Main Policy Direction

In macro policy, we will strengthen counter-cyclical regulation, continue to implement a proactive fiscal policy and prudent monetary policy, and carry out anticipatory adjustments and fine-tuning as appropriate. In structural policy, we will strengthen institution building and look to reform to drive development, pushing for deeper reforms in state capital, SOE, fiscal, tax, and financial systems, land, market access, and social management. In social policy, we will guarantee the provision of social services to those most in need, implement a jobs first policy, ensure people’s basic needs are met, and strengthen management in service delivery.

Ÿ Implementing a stronger and more effective proactive fiscal policy

The debt-to-GDP ratio for the year is projected to be 2.8%, which is 0.2 percentage point higher than the projection last year. The government deficit is set at 2.76 trillion yuan, 380 billion yuan more than last year’s budgeted figure. Furthermore, we will considerably scale up special bonds for local governments. We will impose broader cuts on taxes and fees, deepen VAT reform, substantially lower VAT rates, fully implement the revised Law on Individual Income Tax and regulations on its implementation, and markedly reduce the burden of social insurance contributions on enterprises.

We will adjust and improve the composition of government expenditures. General expenditures will be cut by over 5%, and spending on official overseas visits, official vehicles, and official hospitality will be cut by another 3%, while funding for key expenditures will be guaranteed. Government funds will be leveraged to strengthen points of weakness in a targeted way and to provide a safety net for those most in need, with more funding for poverty alleviation, agriculture, rural areas, and rural residents, and for structural adjustments, scientific and technological innovation, ecological conservation and environmental protection, and people’s wellbeing. Giving better play to transfer payments, we will continue the large-scale increases in transfer payments to local governments, and reform and improve the mechanisms for ensuring basic funding for county-level governments to see that poor areas and local governments are better able to meet people’s basic living needs.

Ÿ Implementing a prudent monetary policy with an appropriate level of intensity

Aggregate financing and the M₂ money supply in 2019 will keep pace with nominal GDP growth and be roughly in line with last year’s real growth rates. This will ensure both indicators better satisfy the requirement of keeping the economy performing within an appropriate range. We will employ a combination of monetary policy tools with flexibility, maintain reasonable and ample liquidity, and keep market interest rates stable at an appropriate level. We will improve the transmission mechanism of monetary policy and ensure better coordination and support between monetary policy and financial regulation. We will move forward market-based interest rate reforms, increase the proportion of direct financing, and effectively ease problems in the real economy, especially for the manufacturing firms, small and micro businesses, and private enterprises that are finding it tough and expensive to access financing.

With a view to further improving the RMB exchange rate regime, we will increase the exchange rate’s flexibility, enhance oversight over cross-border capital flows, and ensure the RMB exchange rate stays generally stable at an adaptive, equilibrium level. Working hard to keep stock, bond, and foreign exchange markets stable, we will respond swiftly to any abnormal fluctuations and guard against and defuse financial risks and hidden dangers.

Ÿ Implementing a jobs first policy with all-out efforts

Ensuring stability in employment and promoting job creation will be priorities in economic and social development. We will improve pro-employment policies and give better play to the crucial role of business startups and innovation initiatives in creating jobs. We will promote the development of some labor-intensive industries and the service sector, which provides large numbers of employment opportunities, and support private enterprises and medium, small, and micro businesses in creating more jobs. We will help college graduates, demobilized military personnel, laid-off workers, and rural migrant workers find employment, and launch large-scale vocational skills training initiatives. We will give more support to flexible and new forms of employment, provide better, all-round public employment services, and strive to see that, in the course of pursuing high-quality economic development, we also achieve higher-quality, fuller employment.

Ÿ Stepping up overall policy planning and coordination

We will further improve top-level design to make policies more consistent, more stable, and better coordinated and ensure we get the timing and intensity right when enacting policies. We will look to our national development plans for strategic guidance and put greater emphasis on aligning annual economic and social development plans with the 13th Five-Year Plan. We will enhance the mechanisms for coordinating fiscal, monetary, industrial, regional, and other economic policies and undertake explorations on establishing an evaluation mechanism for macroeconomic policy. With these efforts, we will avoid cases where policies are uncoordinated or lack supplementary instruments or where they adversely overlap or even clash with one another.

We must keep industrial policy inclusive and functional and see it better supports efforts to improve the structure and quality of supply. We will strengthen the fundamental position of competition policies to ensure the market plays the decisive role in resource allocation and the government better plays its role. We will step up fair competition reviews and enforcement of anti-monopoly and anti-unfair competition laws, standardize government conduct, and break administrative monopolies and local protectionism. We will refine standards for technology, environmental protection, quality, and safety, lower the market entry threshold, and improve the property rights system and the mechanisms for exiting the market. We will foster an institutional environment that facilitates fair competition, advance the development of a sound unified market nationwide, and encourage faster growth among small and medium enterprises.

Our regional policy will focus on speeding up implementation of the coordinated regional development strategy. We will tailor policies to local conditions, provide category-specific guidance, and give play to local comparative strengths. We will encourage the orderly flow of production factors and improve the mechanisms for promoting regional cooperation and integrating markets. We will pick up the pace in developing institutions, mechanisms, and policies for integrated rural and urban development. We will improve the policies on granting permanent urban residency to people from rural areas, and work to ensure basic public services in cities are accessible to rural migrant workers and their families. All these efforts will see that we unlock potential domestic demand in the course of promoting urbanization and urban and rural development.