Sound financial policy is crucial to the nation’s continuing
economic development. Now with a year in office as the Minister of
Finance, Jin
Renqing talks with People’s Daily reporter Li Jianxing
about his experiences and plans for the future.
People’s Daily (PD): Minister Jin, how do you feel
about your past year in office as China’s finance minister?
Jin Renqing (JRQ): I worked in the Finance Ministry from
1991 to 1995, but my work in this position is more challenging.
Things are changing, needs are changing. We’ve encountered many
contradictions in dealing with relations between the state,
enterprises and individuals. This is a tough job. I feel strongly
that every penny of government money comes from the people’s hard
work. “What is taken from the people is to be used in the interests
of the people.” I keep this slogan in mind and scrutinize my work
when I exert my authority, which is endowed by the Party and the
people.
PD: Financial policy is a major tool for our
country’s macro-adjustment and control. Would you tell us about
your newest concepts for this policy?
JRQ: In order to meet the central government’s
requirements we’ve conducted wide-ranging investigations and
listened to ideas from people in a variety of areas. The Finance
Ministry’s basic concept is to “make a big pie.” This means we will
make every effort to boost our economy and enhance our government
revenue. We plan to make better use of treasury bonds and the grain
risk fund; pave the way for reform of the taxation system,
particularly tax fees in rural areas; and manage the budget. In
addition, we are going to step up work in property allocation,
social security, education and public health.
PD: Most people think of the government’s role as
slicing the pie, but your focus is to make the pie bigger. Why is
this?
JRQ: You can’t spend money that you don’t have. Our
primary role is to maintain healthy economic growth. Setting up
public financial revenue is not contradictory to supporting the
economy. We have to consider both economic and political problems
together in order to harmonize financial policy and reform, as well
as development and stability. We also have to deal with problems
like timing, profit and structure. Development is the top priority
for our financial policy.
PD: In what ways do you expect to make the pie
bigger?
JRQ: First of all, further reform of “revenue supports
economy” methods. Supporting economic development – that is, making
the pie bigger – doesn’t mean returning to the old-fashioned
planned economy. Investing in state-owned enterprises doesn’t mean
favoring individual enterprises as it did in the old days. We
should learn to use economic levers like taxation, treasury bonds
and government subsidies to help state-owned enterprises, cultivate
various markets and create a fair, open and relaxed financial
environment.
Second, to improve our management we encourage all levels of
government to contribute to expansion of the pie. We insist that
they adhere to the principle of “maintain public innovation,
activate both central and local government.” A key to this lies in
separating taxation systems: further clarifying the duties of
central and local governments, granting more tax collection rights
to local governments, reducing administrative taxation and
improving the collection mechanism.
PD: How will you make better use of treasury bonds
and the grain risk fund?
JRQ: We have decided to adjust the scale of long-term
treasury bonds, and change their structure and use. As our economy
grows, both public and private investment are rising rapidly. We
are going to integrate the domestic construction bond and basic
construction budget, gradually increase infrastructure investment,
reduce direct investment in competitive and operative fields, and
enhance public service and products.
As for the grain risk fund, we are changing the original
indirect allowance to distribution entities to a direct allowance
to the farmers themselves. From 2004, all farmers in major
grain-production areas may receive a direct subsidy from the grain
risk fund. Subsidies to the farmers will use half of the grain risk
fund in two years, meaning an increase in the direct allowance to
15 billion yuan a year. At the same time, we’ll continue relaxing
price controls in the grain market and exert tighter controls over
distribution.
PD: What are your key points for future
reforms?
JRQ: As for taxation reform, first, we will transfer from
a production-based value-added tax to a consumption-based one. We
will begin trials of this in northeast China this year. We will
also unify tax policies for domestic and foreign-invested
enterprises. Other plans include: reforming overall budget
management; increasing and improving regulated government
procurement projects; conducting research on a system for
evaluating effects of the budget; and maximizing the effects of the
budget. Within a few years, all these reforms will be implemented
and by then, a mature public budget planning and administrative
system will have been established.
PD: Why are you now emphasizing work in property
allocation, social security, education and public health?
JRQ: First of all, these four areas are crucial to the
socialist market economy. Balanced property allocation is the
government’s responsibility. The other three are matters of public
welfare that can be benefited greatly from financial policy. In
addition, support of these four areas may increase consumption,
boost domestic demand, improve the balance between investment and
consumption, and maintain a sustainable economy.
PD: What is your ultimate goal in your
financial policy?
JRQ: Generally speaking, we have to implement the central
government’s scientific concept of development; to reform further;
and to keep overall, harmonious and sustainable development for
finance, the economy and society.
(China.org.cn, translated by Li Liangdu, February 19, 2004)