bond, the national fiscal deficit will increase from 3.88 trillion yuan to 4.88 trillion yuan in 2023, and the fiscal deficit ratio is expected to increase from 3% to about 3.8%. 1 trillion yuan is a considerable scale that can effectively supplement fiscal funds, and a deficit rate of over 3% indicates the intention of further active fiscal policies. At the same time, the scale of bond issuance takes into account the issue of fiscal sustainability. After increasing the deficit rate, China's government debt ratio remains within a reasonable range, and the overall risk is controllable. The second is to invest in significant fields. Since this year, China has suffered from rainstorm, flood, typhoon and other disasters in many places, and some areas have suffered serious disasters with large losses. This reveals that China still has many weaknesses in infrastructure construction such as flood control and flood control, disaster relief and emergency response, and needs to increase construction efforts to better protect people's lives and property. Accelerating post disaster recovery and reconstruction, enhancing disaster prevention, reduction, and relief capabilities, is crucial for the safety and well-being of the general public, and requires large-scale financial investment, which is difficult to afford solely by local financial resources. This additional issuance of treasury bond is all arranged to the local government through transfer payment, and the central government is responsible for the repayment of principal and interest, which will effectively guarantee the implementation of the work tasks. It can be said that the purpose of this additional issuance of treasury bond is clear and timely, and it fully practices the people centered development thought. Thirdly, the comprehensive effect is strong. The additional treasury bond funds are arranged to local governments through transfer payments, which has generally strengthened local financial resources, and will ease the local expenditure pressure on post disaster recovery and reconstruction, and enhance disaster prevention, mitigation and relief capabilities. At the same time, investing funds in a series of projects is also conducive to driving domestic demand, stabilizing investment and growth, and further consolidating the upward trend of China's economy. It is important to do a good job in issuing and using additional treasury bond. The allocation and use of trillions of yuan of funds must comply with the requirements of the Party Central Committee and the expectations of the people, withstand the test of time, and be completely careless. Relevant departments and local governments shoulder heavy responsibilities. For the investment direction of funds, the central government has clarified 8 directions for post disaster recovery and reconstruction, backbone flood control and governance projects, and natural disaster emergency response capacity improvement projects. Each region should accurately focus on the investment field, implement the principle of "funds and factors follow the project", and use precious funds on the cutting edge. In addition, fund supervision should be strengthened to ensure that funds are used according to regulations, and illegal activities such as embezzlement and misappropriation are strictly prohibited. This treasury bond is mainly used for post disaster reconstruction and construction of disaster prevention, reduction and relief projects. Quality and efficiency should be put at the center. On the one hand, it is necessary to start as soon as possible, fully utilize the direct delivery mechanism, do a good job in fund allocation, and meet project funding needs
Edit：Hou Wenzhe Responsible editor：WeiZe
Source：economic daily
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