Overview

The year 2023 is the first year for the implementation of the guiding principles of the 20th National Congress of the Communist Party of China (CPC), and an important year for getting off to a good start in the drive to build China into a modern socialist country in all respects. Since the beginning of this year, faced with a complex and grim international environment and arduous tasks of pursuing domestic reform, development and stability, and under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core, all regions and government departments across the country have made all-out efforts to fully implement the guiding principles of the 20th CPC National Congress, follow the arrangements of the Central Economic Work Conference, adhere to the general principle of seeking progress while maintaining stability, fully, accurately and comprehensively implement the new development philosophy, accelerate the fostering of a new development paradigm with a focus on high-quality development, better balance domestic and international imperatives, better coordinate COVID-19 prevention and control with economic and social development, and better coordinate development and security. The national economy continued to recover with an upward momentum, solid progress was made in high-quality development and industrial upgrading, food and energy security was effectively guaranteed, and overall social stability was maintained, laying a good foundation for achieving the year’s economic and social development targets. 

Finance departments at all levels have followed the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, implemented the decisions and plans of the CPC Central Committee and the State Council, intensified efforts to implement the proactive fiscal policy with higher efficiency, and improved supportive tax and fee policies with a highlight on accuracy and effectiveness. They have also greatly optimized the expenditure structure with a focus on enhancing the efficiency of fund utilization, reinforced support for major national strategies and people’s livelihoods projects, and steadily advanced work related to fiscal reform and development. In the first half of 2023, revenue in the national general public budget totaled 11.9203 trillion yuan, an increase of 13.3 percent year-on-year, and revenue in all 31 provincial-level regions registered positive year-on-year growth. Expenditures in the national general public budget totaled 13.3893 trillion yuan, an increase of 3.9 percent year-on-year, with the structure of expenditures continuously optimized and spending in key areas such as people’s livelihoods, rural revitalization, major regional strategies, education, and major sci-tech breakthrough projects fully ensured.

1.We supported the healthy development of business entities. We reinforced fiscal and tax policy implementation and continued and optimized some tax and fee measures. The first half of the year saw 927.9 billion yuan in tax and fee reductions, tax refunds, and fee deferrals, which have effectively relieved the difficulties of business entities, especially small and micro enterprises and individual-owned businesses, and provided support for their development. We guided and led government-backed financing guarantee institutions at all levels to increase credit and financing support for small and micro enterprises as well as entities related to agriculture, rural areas and farmers. As of the end of June, the National Financing Guarantee Fund had added 796.5 billion yuan  its re-guarantee portfolio, an increase of 33.6 percent year-on-year. 

2.We continued to restore effective domestic demand. We extended and optimized the new energy vehicle purchase tax exemption policy, which resulted in a significant increase of 44.1 percent in new energy vehicle sales in the first half of the year. Preferential tax and fee policies were introduced to support production and consumer service industries and the development of the country’s film industry, which facilitated quick recovery of consumption in the service industry in the first half of the year. Efforts were made to build a circulation network connecting key cities and a rural commercial and trade circulation system, and to further reinforce national comprehensive freight hubs while shoring up their weak links. We accelerated the issuance and use of local government special bonds. In the first half of this year, 2.17 trillion yuan of new special bonds were issued by local governments for project construction, funding nearly 20,000 projects and boosting effective investment. 

3.We accelerated the development of a modern industrial system. We continued to increase support for basic research and improve the funding system of the National Natural Science Foundation. We supported the construction and operation of national laboratories, accelerated the building of a national laboratory system with Chinese characteristics, and supported the fostering of high-caliber scientific and technological personnel. We increased the pre-tax deduction rate for research and development expenses of enterprises in eligible industries from 75 percent to 100 percent, and kept it as a long-term institutional arrangement to encourage manufacturing and other enterprises to increase investment in research and development. We launched pilot projects in cities for the digital transformation of small and medium-sized enterprises, continued to carry out financial rewards and subsidies for small and medium-sized enterprises specialized in key areas and emerging industries, gave better play to the role of government investment funds, and continuously strengthened the innovation and development momentum of enterprises.

4.We continued efforts to safeguard people’s livelihoods. We continued policies to lower the rates of unemployment insurance and work-related injury insurance, optimized and adjusted the policy of unemployment insurance refunds for efforts to stabilize employment, and increased one-time subsidies for enterprises that offer jobs. We improved the supportive financing mechanism for compulsory education, piloted a differentiated allocation system for vocational education funding on a per-student basis, and continued to implement the policy of interest exemption and principal repayment deferral for student loans. We raised the per capita fiscal subsidy for basic public health services to 89 yuan, which brought the per capita fiscal subsidy for basic medical insurance for urban and rural residents to 640 yuan per year. We prudently implemented national pooling of enterprise employees' basic pension insurance, and allocated 154.7 billion yuan in assistance funds for people in difficulty, further consolidating and ensuring people’s social security.

5.We steadily advanced rural revitalization and green transformation. We stepped up efforts to ensure stable production and supply of grain and other major agricultural products, supported the cultivation and upgrading of high-standard farmland, provided a one-time subsidy of 10 billion yuan to crop-growing farmers, improved the subsidy policy for corn and soybean producers, steadily implemented the grain subsidy policy, increased incentives for major grain-producing counties, and expanded the coverage of comprehensive cost insurance and planting income insurance for the three major crops (rice, corn and wheat) to all major grain-producing counties nationwide. We maintained overall stability of fiscal assistance policies, supported the consolidation and expansion of poverty alleviation achievements, and helped people who have been lifted out of poverty to continue to increase their incomes. We carried out demonstrations of concentrated and interconnected protection and utilization of traditional villages and further advanced comprehensive rural reform. We strengthened efforts to support prevention and control of environmental pollution, enhance governance and protection of ecosystems, and further advance green transformation and low-carbon development.

For the next step, finance departments at all levels will fully implement the guiding principles of the 20th CPC National Congress, adhere to the principle of maintaining stability while seeking progress, and insist on "three better coordinations" (better coordination between domestic and international situations, between pandemic prevention and control and socioeconomic development, and between development and security). With a focus on the primary task of high-quality development and the strategic task of building a new development paradigm, we will make good use of the toolbox of macro policies, expanding domestic demand, reform and innovation, and risk prevention and resolution. In addition, we will ensure successful implementation of proactive fiscal policies, push for continuous economic recovery with good momentum, and achieve effective quality improvement and reasonable quantity increase in terms of economic development.