In an interview format, I would like to ask you about the current fiscal policies in China aimed at supporting the “two new” initiatives. Can you elaborate on the key strategies being implemented this year?
This year, China has taken significant steps to enhance macroeconomic policies, particularly those aimed at counter-cyclical adjustments. The government has utilized a variety of tools, including government bonds and interest subsidies, to facilitate large-scale equipment upgrades and the replacement of consumer goods. This approach exemplifies the government’s commitment to a robust fiscal policy that aims to expand domestic demand and promote high-quality development.
Can you explain how the support for the “two new” initiatives demonstrates innovation and collaboration within these fiscal policies?
The fiscal support for the “two new” initiatives stands out due to its innovative nature and strong collaborative efforts. The effectiveness of financial investment policies has been notable, energizing both enterprise and consumer investments. As these policies are put into practice, we are beginning to see positive outcomes across various sectors.
What are the specific mechanisms through which these policies stimulate both supply and demand?
The policies primarily target both supply-side enhancements and consumer incentives. For instance, the central government has allocated around 300 billion yuan for long-term special bonds to bolster key areas like equipment upgrades. Additionally, it has expanded the “trade-in” program to include consumer goods such as vehicles, appliances, and home renovations. As companies upgrade their offerings, they attract consumers eager to replace older products, which not only boosts consumer spending but also encourages further investment from businesses, creating a mutually reinforcing cycle of consumption and investment that propels economic growth.
Looking at the broader goals of these policies, what structural changes do they aim to achieve?
Beyond stimulating overall demand, the “two new” policies also focus on optimizing industrial structure. They are crucial for accelerating the green transformation of the economy and society. These initiatives also align with low-carbon and sustainable development objectives, such as increasing subsidies for the elimination of old, high-polluting agricultural machinery and supporting upgrades in energy facilities. Following these policies, the retail sales of new energy vehicles reached 1.027 million units in August, representing a 17% month-on-month increase. This shift indicates a significant transition in consumer habits, with expectations set for retiring 2 million low-emission standard vehicles by the year’s end.
Could you delve into the execution aspect of these policies and how various government entities are collaborating?
Execution of these policies involves a strong emphasis on coordination and cooperation among different departments. The People’s Bank of China has established a 500 billion yuan quota for re-loans to support technological innovation and upgrades, and financial institutions are being encouraged to expand support for replacing old cars and appliances. The central government has also allocated 20 billion yuan for interest subsidies on equipment upgrades. With comprehensive guidelines now in place across several sectors, local financial departments are increasing their contributions to areas with high public demand. This collective effort—from central to local levels—ensures a unified approach to implementing the “two new” initiatives effectively.
With such significant financial investment in these initiatives, what measures are in place to ensure appropriate allocation and management of funds?
Given the large scale and diverse applications of the “two new” funding, local governments must allocate funds promptly in accordance with project timelines. They are expected to strengthen collaboration with the central government to ensure the local financial burdens are adequately addressed. It’s also crucial to streamline service processes to facilitate the effective implementation of these policies. Stringent oversight over the use of these funds is essential, adhering to negative lists to prevent misuse or misallocation, ensuring the funding aligns precisely with policy intentions.
As of now, how is the disbursement of the 300 billion yuan long-term special bonds progressing across localities?
The disbursement of the 300 billion yuan for the “two new” initiatives is underway, with local governments accelerating their fund utilization. As the benefits of these policies continue to be realized, we anticipate a positive and sustained recovery in the economy.