It Is Of Great Significance To Raise China'S Fiscal Deficit Rate To 4%

Sheng Songcheng, Director of the Investigation and Statistics Department of the People's Bank of China, recently wrote in his personal name that China's fiscal deficit rate could be raised to 4% or even higher in the future, which could make up for the fiscal cuts brought by tax cuts, effectively carry out counter cyclical regulation, better support supply side reform, and would not bring high Debt repayment risk 。

In 2015, China's fiscal deficit rate was 2.3%, lower than the 3% standard proposed by the Maastricht Treaty. In his opinion, there is no definite and unified financial deficit rate cordon Its level should be comprehensively considered according to a country's debt balance and structure, economic development and interest rate level. The warning line of about 3% of Ma is not in line with China's actual situation.

According to different interest rate levels, GDP growth rate, deficit rate and other conditions, Sheng Songcheng calculated the government debt ratio of China. One scenario is that assuming that the government debt ratio at the end of 2015 is 39%, the local currency debt interest rate in the next 10 years is 4% annually, and the GDP growth rate remains unchanged at 6%, how will the government debt ratio change by the end of 2025 under different deficit ratios. The results show that even if the deficit ratio reaches 4%, the government debt ratio of China in 10 years is only 68.9%, lower than that of most countries. This shows that there is still much room for China to implement a proactive fiscal policy, the so-called 3% Deficit warning line It does not accord with the actual situation of our country.

Therefore, Sheng Songcheng pointed out that in the future, by expanding China's deficit ratio to 4%, China's government debt ratio can still be controlled within 70% by the end of 2025, which will not bring high debt repayment risk to our government.

To analyze the sustainability of China's government debt, we should adopt the method of combining the debt balance with the annual debt increment. The deficit ratio only reflects the ratio of annual debt growth to GDP, while indicators such as debt balance, interest rate level and debt service ability are even more meaningful than the deficit ratio. At present, China's government debt balance is low, short-term debt is less, the proportion of foreign debt is very low, the economy maintains rapid growth, government revenue continues to increase, the bond market is gradually improved, local bonds are issued in a standardized manner, financing costs continue to decrease, state-owned enterprises have abundant assets, and financing platforms are profitable, all of which have enhanced the debt capacity of our government.