Page 7 - THE SOUTH CHINA BUSINESS JOURNAL
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e effect, which means the economy will projects and stimulate local economies. A
need to maintain its upward trajectory if it is to further increase in the annual quota signals
maintain a similar growth rate as in 2023. By ambitions to grow the economy, which aligns
contrast, GDP growth in 2022 slowed to just 3 with the annual GDP growth target.
percent year-on-year, which made hitting the
5.2 percent growth rate in 2023 considerably In addition to the SPBs, the 2024 GWR
more likely. announced that the government will begin
to issue “ultra-long term” special treasury
Given this, more direct efforts and policy bonds (STBs) for several years, beginning this
measures may be needed to stimulate the year. These STBs will be allocated specifically
economy throughout the year. The 2024 GWR for the implementation of “major national
indicates China will continue to implement a strategies and security capacity building in key
proactive fiscal policy and a prudent monetary areas”. The government will issue RMB 1 trillion
policy, which might be too modest to achieve (US$138.9 billion) in STBs in 2024.
the ambitious 5 percent growth target.
The 2024 GWR also vows to implement
On the one hand, in the 2024 GWR, the central various tax and fee reduction policies
government urges local governments and to support technological innovation and
departments to introduce policies conducive to manufacturing, without specifying which
stabilizing expectations, promoting growth, and policies will be implemented.
ensuring employment stability, while requesting
them to exercise caution when implementing Although the 2024 GWR offers a variety of
measures that may have a discouraging tools to increase spending, it also warns
effect. Careful deployment of fiscal funds and local governments that they must get used
supportive policies in key areas could help to to “living frugally”, manage their budgets
boost the Chinese economy in 2024. carefully, and efficiently deploy financial
resources. Provincial governments are
Proactive fiscal policies, but austerity encouraged to allocate financial resources
lies ahead to grassroots levels and ensure the “three
guarantees” (basic livelihoods, wages, and
The 2024 GWR calls for “appropriately operating expenses).
strengthening” proactive fiscal policies to
support the economy in the coming year. As The central government has previously warned
such, the general public budget expenditure officials that budgets would be tight in the
will be increased by RMB 1.1 trillion (US$152.79 coming year, as the country faces a range of
billion) from the previous year to RMB 28.5 economic headwinds and local governments
trillion (US$3.96 trillion). The annual quota grapple with scarcer funding channels and
for local government special purpose bonds built-up debt.
(SPBs) will also be increased by RMB 100 billion
(US$13.89 billion) from 2023 to RMB 3.9 trillion However, the 2024 GWR also offers
(US$541.72 billion). SPBs are one of the central some consolation, stating that the central
government’s key tools for transferring funds government will increase the intensity of
to local governments to fund infrastructure balanced transfer payments to local areas and
appropriately prioritize disadvantaged regions.
SOUTH CHINA BUSINESS JOURNAL 4
need to maintain its upward trajectory if it is to further increase in the annual quota signals
maintain a similar growth rate as in 2023. By ambitions to grow the economy, which aligns
contrast, GDP growth in 2022 slowed to just 3 with the annual GDP growth target.
percent year-on-year, which made hitting the
5.2 percent growth rate in 2023 considerably In addition to the SPBs, the 2024 GWR
more likely. announced that the government will begin
to issue “ultra-long term” special treasury
Given this, more direct efforts and policy bonds (STBs) for several years, beginning this
measures may be needed to stimulate the year. These STBs will be allocated specifically
economy throughout the year. The 2024 GWR for the implementation of “major national
indicates China will continue to implement a strategies and security capacity building in key
proactive fiscal policy and a prudent monetary areas”. The government will issue RMB 1 trillion
policy, which might be too modest to achieve (US$138.9 billion) in STBs in 2024.
the ambitious 5 percent growth target.
The 2024 GWR also vows to implement
On the one hand, in the 2024 GWR, the central various tax and fee reduction policies
government urges local governments and to support technological innovation and
departments to introduce policies conducive to manufacturing, without specifying which
stabilizing expectations, promoting growth, and policies will be implemented.
ensuring employment stability, while requesting
them to exercise caution when implementing Although the 2024 GWR offers a variety of
measures that may have a discouraging tools to increase spending, it also warns
effect. Careful deployment of fiscal funds and local governments that they must get used
supportive policies in key areas could help to to “living frugally”, manage their budgets
boost the Chinese economy in 2024. carefully, and efficiently deploy financial
resources. Provincial governments are
Proactive fiscal policies, but austerity encouraged to allocate financial resources
lies ahead to grassroots levels and ensure the “three
guarantees” (basic livelihoods, wages, and
The 2024 GWR calls for “appropriately operating expenses).
strengthening” proactive fiscal policies to
support the economy in the coming year. As The central government has previously warned
such, the general public budget expenditure officials that budgets would be tight in the
will be increased by RMB 1.1 trillion (US$152.79 coming year, as the country faces a range of
billion) from the previous year to RMB 28.5 economic headwinds and local governments
trillion (US$3.96 trillion). The annual quota grapple with scarcer funding channels and
for local government special purpose bonds built-up debt.
(SPBs) will also be increased by RMB 100 billion
(US$13.89 billion) from 2023 to RMB 3.9 trillion However, the 2024 GWR also offers
(US$541.72 billion). SPBs are one of the central some consolation, stating that the central
government’s key tools for transferring funds government will increase the intensity of
to local governments to fund infrastructure balanced transfer payments to local areas and
appropriately prioritize disadvantaged regions.
SOUTH CHINA BUSINESS JOURNAL 4
