On July 20, 2022, when attending the World Economic Forum Global Entrepreneurs Video Special Dialogue, the top executives proposed that they will not introduce super-large stimulus measures, super-issued currency, or advance the future in order to achieve excessive growth goals. We must adhere to seeking truth from facts and do our best to strive for a better level of economic development throughout the year.

Combined with the recent more flexible and refined measures for epidemic control, and the overall economic operation has entered a recovery channel, it means that future fiscal policy will enter a turning point; future macro policies will guide the gradual decline of active finance according to the actual situation, and further. Guide the market economy to gradually operate normally and establish a new circulation mechanism.

It takes time to digest existing policy funds

Since the third quarter of 2021, under the combined pressure of the external environment and counter-cyclical, macro policy tools have begun to exert force, forming a small peak in fiscal expenditure and government investment at the end of 2021. In addition, the active finance in 2022 will still maintain a high level, and most of the policy tools will be used and spent in the first half of the year. Judging from the actual situation of local governments, it will take time to digest these policies and funds.

Taking local special bonds as an example, during the 12-month period from July 2021 to June 2022, the total new issuance scale has reached 6 trillion, which can be said to be two years of quota within this year's time. Consolidated efforts; however, as the directional funds for local government investment projects, the expenditure of special bonds is constrained by the actual start of construction, project progress and other aspects. In many areas, there have been situations in which the funds have arrived but have not reached the payment node and the funds have settled. 

Therefore, judging from the current actual situation, it still takes time for the current stock of active policies and fiscal funds to be digested. Under the circumstance that the economy has gradually recovered, there is no need to introduce new policies again. In the third quarter, it is completely possible to enter a wait-and-see state. It can be said that if there is no greater uncertainty, this round of positive finance is coming to an end.

The gap between local fiscal revenue and expenditure continues to widen

Although in the counter-cyclical economy, active finance needs to be responsible and make efforts in a timely manner; but what cannot be ignored is that when the level of local debt has accumulated to a relatively high level, the counter-cyclical increase in policy efforts will undoubtedly further increase The potential risks that may be brought about by the revenue and expenditure gap and operating pressure of local finance cannot be ignored either.

Since 2020, the decline of local fiscal revenue and the continuous reduction of fiscal self-sufficiency rates in many regions have attracted great attention from the market. In addition to the impact of the rapid sluggish land transfer market after the real estate downturn in 2022, many local governments will encounter greater financial difficulties in 2022. Despite the State Office's No. 20 document to speed up the reform of the fiscal system below the provincial level and strengthen regional fiscal coordination, it is still far from being able to quench the thirst of the near future, and the hidden worries of local debt risks still exist all the time.

Therefore, after the economy gradually recovers and active finance can be temporarily strengthened, the focus of the fiscal system will turn to the solution of existing problems and the sorting out of debt risks. Whether it is the hidden government debt in stock, or the debt risks of local state-owned enterprises and urban investment companies, as well as the risks in the management and use of new local bonds, they all deserve the attention of the financial system and wait for the opportunity to deal with and solve the problem.

Avoid government credit crowding out social financing

From the current pattern of economic operation, although active finance plays an important role in underpinning economic operation, it also inevitably squeezes social financing and increases the share of state-owned capital in economic operation. Therefore, once the economy begins to recover, government financing must "give way", especially in the context of a flexible and moderate monetary policy, leaving more room for market players.

This trend is more obvious after the continuous strengthening of the management of local governments' implicit debt and the implementation of Document No. 15. It is the general trend to curb the expansion of local government credit and improve the operational efficiency of government investment projects through market mechanisms; the pattern of disorderly expansion of government debt in the past is no longer applicable. Under the new background and new industrial structure, market-oriented, A new round of development and new kinetic energy for more efficient and industrial upgrading.

Active Finance Enters the New Normal Era

From this we can see that not only is the current proactive fiscal policy drawing to a close, but the future proactive fiscal policy will also be a "new normal" under a new model and new thinking, and the experience and The environment will be very different. The active finance in the future will be limited, prudent and directional; policies can be introduced in certain fields and in certain directions, but it will never be flooding or disorderly investment.

A new round of development is destined to require new development under the market mechanism, and a new cycle mechanism can be established; active finance is only a policy adjustment tool, which can support the bottom line and help, but it will not be the focus of development, nor will it be the focus of development. will be the core of the new development. Editor / Xu Shengpeng