The trend of regional economy is divided, and the prime minister demands that national policies be used to solve the difficult problems of development.
"as far as the regional economy is concerned, the trend is obviously divided, with a relatively rapid decline in the growth rate of some local industries, investment, and other indicators, weakening the driving force for development, and greater pressure on fiscal revenue and expenditure and the protection of people's livelihood."
Li Keqiang, member of the standing Committee of the political Bureau of the CPC Central Committee and premier of the State Council, said at a forum on the economic situation and ensuring basic people's livelihood in some provinces on November 14.
China's economy is generally stable, but the downward pressure on the economy has increased. Recently, the premier has repeatedly mentioned that it is necessary to put steady growth and keep the economy in a reasonable range in a more prominent position. "this is an important basis for achieving this year's main goals and tasks and promoting high-quality development."
Stable growth is mainly stable investment. Recently, the State Council has introduced a number of measures to stabilize investment and make up for its shortcomings.
Li Keqiang said: all localities should make good use of state policies and actively solve development problems. Seizing the opportunity of issuing the special debt line of local governments in advance and reducing the minimum capital ratio of some infrastructure projects, speeding up the construction of short board projects, forming more physical workload, and promoting effective investment and industrial upgrading, We will strengthen the planning and preparation of major projects and promote the commencement of construction as soon as possible.
Under the influence of slowing economic growth, large-scale tax cuts and fee cuts, and the peak of local debt service, local financial resources are relatively tight, and the funds used for investment depend to a considerable extent on the issuance of local government bonds. Especially local government special bonds.
This year, more than 200 billion yuan of local government special bonds were issued in September, and bond funds will be allocated to projects by the end of October to form a physical workload, promote investment and make up for weaknesses.
In order to give full play to the policy effect of special debts on stable investment to make up for weaknesses, China will issue some of the 2020 special debt lines in advance to supplement local stable investment with "ammunition." the organization estimates that this amount will reach 1.29 trillion yuan.
The first financial reporter learned from a number of local finance, development and reform personnel that many places have actively and upward declared special debt projects that meet the regulations. Some local dignitaries believe that this is a once-in-a-lifetime opportunity to make up for the shortcomings of infrastructure and social and people's livelihood and to expand effective investment. At present, the declaration has basically come to an end, and some provinces are still reviewing related projects. It is expected that some of the special debt lines will be issued to local governments in December and 2020, and special bonds will be issued in January next year.
In recent years, the amount of special debt has been rising to 2.15 trillion yuan this year, and institutions generally expect to exceed 3 trillion yuan next year. China International Capital Corporation, for example, expects the issuance of special bonds to expand from 2.15 trillion yuan (2.2 per cent of GDP) in 2019 to about 3.35 trillion yuan (3.2 per cent of GDP) in 2020.
In addition to replenishing local investment with urgently needed funds, the State Council has also adjusted a number of policies to further amplify the efficiency of the use of funds.
For example, in the past, special bonds were not allowed to be used as project capital, but in June this year, special bonds were allowed to be used as qualified capital for major projects. Recently, major project areas have been further expanded to railways, highways, power supply, gas supply, urban parking lots, natural gas pipeline networks and gas storage facilities, urban and rural power grids, water conservancy, and urban sewage waste disposal, which are supported by the state. There are 10 areas such as water supply. The policy requires 20 per cent of earmarked debt to be capitalised, which is expected to inspire trillions of dollars of investment.
In another major move, the State Council recently decided to reduce the minimum capital ratio for some infrastructure projects by up to 5 percentage points. And allow projects to raise capital through the issuance of equity-based and equity-based financial instruments, with a maximum ratio of 50%, which is equivalent to a half discount on the actual proportion of capital.
A number of experts told first Financial that the reduction in the capital ratio of projects and the widening of capital financing channels mean that social capital has more funds to invest in infrastructure projects, which is of great significance to stimulating economic growth and making up for weaknesses.
From January to October, infrastructure investment rose 4.2 percent from a year earlier, down 0.3 percentage points from the previous three quarters and 0.1 and 0.4 percentage points faster than in the first half and the whole of last year, according to the National Bureau of Statistics. Of the infrastructure investment, investment in the railway transport industry increased by 5.9%, that in the road transport industry increased by 8.1%, that in the information transmission industry increased by 12.2%, and that in the ecological protection and environmental management industry increased by 37.4%. (Chen Yi Journal)