China's fiscal revenue to drop, but will allocate more to local govt.
China's fiscal revenue will decline this year as part of the impact of the coronavirus epidemic, Liu Kun, China's minister of finance, said Friday following the release of the annual government work report.
It is expected that local fiscal revenue will decrease by 800 to 900 billion yuan, putting more pressure in some places.
Liu said that the central government has accelerated the allocation of funds to local governments during the past few months. This year, the central government's transfer payments to local governments will increase by 12.8 percent, hitting the highest level in the recent years.
Liu implied that the tightening-up of government expenditure is a long-term policy, instead of a short-term response. He emphasized that expenditures must be in accordance with laws and regulations. "The central government will reduce non-urgent and non-rigid expenditures by more than 50 percent this year," said Liu. However, he added that, rigid expenditures such as wages will be guaranteed, and also the normal operation expenses of the government will be intact.
According to this year's government work report, 3.75 trillion yuan of special local government bonds will be issued in 2020, an increase of 1.6 trillion yuan over last year. The report specified that the proportion of special bonds that can be used as project capital will be raised, and 600 billion yuan will be earmarked for investment in the central government budget.
The central government has raised more than five trillion yuan in total, of which more than two trillion yuan was newly added, said He Lifeng, chairman of the National Development and Reform Commission.
"The government acted to stimulate social capital, while making the market play a decisive role in allocation," He said.
He added that investment should target on specific projects, and the shortcomings exposed by the epidemic in public health, medical emergency supplies should be compensated as soon as possible. He emphasized that large and medium cities and counties should work on infrastructure construction, public health projects, and medical emergency supplies, reserves and so on.
He said that the construction of new infrastructures such as 5G should be further pushed on. He added that efforts in building mega projects should be stepped up, such as river management, Sichuan-Tibet railway, etc., since these projects can benefit both the current and long-term development.