abstract:
Fiscal policy and monetary policy are the two major policy pillars of macro-control. Accordingly, the effect of fiscal policy and monetary policy are the two most important aspects to determine the effectiveness of macro-control, which are related to whether the national economy can maintain stable operation and achieve long-term growth, so they have a very important position in a country's policy system.
Keywords: fiscal policy, macro-control of monetary policy
1992, the 14th National Congress of the Communist Party of China formally established the reform goal of establishing a socialist market economic system. After 10 years, China's economic growth has experienced three stages: too fast, steady and declining, and steady and rapid, showing a good trend of sustained and rapid growth and narrowing the fluctuation range. In this process, fiscal policy has played an active role as an important means of government macro-control. Especially since May 2004, fiscal policy and monetary policy have been adopted for regulation and control, and the reform of fiscal and taxation management system has been deepened. The long-term high investment scale has finally fallen sharply, both PPI and CPI have fallen rapidly, and the money supply has returned to the range pegged by the central bank. This shows that fiscal policy has played an important role in promoting system reform, promoting coordinated development and building a harmonious society.
In 2005, China made substantial steps in strengthening fiscal macro-control, promoting financial management according to law, and promoting the coordinated development of urban and rural areas, regions, economy and society, and implemented a prudent fiscal policy with the main contents of "controlling deficits, adjusting structure, promoting reform, increasing revenue and reducing expenditure", which promoted steady and rapid economic development and further improved the financial and economic situation.
In 2005, the national fiscal revenue was 316,279.8 billion yuan, exceeding the 3 trillion yuan mark, with a year-on-year increase of 19.8%. In 2005, the basic context of China's economic development has been clear. In the case of maintaining a strong growth momentum, there are several trends worthy of attention: First, the domestic consumer price index (CPI) has been declining continuously and has now entered an ideal range; Second, the reform of RMB exchange rate formation mechanism was successfully implemented, and the RMB exchange rate rose steadily after an initial appreciation of 2%; Third, after the appreciation of RMB, net exports continued to rise, trade surplus increased substantially, and foreign exchange reserves reached a record high; Fourth, the profit rate of industrial enterprises has declined; Fifth, the contradiction of overcapacity in some industries is prominent.
In this context, the government's implementation of macro-control policies has increased the difficulty of operation. In order to maintain the ideal development pattern of high growth and low inflation, there is not much room for adjusting economic growth, improving import and export balance, improving economic benefits of industrial enterprises and reducing long-term investment in the short term. Compared with monetary policy, fiscal policy can promote stable economic growth, restrain and eliminate unhealthy factors in current economic development, and realize the coordinated development of society, so as to achieve the government's macro-control objectives by reducing the overall level of corporate tax burden, adjusting import and export tariff policies, implementing differentiated industrial tax systems and preferential tax policies, adjusting the direction and proportion of public expenditure, and increasing transfer payments.
Since 2003, open market operation has played an important role in the whole monetary policy regulation. Since April 2003, the People's Bank of China has stepped up its efforts to hedge foreign exchange reserves by issuing central bank bills. Since then, the Notice on Further Strengthening the Management of Real Estate Credit Business has been issued to remind commercial banks of the risks of real estate credit and require commercial banks to strengthen loan management. In addition, the statutory deposit reserve ratio was raised from 6% to 7%. Since the first quarter of 2004, the People's Bank of China has successively issued three major policies: on March 25th, it raised the central bank's refinancing rate and rediscount rate respectively; On April 25th, the deposit reserve ratio was raised by 0.5 percentage points again, and the differential deposit reserve ratio system was implemented. In June+10, 5438, the People's Bank of China raised the benchmark interest rate of RMB deposits and loans by 0.27 percentage points respectively, and at the same time released the upper limit of loan interest rate and the lower limit of deposit interest rate. The reform of interest rate marketization has achieved remarkable results, which reflects the role of monetary policy in macro-control.
In 2005, the financial macro-control achieved remarkable results. The People's Bank of China implemented a prudent monetary policy, strengthened aggregate control, optimized the credit structure, improved the transmission mechanism of monetary policy through market-oriented means, maintained stable financial operation, and promoted steady and rapid economic development. At the end of 2005 1 1, the broad money supply M2 increased 18.3%, and the narrow money supply M 1 increased 12.7%. RMB loans of all financial institutions increased by 2.2 trillion yuan; The credit structure has improved, with short-term loans and bill financing increasing by 44 1.3 billion yuan, medium-and long-term loans by 34.4 billion yuan and agricultural loans by 7.5 billion yuan.
Both fiscal policy and monetary policy are important means of national macro-control and important policies of the country. But the two are different. There are different means to adjust the economy. Fiscal policy is regulated by fiscal revenue and expenditure, and monetary policy is regulated by regulating the supply and demand of money. For different decision-making organs, the fiscal revenue and expenditure plan in fiscal policy must be approved by the National People's Congress, and the monetary policy is formulated by the People's Bank of China. Fiscal adjustment is more direct, and monetary adjustment is relatively indirect. Fiscal policy should play an important role in promoting economic growth, optimizing structure and adjusting income, and monetary policy should play an important role in maintaining monetary stability and aggregate balance.
Fiscal policy promotes system reform and system construction
It is a special and important function of China finance to bear the cost of system reform and system construction. Looking back on the course of China's reform and development, there are a lot of financial funds invested in the reform of state-owned enterprises, such as debt handling, personnel placement and separation of social functions of enterprises, bad debt handling and capital replenishment in financial reform, social security system construction that has been in arrears for many years, and coordination of various interests in rationalizing price relations. This is very different from those countries whose systems and systems are basically stereotyped and whose public finances mainly focus on developing social undertakings. From the overall situation and long-term perspective, it is of great significance to increase financial input into reform. If the system is not straightened out, it will increase the production and transaction costs, so accelerating the reform has obvious institutional benefits. By investing in reform, fiscal policy has not only become a "shock absorber" to stabilize society, but also a "booster" to improve the efficiency of resource allocation, enhance social vitality and maintain long-term rapid development.
Fiscal policy promotes social coordinated development and social equity.
Since the 1980s, China's industrialization, urbanization, marketization and internationalization have accelerated, profound changes have taken place in various fields of economy and society, social interests have been rapidly adjusted, and the pressure of overall planning has increased. In recent years, finance has paid more attention to promoting the coordinated development of urban and rural areas, especially rural areas, promoting regional coordinated development, especially the development of backward areas, promoting the development of social undertakings, especially compulsory education, promoting the harmonious development of man and nature, especially environmental protection and resource conservation, regulating the relations between all parties and maintaining social stability. China is a big country undergoing structural reform and unbalanced development. The basic national conditions determine that macroeconomic policies should not only regulate the total amount, but also regulate the structure. Fiscal policies should not only support economic and social development and reform, but also use market forces and administrative forces to maintain sustained, steady and rapid economic growth.
Monetary policy maintains price stability and promotes economic growth.
The ultimate goal of China's monetary policy is to keep the value of RMB stable and promote economic growth. Maintaining the stability of RMB value has two meanings, one is to stabilize prices, and the other is to maintain the basic stability of RMB exchange rate. The central bank achieves the ultimate goal by adjusting the intermediate goal by using monetary policy tools. At present, the intermediate goal of China's monetary policy is money supply. At present, monetary policy tools include open market operation, interest rate, deposit reserve ratio and so on.
Since the reform and opening-up, China's central bank has actively explored macro-control, flexibly adopted loose or tight monetary policies according to the macroeconomic operation, and used various monetary policy tools to influence the production, investment and consumption of enterprises and residents through channels such as credit, interest rate, exchange rate and asset price, which not only successfully controlled inflation, but also effectively prevented deflation, creating a good macroeconomic environment for the stable and healthy development of the national economy.
From 1993 to 1994, development zone fever, real estate fever and stock fever appeared everywhere, and investment demand and consumption demand expanded rapidly, leading to serious inflation. In accordance with the strategic decision of the CPC Central Committee and the State Council, the People's Bank of China implements a moderately tight monetary policy, adjusts the total amount and structure of money supply in a timely manner by implementing asset-liability ratio management, flexibly adjusting interest rates, and coordinating local and foreign currency policies of commercial banks, while vigorously rectifying financial order and standardizing market behavior. Comprehensive control measures, including moderately tight monetary policy, have effectively controlled inflation and successfully achieved a "soft landing" of the national economy. Another example is 1997, when the Asian financial crisis broke out, the currencies of neighboring countries depreciated sharply. Proceeding from its own reality and according to the requirements of the international situation, China has maintained the stability of RMB exchange rate, made important contributions to regional financial stability and won wide acclaim from the international community. Due to the impact of the Asian financial crisis, China's export demand has decreased, while its domestic supply capacity has improved, and the supply of some commodities exceeds demand. Under the combined action of internal and external factors, the national economy showed signs of deflation. According to the policy of expanding domestic demand formulated by the CPC Central Committee and the State Council, the People's Bank of China implemented a prudent monetary policy, appropriately increased the money supply, guided loan investment through policies and regulations and "window guidance", and promoted economic restructuring. At the same time, implement the financial stability work plan, promote the deepening reform of commercial banks, and improve the transmission mechanism of monetary policy. The implementation of a prudent monetary policy has created favorable conditions for the implementation of a proactive fiscal policy. Under the comprehensive effect of various macroeconomic policies, China's economy has successfully resisted the impact of the Asian financial crisis. With the establishment and perfection of the socialist market economic system, the People's Bank of China, as the central bank, has played a more prominent role in the macro-control system, and at the same time, it is undertaking more arduous tasks and facing more arduous challenges.
conclusion
In 2006, China will continue to implement prudent fiscal and monetary policies. Facing the good opportunity of tax reform this year, it is expected that new measures to deepen tax reform will be introduced one after another, including: unifying the income tax of domestic and foreign-funded enterprises, levying fuel tax, and adjusting import and export tax policies. This year's fiscal policy will give full play to the redistribution function of finance and promote the fair and coordinated development of society. We will continue to implement a prudent monetary policy, maintain the steady growth of money and credit, enhance the active control ability of monetary policy to maintain the stability of currency value and the total balance, keep the price level basically stable, and promote a more coordinated and balanced economic growth.