Former minister shares financial wisdom at forum

To better stabilize economic recovery with a more proactive fiscal policy, China should maintain the fiscal deficit rate at around 3.8 percent next year and spend the increased fiscal funds mainly on smaller enterprises, rather than on public investment, said Lou Jiwei, chairman of Global Asset Management Forum and former finance minister.

"Facing a scarring effect from the COVID-19 pandemic, China needs to take precise policy measures to promote employment and improve people's livelihood, while also boosting investment in private economy," said Lou when addressing the annual convention of China Wealth Management 50 Forum, which was held in Shenzhen, Guangdong province over the weekend.

"The country needs to continue to carry out tax reductions for small and micro-sized enterprises, and the increase in fiscal deficits should be mainly used to provide temporary subsidies on rent, utilities and hiring downstream enterprises in the manufacturing industry and small and micro-sized firms," he said.

He also said that some of the increased fiscal expenditures could be used on public investment, but only moderately. That is because public investment mostly benefits large-sized enterprises rather than smaller ones, he said.

As for local governments, he believes they can "moderately" increase fiscal deficits next year.

"Since the budget law stipulates that funds from local fiscal deficits can only be used for public investment, the increase amount can be mainly spent on repaying government debts owed to enterprises," he suggested.

"During the three years of the pandemic, local governments have owed a lot of debts to construction companies. Speeding up the repayment will help improve government credibility, boost market confidence and expand private investment," he said.

liuzhihua@chinadaily.com.cn