From December 16th to 17th, the 2023 China Political and Credit Industry Summit Forum was held in Beijing. With the theme of "Major Economic and Social Transformations in Chinese-style Modernization and Improving the Quality and Efficiency of Political and Credit Financial Services", the forum delved into major topics such as financial power and digital economy in the current field of political and credit services.
The 20th National Congress of the Communist Party of China (CPC) ushered in a new cycle of China's development, and determined that "high-quality development is the primary task of building a modern socialist country in an all-round way" in the next 15 years.
Promoting high-quality development is the fundamental requirement for determining development ideas, formulating economic policies, and implementing macroeconomic regulation and control at present and in the future.
Under the new normal, it is difficult for local governments to implement the "large capital circulation model under land finance" for nearly 20 years. Like other industries, the development of the political and credit industry has also encountered difficulties and bottlenecks, and there is an urgent need for theoretical guidance and practical exploration.
Four major opportunities for the government and credit industry
At the forum, Zhao Quanhou, director of the Financial Research Center of the Chinese Academy of Fiscal Sciences, gave a keynote speech on "Opportunities and Challenges Faced by the Political and Credit Industry in the Process of Chinese-style Modernization".
Director Zhao believes that there are four major opportunities in the political and credit industry.
First of all, there is still a lot of room for urbanization in China. Based on international experience, by promoting the urbanization of the rural migrant population and allowing those who have been stably employed in cities and towns to settle down, we can continue to unleash consumption potential and stimulate effective investment. Promoting the synchronization of urbanization, industrialization, informatization, and agricultural modernization will further unleash the potential of China's economy. With the acceleration of the urbanization of the agricultural transfer population, the improvement of the quality of urban agglomeration and urban development, the integration of urban development with industrial support, employment transfer and population agglomeration, and the continuous release of the potential of urbanization to high-quality development, it will surely provide strong support for maintaining sustained and healthy economic development and overall social stability.
Second, there are still shortcomings in China's traditional infrastructure, and there is still a lot of room for new infrastructure. According to the World Economic Forum's Global Competitiveness Report 2019, among the 141 countries in the world, China ranks 28th in terms of overall competitiveness, and only ranks 36th in terms of infrastructure, eight places behind the overall ranking. Among the top 30 countries and regions in terms of comprehensive competitiveness, China belongs to the countries with a large gap between the infrastructure ranking and the comprehensive ranking.
Third, from the perspective of supply quality and service efficiency, China's infrastructure needs to be improved. The development of new technologies in China will give rise to new infrastructure construction needs. Digitalization, networking, and intelligence are important directions for future economic and social transformation, which will bring a large demand for the upgrading of traditional infrastructure and the construction of new infrastructure.
Fourth, we still have the opportunities brought about by national policies. The downward pressure on the economy is great, and there is an opportunity in the midst of crisis, and expanding profitable investment and expanding domestic demand has been the direction of the proactive fiscal policy in recent years.
Challenges faced by the government and credit industry
Like other industries, the development of the political and credit industry has also encountered difficulties and bottlenecks. With the continuous shortage of funds, the contradiction between the capital demand and the supply of funds for China's infrastructure investment has become increasingly prominent, and the demand for non-standard financing for infrastructure investment is also increasing.
Director Zhao pointed out that the stock of the political and credit industry is becoming increasingly large, and the proportion of rigid maintenance costs is increasing, which is easy to crowd out the resources for expanding investment. In the case of large-scale and structural tax cuts and fee refunds, the proportion of macro tax burden is not high, and financial resources are limited. The local government has a long way to go to stabilize growth and prevent and resolve debt risks.
In the case of assets, the revitalization of the stock of public welfare infrastructure has a "large base and narrow exports", and it is difficult to form an expected threshold to alleviate liquidity risks.
The boundary between local ** and financing platform is blurred, and moral hazard affects "new addition" and "chemical storage".
On the one hand, the local financing platform is mainly for the local financing services, and compared with the general state-owned enterprises based on operating assets, the control of the first department is still in the hand, with a stronger administrative color and budget soft constraints, it is difficult to really carry out the operation of state-owned assets.
On the other hand, the financing platform and the local government and enterprise integration model, so that the financing platform has become an extension of the department, to undertake the social service function of the first to undertake, its main responsibility is to integrate funds to solve the construction funding gap, become the first "borrowing tool", and at the same time invest a large amount of funds in obviously non-profit public welfare projects, so that the main business ability of the financing platform is weak, the degree of marketization is low, and it is difficult to effectively carry out transformation and development.
It is recommended to handle the seven major relationships well
Statistics show that the current proportion of the country's debt balance to GDP, that is, the debt ratio, is lower than the internationally accepted 60% warning line, and the risk is generally controllable. Among them, local implicit debts have been reduced by more than one-third by curbing the increase and dissolving the stock.
At present, the stock of local implicit debts is not small, some local financing platforms have prominent debt repayment problems, some local debt management is not standardized, and even new hidden debts are added in violation of regulations, and the debt risk of some local cities and counties is relatively high, and the prevention and control of debt risks should not be taken lightly.
For systemic bonds, Director Zhao believes that it is necessary to deal with seven relationships, including the relationship between expanding investment and preventing risks, the relationship between the market and the central government, the relationship between the central government and the local investment and financing structure, the relationship between state-owned enterprises and financing platforms, the relationship between fees and user payments, the relationship between fiscal risks and the transformation of financial risks, and the relationship between stable growth and risk prevention.
It is necessary to pay attention to the need to guard against moral hazard in the work of reducing debts. If the local government relies on the superiors to cover the bills, or borrows debts in violation of regulations without being held accountable, it is easy to trigger arbitrary borrowing behaviors, and even add hidden debts.
Therefore, it is necessary to adhere to the principle of "whoever borrows debts is responsible", break the bottom line expectations, and consolidate the responsibilities of local territories, departments and enterprises. To effectively prevent and resolve local debt risks, it is also necessary to strengthen the construction of long-term mechanisms. It is necessary to further promote the reform of the budget management system, harden the budget constraints on various revenues and expenditures, improve financial transparency, and put an end to arbitrary borrowing.
In short, to prevent and resolve local debt risks, we must not only have the first hand to prevent risks, but also have the best skills to deal with and resolve risks. By effectively promoting the work of debt reduction, local economic development will be more sustainable and more stable and far-reaching.
The 2023 China Government and Credit Industry Summit Forum is co-sponsored by the Institute of Government and Credit of ** University of Finance and Economics, the Institute of Internet Finance and Law of China University of Political Science and Law, the Collaborative Innovation Center for China Financial Development, and the Government and Credit Industry Alliance.
A total of more than 230 representatives from national university think tanks, industry experts, local urban investment platforms, well-known law firms, accounting firms and consulting institutions gathered at the forum to discuss the reform and development of political credit in the process of Chinese-style modernization.