Jia Kang, President of China Academy of New SupplySide Economics and Professor of Research Institute for Fiscal Science, Ministry of Finance: The Reform
of the Fiscal and Taxation Policy Should Be Done in Lots of Ways Simultaneously
The People's Bank of China has further loosened monetary policy, which makes the situation very serious. We should further explore how to regulate and control the economy in the acceptable range. The central economic work conference has made a clear tone. The economic operation should take account of the medium-long-term general blueprint, such as modern state governance, modern market system, modern legal system, and comprehensive implementation and governance of the country by law. The Treasury should ascend some expansion aggressively as far as possible to serve the overall situation and stable market expectations and grasp the bottom line. It is possible to discuss the proper improvement of deficit rate.
In addition, the fiscal policy should clearly do something to optimize the structure adjustment. We cannot simply expect the slowdown of economy to bring structure optimization naturally. Because of imperfect competition, if the government simply reduces investment, it cannot shoulder its responsibility well. The first is to cut tax. Tax credit on enterprise innovation activities has been discussed for several years, and barriers of operation should be resolved. Responsibility should not be postponed again and again. The second is to use the available space in the financial expenditure as far as possible. We should emphasize the structure, mechanism, and performance rather than the total amount and growth. Meanwhile, we should increase effective supply selectively to support the new normal. As far as livelihood is concerned, we need a further movement on mobilizing government funds, stimulating the nongovernmental capital cooperation, and increasing investment in order to make everything go well. The third is related to redistribution, which links to reform more explicitly. Xiamen University emphasizes direct taxes, which is consistent with the policy of the Third Plenary Session. However, the difficulty is here as well. For example, the real estate tax, NPC and CPPCC have made it clear to legislate as soon as possible last year, but there is no movement so far. In addition, the personal income tax is at the bottom of the current scheme. There is no way to take the inheritance tax into the scheme of reform task if there is no policy to make officials' assets known to the public, which causes the lack of confidence to undertake the act. The distribution should be improved in this respect.
Above all, total amount, structure, redistribution, and reform should be improved collectively. Thank you!
Jia Yandong, Researcher and Deputy Director
of Macroeconomic Analysis Division of The Research Bureau, People's Bank of China: Development
and Research of Economic Models Help to Enhance the Accuracy of Policy
Thanks for the invitation of Xiamen University, this is my first time to attend this conference. I used to be a student of Xiamen University, and it is my honor to exchange our experience in People's Bank of China with you. My job in the Research Bureau of PBC is to develop macroeconomic models. As it takes a lot of manpower and material resources to develop and maintain the models and it also costs a lot of money to buy foreign models, thus, in my understanding, it is a miracle that our university can develop models continuously in so many years.
The PBC's demand for macroeconomic models is very strong, and it has undertook the task of working out the 13th five-year development planning. Our leaders hope we can conduct policy simulation and various estimates by some scientific tools, then provide a benchmark for medium-long-term planning, and provide some policy recommendations for the short-term economic fluctuations. We also organize various business scenario analyses and predictions about the macroeconomic trend. This report is of great significance to us. Since 2000, the PBC has begun to develop various models. In addition to the large-scale econometric models, there are some special models, which construct a model library and provide support and help for the decisions. Our models emphasize the balance between financial variables and pay less attention to the government's fiscal revenue. Since fiscal policy is a theme this year, this model is a excellent supplement to ours.
Currently, we also try to release the model results by publishing papers. The leaders hope that the market expectations would be influenced through this way. We have a long way to go, and I hope, entrusted by the leaders, that we can strengthen the strategic cooperation with Xiamen University in the future. It is a strong cohesion force to combine the models together, and it can make more contributions to the development in the future.
At last, I wish our models can be improved and perfect. Thank you!