(Photo: Sipa)

Key meeting says finances will enhance foundation of economic recovery, growth

China will make further plans for increased fiscal funds to directly benefit businesses and the people in a bid to enhance the foundation for economic recovery and growth, and ensure the full delivery of financial policies to support the real economy, the State Council's executive meeting chaired by Premier Li Keqiang decided on Monday.

By early August, among the 2 trillion yuan ($288 billion) in increased fiscal funds, 300 billion yuan has been used for tax and fee cuts; and out of the 1.7 trillion yuan under the special transfer payment framework, apart from the reserved fund of a set proportion raised from the special treasury bonds for COVID-19 control, 97.8 percent of the funds had been distributed to prefecture and county-level governments.

The policy is making a difference in supporting market entities, stabilizing employment and ensuring people's livelihoods, and has driven the economic rebound.

"The special transfer payment mechanism has delivered notable outcomes, showing the decision is right, and the intensity is appropriate," Li said.

It was urged at the meeting that the prefectures and counties will be guided to promptly channel the allocated funds to market players and people's livelihoods. Steps will be taken to redress any delays in fund allocation or utilization. A special treasury account reconciliation mechanism will be set up for the directly allocated funds, to ensure clear bookkeeping, detailed usage, and matching accounts. Rigorous fiscal discipline must be enforced. Any fraudulent reporting, false claims, retention and embezzlement of the funds will be strictly dealt with.

Efforts will be made in intensifying reform and firming up confidence in development to fulfill this year's targets and the tasks for economic and social development.

The meeting also urged stronger financial support for the real economy across the board. In the first seven months of this year, financial incentives including interest rate and fee cuts and deferred loan repayment in principal and interest have saved businesses over 870 billion yuan.

"In view of the impact of COVID-19, financial institutions have notably intensified their support for the real economy, especially for micro, small and medium-sized businesses. Their efforts have paid off," Li said.

"Unlike previous unforeseen situations, the novel coronavirus has hit smaller businesses directly. The financial and fiscal support has been instrumental in staving off massive business closures and job losses," he said.

It was agreed that liquidity will remain reasonably sufficient, without resorting to massive stimulus. The direct, structural monetary policy tools will be better leveraged to ensure the money goes to where it is needed the most, especially to smaller firms.

Small and medium-sized banks will be supported in using big data to better meet the needs of businesses.