China will pursue a more proactive and effective fiscal policy with government fiscal deficit projected to be 3 percent of its GDP, according to a government work report available to the media on Sunday.
While the deficit-to-GDP ratio stays unchanged from last year, the government fiscal deficit volume is set at 2.38 trillion yuan (about 345 billion U.S. dollars), a year-on-year increase of 200 billion yuan, said the report to be delivered to the national legislature annual session.
In a breakdown, the projected deficit of the central government is 1.55 trillion yuan, and that of local governments is 830 billion yuan.
Keeping the deficit-to-GDP ratio unchanged at 3 percent aims to "allow for further reductions in taxes and fees," the report says.
Tax burden on businesses is expected to be further eased by around 350 billion yuan, and business related fees will be further cut by around 200 billion yuan to benefit market entities.
"We will keep government spending low and enrich our people," says the report, promising that the government will squeeze out more funds to cover cuts in taxes and fees....China.org.cn
China eyes more proactive fiscal policy
Xinhua
See also
China to pursue prudent, neutral monetary policy
China sets 2017 GDP growth target at around 6.5%
See also
China to pursue prudent, neutral monetary policy
China sets 2017 GDP growth target at around 6.5%
Traditional growth engines, which are losing steam, can regain momentum in the long run only if the country patiently pushes ahead with reforms to foster innovation and encourage industrial upgrading.
Vitality of new growth drivers can be unleashed only if the country continues efforts to streamline administrative procedures and scale back government controls.
Financial risks can be diffused only if the country accelerates reforms in the sector to further regulate market operations, crack down on illegal practices and channel credit to support the real economy.
Private firms can prosper only if the country advances reforms of state-owned enterprises and opens up more sectors to private investment.
Moreover, the impact of protectionism can be mitigated only if the country continues to promote reforms while further opening up its economy to the outside world.
Though these changes are painful at times and their benefits take time to manifest, they are the only way to carry the economy forward.Deepening reforms the only way forward for China's economy
Whats the difference between a fiscal deficit and a state bank loan that never gets paid back?
ReplyDeleteNothing.
The Chinese are funny in this way. They seem to fastidiously avoid large official fiscal deficits but use their Govt banks to create incredible amounts of money to build these enormous cities and institutions in so short a period of time. I wonder if they do it like this just to trick stupid western educated economists into not thinking the Chinese Govt is deficit spending like mad or have so many Chinese gotten western economic educations and so are bringing that poison back with them?
Well thats one sure fire way to guarantee that China never challenges the Empire, teach enough of the Chinese western economics that theyll never exceed 3% growth in the long run.
US politicians, take note. This is how you get past all the idiots who say "we're running out of money!" China is way ahead of the curve not only on this matter, but on energy too. What next? America will once again be late to the party.
ReplyDeletesounds like libertarianism has infiltrated China...
ReplyDeleteAuburn: "Whats the difference between a fiscal deficit and a state bank loan that never gets paid back?"
ReplyDeleteWhat a superb point! It's so obvious and yet it never really crossed my mind that the Chinese have been, and can continue to, deficit spend through state bank loans that never get paid back, or at least wiped off the balance sheet. As has been noted so many times before, the best place to hide something is in plain sight. Deficit spending in plain sight.
Penguin: "China is way ahead of the curve not only on this matter, but on energy too."
ReplyDeleteIt blows your mind, doesn't it? China was an overwhelmingly agrarian peasant economy until about 1980. Now it leads the world in certain areas, even ahead of the mindbogglingly wealthy and technologically advanced United States. Words fail me. I would say "Jesus wept", but will refrain from doing so!
Yep the power of MMT, when applied responsibly, is literally the power to transform society and the world.
ReplyDeleteThe most important thing (other than morality which Americans sorely lack) holding the USA back from even more stupendous wealth and accomplishment is financial scarcity. Eliminate the financial constraint and almost any endeavor is possible.
"Eliminate the financial constraint and almost any endeavor is possible."
ReplyDeleteThat is because the underlying condition is one of surplus... which is not the view of the academe the academe teaches that the underlying condition is equilibrium... 'supply and demand!" is all false....
Exactly. Its a pretty extraordinary statement about progress of the species. A ton of work can be done by a few million people all working on a single project. In fact, Its hard to imagine something that couldnt be done by that many people working together. I mean they built the pyramids with just 10s of thousands, NASA went to the moon with 100s of thousands.
ReplyDeleteBut not only are we currently so productive and populous that we have millions of people as surplus labor, we've developed a centralized coordination system (the monetary system) that is infinitely flexible and scaleable that allows us to efficiently organize and put these people to use. I mean its way easier to pay someone to do something than to get people to volunteer or to conscript them against their will.
Thought about from this perspective, it makes our current policy of maintaining 10 million people in idleness for no reason at all seems like a crime against the species.
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ReplyDeleteActually, the fundamental assumption of economics is in the definition — scarcity.
ReplyDeleteScarcity (also called paucity) is the fundamental economic problem of having seemingly unlimited human wants in a world of limited resources. It states that society has insufficient productive resources to fulfill all human wants and needs.
WikipediaWikipedia/Scarcity
The domain of economics is the study of processes by which scarce resources are allocated to satisfy unlimited wants.
Boundless.com
Well the E in DSGE is 'equilibrium'...
ReplyDeleteTom the only time there is scarcity is when there are wars, mass corruption, nepotism, technical incompetence, etc..
When we manage to eliminate all of those things for the short periods when we do, we immediately have 'stuff' coming up to our asses...
Conventional (neoclassical) economics is based on scarcity. It's the starting point of inquiry.
ReplyDeleteThe human psyche also assumes scarcity.
ReplyDelete