Abstract: Recently, incremental fiscal policies have received ongoing attention and widespread discussion. Based on the fiscal revenue and expenditure for 2024 and the various objectives of fiscal policies, we hold the following views on incremental fiscal policies:
First, there is no need to add fiscal funds in 2024. As long as the existing new debt and part of the transferred funds are fully spent within the year, it can ensure that the economic growth rate reaches 5% for 2024. While there may be a need to add some incremental funds to achieve the general public budget target, this additional funding may result in a surplus for 2024.
Second, if broad fiscal expenditure (the total of the general public budget and government-managed funds budget) in 2025 increases by 2.6 trillion yuan compared to 2024, it could help achieve a desired economic growth rate of around 5% in 2025. Without this expenditure increment, the Chinese economy is likely to continue facing a negative cycle of insufficient domestic demand and low inflation, increasing the risk of accelerated economic contraction. It should be noted that relying solely on fiscal policy cannot achieve the desired growth.
Third, to address the urgent existing issues, at least 10 trillion yuan of public funding needs to be added. These issues include resolving overdue government payment, alleviating local debt risks, addressing real estate market risks, and supporting the banking system in replenishing capital. The 10 trillion yuan is the total additional public funding needed over the next few years to resolve these issues and does not imply that an extra 10 trillion yuan in fiscal expenditure will be needed for the next year.
