Incremental Policies to Support Growth Soon to Be Rolled Out

The Ministry of Finance, on the basis of accelerating the implementation of policies already determined, will introduce a package of targeted incremental policy measures in the near future, focusing on stabilizing growth, expanding domestic demand, and resolving risks. On October 12, at the press conference held by the State Council Information Office on "Increasing the Counter-cyclical Adjustment of Fiscal Policy and Promoting High-Quality Economic Development," Finance Minister Lan Fuan stated this.

According to the introduction, the package of incremental policy measures includes strengthening support for local governments to resolve government debt risks, issuing special treasury bonds to support large state-owned commercial banks in replenishing core tier-one capital, supporting and promoting the real estate market to stop falling and stabilize, and increasing support and protection for key groups.

Resolving Local Government Debt

Preventing and resolving local government debt risks is related to development and security, as well as the sustainable development of fiscal finances. This year, after going through relevant procedures, the Ministry of Finance has arranged a debt limit of 1.2 trillion yuan to support local governments in resolving existing implicit debt and digesting government arrears to enterprises.

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In accordance with the package of targeted incremental policy measures, in addition to continuing to arrange a certain scale of bonds in the newly added special debt limit every year to support the resolution of existing government investment project debts, it is proposed to increase the debt limit by a large scale in one go to replace the existing implicit debt of local governments, and to increase the intensity of support for local governments to resolve debt risks.

"This policy is the most supportive measure for debt resolution issued in recent years, which will effectively reduce the pressure of local debt resolution, free up more resources for economic development, boost the confidence of business entities, and consolidate the grassroots 'three guarantees'," Lan Fuan said.

Supplementing Bank Core Tier-One Capital

Large state-owned commercial banks are the main force in serving the real economy and also the ballast stone for maintaining financial stability. At present, the six large state-owned commercial banks, including Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications, and Postal Savings Bank of China, are operating steadily overall, with stable asset quality and sufficient provision for bad debts. According to the best international practice standards, the main indicators are all in the "healthy range." Deputy Finance Minister Liao Min said that large state-owned commercial banks, together with other types of financial institutions, jointly bear the important task of supporting high-quality economic development and implementing the financial "five major articles." The package of incremental policy measures clearly states that special treasury bonds will be issued to support large state-owned commercial banks in replenishing core tier-one capital, enhancing these banks' ability to resist risks and increase credit supply.

Liao Min said that under the current situation, it is necessary to support large state-owned commercial banks to further increase core tier-one capital through appropriate means. This can not only enhance the banks' stable operation capabilities but also leverage the leverage effect of capital, enhance credit supply capabilities, and further increase the intensity of serving the development of the real economy.

Authorized by the State Council, the Ministry of Finance is responsible for centrally and uniformly performing the duties of the state-owned financial capital contributor, including establishing a mechanism for capital supplementation and dynamic adjustment of state-owned financial institutions. Liao Min introduced that the Ministry of Finance will adhere to market-oriented and rule-of-law principles, follow the idea of "overall promotion, phased and batch, one bank one policy," actively raise funds through channels such as issuing special treasury bonds, and support large state-owned commercial banks to further increase core tier-one capital in a stable and orderly manner.It is reported that the Ministry of Finance, in conjunction with relevant financial regulatory authorities, has established an inter-departmental working mechanism to provide efficient services for state-owned large commercial banks to complete their respective tasks. "At present, we are waiting for each bank to submit specific capital replenishment plans, and all work is progressing in an orderly manner," said Liao Min. As listed banks, the specific capital replenishment plans of each state-owned large commercial bank will be disclosed in a timely manner in accordance with relevant regulations and laws.

Promoting the Stabilization and Recovery of the Real Estate Market

This year, the Ministry of Finance has worked in the same direction with relevant departments, focusing on promoting the balance of supply and demand in the real estate market, continuously optimizing fiscal and tax policies, and promoting the real estate industry to return to a stable and healthy development track.

A package of incremental policy measures has been clearly defined, and tools such as local government special bonds, special funds, and tax policies are being used in combination to support and promote the stabilization and recovery of the real estate market. "Next, we will strictly control the increase, optimize the stock, and improve the quality, and actively study and introduce policies and measures that are conducive to the stable development of the real estate market," said Liao Min.

Special bonds are allowed to be used for land reserve. This policy can not only adjust the supply and demand relationship in the land market, reduce idle land, and enhance the control ability of land supply, but also help to alleviate the liquidity and debt pressure of local governments and real estate companies.

Support the acquisition of existing housing to optimize the supply of affordable housing. Make good use of special bonds to acquire existing commercial housing as affordable housing in various places. Continue to make good use of the subsidy funds for affordable housing projects. Originally, these funds were mainly used to support the construction of affordable housing through new construction. Now, the support direction has been adjusted to appropriately reduce the scale of new construction and support localities to acquire more affordable housing through the digestion of existing housing.

Optimize and improve relevant tax policies. Research is being intensified to clarify the value-added tax and land value tax policies that are connected with the cancellation of the standards for ordinary and non-ordinary residential housing. Next, further research will be conducted to increase support, adjust and optimize relevant tax policies, and promote the stable and healthy development of the real estate market.

"Promoting the stable development of real estate is a systematic project that requires the joint efforts of various policies. In the implementation of policies, we will continue to strengthen the coordination between fiscal policies and other policies, strengthen the linkage between the central and local governments, and the connection between new and old policies, to play a combination of punches, and unswervingly promote the stabilization and recovery of the real estate market," said Liao Min.

In addition, the package of incremental fiscal policies has also clearly increased support and protection for key groups. A one-time living allowance has been issued to the needy before the National Day. Next, the support for students will be increased to enhance the overall consumption capacity.

It is reported that the package of incremental fiscal policies that have been disclosed have entered the decision-making process. "We also have other policy tools under study, such as the central finance still has a larger debt space and a deficit increase space," said Lan Fuan.