On March 2, after Moody’s investors service downgraded China’s sovereign credit rating Outlook, March 31 p also downgraded China’s sovereign credit rating Outlook to negative and downgraded Hong Kong’s rating Outlook to negative.
On March 31, Weidong, Vice Finance Minister on China’s sovereign credit rating issues related to an interview with reporters, said the Moody’s, p’s sovereign credit rating Outlook to “negative”, to a certain extent overestimating the difficulties facing our economy, underestimated China’s reform, the ability to cope with risk. Rating companies on China’s economic structural adjustment and the real economy debt, reform of State-owned enterprises, financial market risk and other concerns, is not necessary. On China’s achievements in economic and social development and the progress made in structural reform, rating companies also need to be aware of and fully assessed.
On April 1, according to Bloomberg, head of Asia-Pacific sovereign ratings at Fitch Andrew Colquhoun said in an e-mail message on Friday, Fitch a + ‘ rating to China ‘, Outlook stable, owing to China’s sovereign balance sheet is relatively strong, can deal with a comprehensive systemic risk and vulnerability of the economy.
Following is a question-and-answer full text: Lou Jiwei improve the consumption subsidy threshold
Q: on March 31, the poor’s ratings services issued a report maintaining China’s sovereign credit rating unchanged, but the rating Outlook from “stable” adjustments to “negative”. Within 1 month, there are two international credit rating companies downgraded the country’s sovereign credit rating Outlook, Treasury have any views on this?
Answer: since the late 90 ‘s, sovereign credit ratings have been rising steadily in China, p from “BBB” up to “AA-“, Moody’s from “Baa1” up to “Aa3”, is the fourth highest level of their rating system. Even after the outbreak of the international financial crisis, in the world’s major economies are going through the most difficult period, China’s sovereign credit rating is on the rise, reflecting China’s economic development has great potential and toughness.
China, the world’s second largest economy and largest trade country, ever since the outbreak of the international financial crisis, has been the most important engine of growth and stabilizing force. Extremely complex situation facing the current global economic recovery and maintaining stable economic growth in China, it is assumed the international community responsibility, for practical initiatives to contribute to a global economic recovery. Even in the context of overall recovery anaemic global economy, China’s economy still achieved a high growth rate. In 2015, China’s GDP grew 6.9%, according to the figures, contributions to global economic growth rates of over 25%.
Also see, current economic development in China has great potential, great flexibility, leeway is very broad. The “Thirteen-Five” program for future five-year major targets for China’s economic and social development, the implementation of innovation-driven development strategies, build new systems, optimization of a modern industrial system and other major initiatives. The Government work report, proposed to strengthen the supply side of structural reform, accelerate the break down institutional obstacles, improve the quality and efficiency of supply systems, further stimulating market vitality and social creativity, enhance sustainable growth momentum. The deepening of China’s economic structural reform, as well as the progressive implementation of the relevant policies and measures, will continue to maintain high growth, sovereign credit rating which will provide a solid guarantee of long-term stability.
The Moody’s, p’s sovereign credit rating Outlook to “negative”, to a certain extent overestimating the difficulties facing our economy, underestimated China’s reform, the ability to cope with risk. Rating companies on China’s economic structural adjustment and the real economy debt, reform of State-owned enterprises, financial market risk and other concerns, is not necessary. On China’s achievements in economic and social development and the progress made in structural reform, rating companies also need to be aware of and fully assessed.
Reporter: rating company downgraded China’s sovereign credit rating Outlook, run what would be the impact on China’s economy and the financial markets?
Answer: the market confidence and expectations of modern economic and financial stability has an important role. Sovereign credit rating is one of the factors that affect market confidence and expectations, however, a country’s economic fundamentals is what determines economic and financial factors underlying trend of running. Rating company will be China’s sovereign credit rating Outlook to “negative”, but expressed concern about the risks and tips, run on China’s real economy and financial markets will not have a significant impact.
At present, China’s economy was in a phase of economic growth transformation of “three stack” critical period, external and domestic supply and demand conditions have undergone profound changes. Comprehensive analysis of the world economy and China’s development at this stage for a long period and its interaction, it is necessary to maintain a reasonable economic growth, the quantity on the basis of a qualitative leap forward, promotion of economic growth from extensive to intensive, from external to internal change, improving the balance and sustainability of economic development.
At present, China’s overall smooth economic operation, long-term economic fundamentals have not changed for the better. From the perspective of growth and positive progress was made in economic restructuring, tertiary industry growth rate is significantly faster than other industries, consumption basic role is strengthened and substantial increase in the contribution of consumption to economic growth, fixed assets investment structure has been optimized. From the perspective of quality growth, productivity rising, energy consumption per unit GDP gradually decreased and by promoting technological progress, innovation, specialization and production innovation and increased investment in research and development to further enhance total factor productivity. From the perspective of growth environment, overall control of potential risks in the economy, have created good conditions for growth. For example, local government and corporate debt in the real economy still at a reasonable level, basis of devaluation of the RMB exchange rate does not exist, financial markets run smoothly.
Reporter: proposed in the Government work report “positive financial policies to increase its efforts”, may I ask how to play a role in the steady growth of the financial sector and in the areas in which greater efforts?
Answer: at present, the growth rate of China’s economy is undergoing a shift, structural adjustment pains, the old and the new kinetic energy of the new normal, requires constant innovation macro, continue to promote the reform and opening up. Implement the proactive fiscal policy, and strengthen its efforts, both fiscal policy and monetary policy coordination role to play, but also in terms of economic growth, structural and dynamical realize directional force, “drip” control, strengthening the preset tuning.
Steady implementation of the proactive fiscal policy, to promote the supply side structural reform in China is of great significance. By expanding deficits, the Qing state tax, optimizing the structure, improving performance, improving the supply structure on the supply side, promoting the development of power changed, on the demand side to boost effective demand, continue to release potential and actively support “to capacity to inventory, to leverage, reducing costs, fill the short Board” to promote stable economic growth.
For “active fiscal policies to increase its efforts” to be understood from the following areas: first, the tax reduction policy, the full implementation of camp to increase, increase the fees fund clean up and reform efforts, resolutely curb arbitrary charges, and reduce the burden on enterprises. Second, improve the deficit rate in 2016, budget deficit of 2.18 trillion yuan, the deficit was 3%, where appropriate increased financial expenditures and government investment in necessary, mainly used to compensate for the tax cut reduced financial reduction protects the Government should bear the responsibility. Third, optimize the structure of fiscal expenditure, continued efforts to increase financial resources and manpower used, innovation spending, inventory of stock funds financial, education, science and technology, social security, employment, poverty alleviation, eco-focused on spending, while reducing unnecessary or inefficient spending. Finally, improve the efficiency of fiscal management, continue to promote the cooperation of the Government and social capital model to promote PPP legislation and strengthen guidance, market development and continue to urge the local government in accordance with the budget law and the relevant system requirements, strengthening local government debt management, clarifying Government and market boundaries to prevent fiscal and financial risks.
Q: just now you mentioned the proactive fiscal policy, tax will be reduced fee, please turn to the Ministry of Finance on tax cuts will work?
A: the end of February this year, and published a joint communique the G20 Finance Ministers and Central Bank Governors meeting, clearly take growth-friendly tax policies. So-called growth-friendly tax, is how to make the tax system more conducive to the free market, formed a reasonable corporate tax burden, thereby contributing to economic growth.
In recent years, the tax structure of the financial sector, improve the tax function, stable macro-tax burden and taxation law, actively promoting the value-added tax, consumption tax, personal income tax, resources tax and other tax reforms. Meanwhile, for the macro-control function of taxation, preferential policies for integration of industrial systems, implemented a series of supporting the development of small and micro businesses tax breaks, perfect support for the people and the tax incentives for innovation.
As plays of the fiscal and taxation systems, pilot projects to camp early increases has been gradually expanded to nationwide transportation, telecommunications, postal services and part of the modern service industry, and have achieved positive results. Starting from May 1 this year, China will fully open the pilot projects to business increased, to extend the pilot project to the construction industry, real estate, finance, service industries, and all enterprise scope VAT included to offset the added real estate. In addition, step by step integrated classification with a combination of personal income tax reform, fully pushed reform of resource taxes ad valorem levy, implementation of fiscal policies to encourage innovation, continue to support the vessel tonnage tax and environment tax legislation.
Reporter: has been the subject of concern of the international credit rating companies in the financial sector, invites you to the financial sector in the financial area of work?
Answer: finance is the core of modern economy, improve the financial system market-oriented way, improve the efficiency of resource allocation, promote the development of the real economy. However, the financial sector on the economic risk of significant negative externalities, particularly systemic financial risks spread widely, concealment, vulnerability, highly contagious, with common characteristics. How to play a financial role to support the real economy and guard against systemic financial risk, finance sector remain high priority.
In recent years, initiate or cooperate with relevant departments of the Ministry has implemented a number of measures together to keep risk is a systemic culture of the bottom line, to support the real economy developments. In terms of deepening State-owned financial institutions, and constantly improve the corporate governance of State-owned financial institutions, promoting the establishment of a modern enterprise system, support conditions in domestic and overseas listing of State-owned financial institutions and increasing their strength, sound risk management and control systems, strengthening the incentive and restraint mechanisms, enhancing institutional vitality and competitiveness. In supporting the development of inclusive financial, through such measures as tax incentives, subsidies, incentives, subsidies, financial funds “four-two ounces of” the leverage advantage, leveraging financial resources focused on “supporting agriculture and little, weak,” and promoting the resolution of “sannong”, financing small and micro businesses and vulnerable groups, financing your questions. Construction of financial risk prevention mechanisms, and supported the establishment of the Securities Investor Protection Fund, futures investors protection fund, the insurance fund, supported the establishment of a deposit insurance system, to create a market-oriented financial risk protection net, for investors, provide a strong protection.
In the current situation, in order to create a favorable financial environment for steady economic growth, the Treasury continued to support the financial system, further promoting the construction of a modern financial enterprise system and adhere to the bottom line of thinking, sustained attention and prevention of financial risks credit risks and corporate debt, better play the role of financial support for the real economy, promote the steady and healthy development of the economy.