In the second half of the year, the issue of special treasury bonds, increasing the deficit rate or the size of special bonds, and adjusting the mid-year budget have become a hot topic in the market recently. However, industry experts believe that by mid-July, it is very unlikely that China will adjust its budget in a regular way. Unless the situation is very urgent and the economic growth rate drops sharply, it is difficult to imagine that China will make a mid-year budget adjustment plan.
They believe that if the economy continues to decline in the third quarter, policy easing will increase. The US interest rate cut will be put on the agenda to provide more room for China's monetary policy. The fiscal key is to play a good role of "four or two allocations of kilograms" of fiscal funds, and to implement tax cuts and fees. If it needs to be increased, additional special treasury bonds can be considered. In theory, the unused balance in the local debt limit can also be used. At present, the market is concerned that the meeting of the Political Bureau of the Central Committee in the middle of the year will guide the direction for the second half of the year.
"In the second half of the year, under the concept of camera choice, we need to form a comprehensive analysis quickly. We need to consider what policies are necessary for camera choice or new policy means are introduced. If necessary, we can not exclude the plan of budget adjustment. But now it's mid-July, and by convention, it's very unlikely, "said Jia Kang, former director of the Finance Department of the Ministry of Finance of China.
He explained that if we adjust now, it will be between August and September when the program is finished, and there will be only one quarter left. Therefore, unless there is a particularly urgent situation, it is generally difficult to envisage further budget adjustments.
He also stressed that the multiplier effect of fiscal expenditure must be exerted to expand effective investment and promote the release of long-term vitality, stamina and market consumption potential. Under the limitation of the existing deficit rate and the scale of debt issuance, it is crucial for the fiscal money to play a multiplier and magnify the effect. For example, PPP is a good mechanism. In real life, there are many optional projects. The government can use a small part of the funds to stimulate a large amount of social capital to do so.
China's fiscal revenue grew by only 0.8% in the second quarter compared with the same period last year, as tax cuts and fee cuts led to a decline in tax revenue. At the same time, although the growth rate of fiscal expenditure in June was higher than that in May, it was still far lower than the growth rate of about 15% in the first four months of this year. While the gap between fiscal revenue and expenditure is widening, there is limited room for the acceleration of fiscal expenditure in the second half of the year.
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