SMM News: in order to improve urban traffic, Wuhan this year opened a north-south fast channel-Donghu Nanhu "two lakes tunnel", dozens of exploration ships and drilling frames have been set up on the East Lake to carry out exploration and construction operations.
The project, with a total investment of about 12 billion yuan, can be started ahead of schedule by March, which is inseparable from the early opening of local government bonds to ensure that construction funds are in place. At the end of February, the Finance Department of Hubei Province successfully issued 2.5 billion yuan of special bonds for the two lakes tunnel, and plans to continue to raise 7.1 billion yuan for the construction of the two lakes tunnel from 2020 to 2021.
Under the active fiscal policy to increase efficiency, the scale and speed of government bond issuance this year is unprecedented. In the first four months, local governments across the country issued about 1.3 trillion yuan of new government bonds (zero in the same period last year). The fund-raising has been used for tens of thousands of major infrastructure and livelihood projects, such as the two Lakes Tunnel in Wuhan, and the growth rate of government-led infrastructure investment has increased slightly over the whole of last year.
In addition, in the first four months, the national general public budget expenditure reached about 7.6 trillion yuan, an increase of 15.2 percent over the same period last year. With the improvement of fiscal expenditure and efficiency, China's economy grew by 6.4 percent in the first quarter, better than the market expected.
Accelerated government investment
One of the key to stabilizing the economy is to stabilize investment. Although the government's investment in fixed assets of more than 60 trillion yuan in the whole year is small (about 3 trillion yuan), it still plays a key role in stabilizing investment, making up for shortcomings, and boosting market confidence.
Government investment refers to the use of budgetary funds in fixed assets investment and construction activities within the territory of China, including new construction, expansion, reconstruction, technological transformation, and so on. At present, government investment is the key to public infrastructure investment.
In order to reverse the precipitous decline in the growth rate of infrastructure investment last year and give full play to the role of investment in stable economic development, the scale of government investment, especially that of local governments, has expanded this year.
More government investment money comes from issuing bonds, which are at an all-time high this year.
This year, China has arranged a budget deficit of 2.76 trillion yuan, of which the local deficit has been raised to 930 billion yuan, which will be covered by the issuance of general local government bonds. More importantly, local government special bonds will be allocated 2.15 trillion yuan this year, an increase of 800 billion yuan over last year, to provide financial support for the construction of key projects.
Not only has the scale of local government bond issuance expanded significantly, but the speed of bond issuance has also accelerated significantly.
As the amount of bonds issued by local governments in previous years needs to be issued layer by layer after the National people's Congress determines in March, the issuance of new bonds by local governments is often concentrated in the second half of the year, affecting the efficiency of the use of government investment funds. In order to change this situation, at the end of last year, the National people's Congress authorized the State Council to issue 1.39 trillion yuan of local government bonds in advance, and local governments issued bonds to January.
By the end of April, new local government bonds had been issued across the country by 1.294 trillion yuan, accounting for 93 percent of the new debt limit issued in advance and 42 percent of the full-year debt limit, according to the Ministry of Finance.
Focus on the construction of projects under construction and make up for the shortcomings of the board.
In introducing the use of new bond funds for local governments in the first quarter, Hao Lei, deputy director of the Budget Department of the Ministry of Finance, said that the funds were mainly used for the construction of projects under construction and to make up for shortcomings, and according to the preliminary statistics reported by the local authorities, More than 60 percent of the new bond funds will be used for projects under construction, focusing on the transformation of shantytowns and other key areas, such as affordable housing, railways, highways, urban public infrastructure, and the "three districts, three states," and so on. As well as major public welfare projects in the fields of pollution prevention and control, rural revitalization, and water conservancy, have played a positive role in stabilizing investment and promoting consumption.
The Ministry of Finance recently issued a document urging all localities to speed up the progress of bond issuance, complete the issuance of new bonds (1.39 trillion yuan) in advance by the end of June 2019, and strive to complete the issuance of new bonds (3.08 trillion yuan) for the whole year by the end of September.
In addition to the accelerated progress of bond issuance by local governments, the progress of central-to-local transfer payments has also been accelerated, the progress of budget implementation has been significantly accelerated, and the amount of financial funds spent on infrastructure in the first four months has increased significantly compared with the same period last year.
According to the Ministry of Finance, in the first four months, of the national general public budget expenditure, 489.7 billion yuan was spent on transportation, an increase of 33.1 percent over the same period last year, and 167 billion yuan on energy conservation and environmental protection, an increase of 26.6 percent over the same period last year. Expenditure on urban and rural communities was 745.7 billion yuan, an increase of 23.3 percent over the same period last year, and expenditure on agriculture, forestry and water was 574.3 billion yuan, an increase of 16.4 percent over the same period last year.
The acceleration of government investment has led to the growth of infrastructure investment in related areas. In the first four months of this year, infrastructure investment rose 4.4 percent from a year earlier, 0.6 percentage points faster than for the whole of last year, according to the National Bureau of Statistics.
Wen Laicheng, a professor at the Central University of Finance and Economics, told the first financial reporter that the accelerated use of financial funds for infrastructure investment can promote economic growth and keep economic growth within a reasonable range. In the current complex external situation can also enhance market confidence.
Focus on effectiveness in investment
This year, the intensity of active fiscal policy has been continuously intensified, but it is not a strong stimulus of "flood flooding". Government investment has paid more attention to non-operating public sector projects and does not compete with the people for profit. Investment also avoids "sprinkling pepper" and focuses more on key projects and "short board" areas.
Gao Peiyong, vice president of the Chinese Academy of Social Sciences, believes that the active fiscal policy to expand government expenditure is mainly manifested in expanding government investment. However, unlike in previous years, this year, special emphasis has been placed on expanding "effective investment", resolutely abolishing invalid expenditure, and paying more attention to investment in key projects. In addition, this year, special emphasis is placed on docking the expansion of investment with the "complementary board", focusing on the "complementary board", and paying more attention to the structural effect of investment.
From the arrangement of financial funds this year, some key areas of projects have received more financial support.
For example, railway, road, water transport and other investment is the "fixed Poseidon needle" of infrastructure investment, a number of key areas of projects have been supported by the state. For example, China has made it clear that this year it will complete 800 billion yuan in railway investment and 1.8 trillion yuan in highway and water transportation, and start a number of major water conservancy projects to speed up the planning and construction of the Sichuan-Tibet railway. We will increase investment in infrastructure such as intercity transportation, logistics, municipal affairs, disaster prevention, civil and general aviation, and strengthen the construction of a new generation of information infrastructure.
In addition, financial funds have focused more on the area of "making up for shortcomings" and supported the fight against poverty and the prevention and control of pollution. For example, this year, the central government allocated 126.1 billion yuan for poverty alleviation, an increase of 18.9 percent, and the incremental funds were mainly used in deep poverty-stricken areas.
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