Overview

The year 2022 was of extreme significance in the history of the Communist Party of China (CPC) and the country. The 20^th CPC National Congress was successfully held, outlining the grand blueprint for building a modern socialist country in all respects. Faced with a turbulent international environment and arduous tasks of pursuing domestic reform, development and stability, under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core, the whole Party and nation have risen to the challenges and comprehensively implemented the requirements for pandemic control, successfully stabilizing economic development and ensuring security in development. We have taken both the domestic and international situation into consideration, coordinated pandemic control with socioeconomic development, and pursued development while ensuring security. We have reinforced macro regulation in response to the impact of unexpected factors, and steadily improved development quality, achieved fruitful results in scientific and technological innovations, comprehensively deepened reform and opening-up, stabilized employment and prices, effectively ensured food and energy security, safeguarded people’s livelihoods, and maintained the overall stability of the economy and society.

Under the centralized and unified leadership of the CPC Central Committee, finance departments have thoroughly implemented the guiding principles of the 20^th CPC National Congress, followed the decisions and arrangements of the CPC Central Committee and the State Council, adhered to the general principle of pursuing progress while ensuring stability, implemented the new development philosophy in a complete, accurate and comprehensive manner, accelerated the establishment of the new development paradigm, solidly promoted the package of policies and follow-up measures to stabilize the economy, and actively improved the effectiveness of fiscal policies, while paying attention to precision and sustainability. In budget execution, finance departments have taken the initiative, adapted to changes, overcome difficulties, strengthened their analysis and judgment of the economic situation, fiscal revenue and expenditure, and enhanced the coordination of fiscal resources, which have achieved the basic alignment between the execution of the national budget and the country’s economic development throughout the year, and provided necessary fiscal support for the efficient coordination between pandemic control and socioeconomic development.

The first measure was to release fiscal policies early and quickly in order to help stabilize the macro economy. We have expanded the scope and accelerated the implementation of policies for providing the value-added tax (VAT) credit refund on a large scale, with a major part implemented in the first half of the year. This was followed by a policy mix, including VAT exemptions for small-scale taxpayers, the phased deferral of social insurance premiums, the deferral of some administrative fees and deposits, and reductions in purchase taxes for some passenger vehicles. Those policies have resulted in a total of over 4.2 trillion yuan in tax cuts and refunds, fee reductions, and deferred tax and fee payments, with the VAT credit refund amounting to about 2.46 trillion yuan, making it the largest reduction in recent years. We have accelerated the issuance and use of local government special bonds, and legally mobilized and utilized the special debt quota of over 500 billion yuan, which has helped to expand effective investment.

The second measure was to fully support epidemic prevention and control and to relieve its impact on production and people’s lives. We have arranged subsidies in a timely manner to support local authorities in dealing with the pandemic, and fully ensured necessary expenditures on pandemic control, such as vaccine inoculations, patient treatment, and temporary work subsidies for medical staff. Targeted support was provided to such industries as catering, retail, tourism, and civil aviation, as well as transportation services significantly affected by the pandemic, in order to help market entities overcome difficulties. The policy of expanding the coverage of unemployment insurance benefits was continued, the proportion of subsidies to enterprises for stabilizing employment was increased, the national coordination of basic pension insurance for enterprise employees was steadily advanced, and the interests on national student loans for economically disadvantaged college graduates was temporarily waived, with repayments being allowed to be postponed, all of which have effectively guaranteed people’s livelihoods.

The third measure was to allocate more fiscal resources to the grassroots in order to effectively ensure the smooth operation of local public finance. The central government has taken measures, such as increasing special remittances and arranging one-time transfer payments, to increase transfer payments to local governments. Funds closely related to the fiscal operation of county and district-level governments were included in the direct transfer range, with a funding scale of 4.1 trillion yuan. We strengthened the monitoring and early warning of local government fiscal operations, supported the resolution of hidden debt risks and risks to small and medium-sized banks, and accomplished tasks such as ensuring the delivery of pre-sold houses and safeguarding people’s livelihoods.

The fourth measure was to support efforts in ensuring food and energy security and maintaining the stability of industrial and supply chains. The year 2022 saw a sharp increase in food and energy prices in the international market, which caused major imported inflation pressure on China. In response to the price increases of agricultural products, subsidies totaling 40 billion yuan were distributed to grain growers in three batches. A pesticide subsidy was provided to ensure the quality growth of summer grain and wheat, and additional funds were allocated in a timely manner to support drought relief and ensure the autumn harvest. We improved the grain reserve system and adopted innovative measures to ensure supply through rotation and allocation adjustments. Efforts were made to ensure the stable supply and price of important energy resources, such as giving lump-sum reward and subsidy to key enterprises and regions engaged in winter heating and energy supply, applying a provisional zero tax rate for imported coal, and conducting research on establishing incentive and restraint mechanisms for coal production. We injected additional funds into three major domestic airlines, carried out a phased funding policy for domestic passenger flights, and supported efforts to improve the weak links of a group of national comprehensive freight hubs to ensure smooth transportation and logistics.

In 2023, finance departments will follow the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, fully apply the guiding principles of the 20^th CPC National Congress, uphold a systematic mindset, and stay true to these principles while promoting innovation. We will strive for better coordination between pandemic control and socioeconomic development, economic growth quality and quantity, supply-side structural reform and expanding domestic demand, economic policies and other policies, domestic circulation and international circulation, while taking into account both the present and the long-term factors. We will strengthen macroeconomic regulation, reinforce coordination among various policies, and form a joint force to promote high-quality development.