China’s new budget book for 2024 has shed light on the country’s fiscal priorities for the upcoming year. The central and local budgets, recently approved by China’s legislature, outline key measures aimed at bolstering economic recovery and advancing social welfare.
One significant development is the issuance of ultra-long special treasury bonds totaling 1 trillion yuan, sparking widespread interest. These bonds are instrumental in enhancing fiscal stability, boosting government investment, driving social investment, stabilizing expectations, and facilitating development without impacting the deficit-to-GDP ratio.
Special government bonds have historically played a crucial role in promoting economic and social stability and improvement when issued in 1998, 2007, and 2020. In 2024, these bonds will focus on supporting science and technology innovation, integrated urban-rural development, coordinated regional growth, food and energy security, as well as promoting high-quality population expansion.
The new budget also reflects China’s increased fiscal input to support key industrial sectors, foster new growth drivers, and enhance public services. The national general public budget expenditure is projected to reach around 28.55 trillion yuan this year, marking a 4% increase from the previous year.
Moreover, China plans to set a deficit-to-GDP ratio of 3% in 2024, resulting in a 4.06 trillion yuan deficit. The country will also raise the limit on new local government special debts to 3.9 trillion yuan to address weaknesses in crucial areas effectively.
In terms of prioritized areas, China aims to advance new industrialization, strengthen industry competitiveness, upgrade traditional sectors, and nurture emerging industries. The government will allocate special funds to bolster industrial resilience and competitiveness, with a particular emphasis on manufacturing and key technologies.
Furthermore, China plans to prioritize sci-tech innovation to drive high-quality development, offering tax incentives for R&D costs and tech applications. Fiscal support for small and medium-sized enterprises (SMEs) utilizing advanced technologies will continue, promoting digital integration into the real economy.
On the consumer front, efforts will be made to boost consumer spending power, improve expectations, and foster new consumption growth areas such as culture, tourism, education, health, and elderly care. The government will leverage existing funding channels to enhance consumption-related infrastructure and develop county-level commercial systems.
To ensure equitable access to basic public services nationwide, China will provide transfer payments from the central government to local governments totaling approximately 10.2 trillion yuan in 2024. These payments will see a 4.1% increase compared to the previous year, benefiting sectors like education, employment, and healthcare.
In conclusion, China’s budget book for 2024 reflects a comprehensive strategy to stimulate economic growth, promote innovation, support SMEs, enhance consumer welfare, and ensure equal access to public services across regions. The country’s fiscal priorities underscore a commitment to driving sustainable development and improving the well-being of its citizens.
