Create a suitable fiscal and tax environment for the development of manufacturing industry

This year is the seventh year after the outbreak of the international financial crisis in 2008. The state of weak economic growth has spread from developed countries to emerging and developing countries. On a global scale, the effects of economic policies are getting smaller and smaller, even in some countries. Already near failure. From the current situation, the global economic growth momentum cannot come from external economic policies, but only from the internal, that is, the economic restructuring and strategic layout. Using the exclusion method, the manufacturing industry is the only engine that can be selected by countries. .

The lack of global economic growth momentum In the third quarter of 2015, the world economy was overshadowed by the US interest rate hike expectations, the slowdown of China's economic growth, and the decline in international commodity prices, facing the increasingly obvious downside risks, reflecting the fragile recovery. Unstable, unbalanced features. What is even more frustrating is that the positive actions of governments have not produced the expected results. In the face of the unfavorable situation of economic development, there is almost no way to do it. The bottom line is the lack of economic growth.

World economic growth shows unbalanced and fragile characteristics In the third quarter of 2015, the economic development of countries around the world is still in a state of inconsistent pace, but the economic development situation has quietly changed. On the surface, although the economic growth rate of emerging and developing countries is still much higher than that of developed countries, the growth rate is further slowed down due to the more severe economic downward pressure. The US economy has experienced more-than-expected growth. Still maintaining a slow recovery at a slow pace, the Japanese economy has relapsed into a stagnant and quarter-on-quarter negative growth. On a deeper level, the moderate recovery of the economies of developed countries such as the United States and Europe is also fragile and unstable.
1. The US macroeconomic situation is mixed. The US economy has started to recover since 2010, showing a moderate recovery. The US Department of Commerce data shows that US GDP achieved a 3.9% growth in April-July this year. However, its macroeconomic performance is mixed: despite the steady expansion of the industry, especially the strong growth of the construction industry, the momentum of industrial expansion has weakened; although consumption and investment spending have increased to some extent, consumer confidence is unstable; although the unemployment rate continues to decline However, the labor market is weak; although the trade deficit has risen sharply, the price index remains low.
2. The economic recovery in the Eurozone is fragile The data of the Eurostat shows that the Eurozone's GDP in the second quarter increased by 0.3% quarter-on-quarter and 1.2% year-on-year, showing a slow growth trend. The basis for supporting the fragility of its economic recovery is: increased deflationary pressures, a worsening employment situation, and a fall in the economic sentiment index. However, there are also favorable factors: the foreign trade situation is improving, and the volume of both import and export trade is growing; although in the low-speed growth range, the expansion trend is maintained, and Markit's comprehensive PMI, service industry PMI, and manufacturing PMI are both above the critical value of 50. And it is on the rise; the financial situation has improved, which has provided better support for the implementation of the “Junker Investment Plan”.
3. Japan's economic contraction Japan's Cabinet Office data show that after the price change factor was removed in the second quarter, Japan's real GDP fell by 0.3%, the annual conversion rate fell by 1.2%, and GDP once again experienced negative growth. From August to October, Japan’s manufacturing PMI was above 50, indicating that manufacturing activity is showing signs of recovery, but industrial production has been declining for two consecutive months. The production of automobiles and electronic components as a pillar industry is particularly low, and the market is facing the service industry. Confidence in the future is also insufficient. The basis for supporting the Japanese economic contraction is that domestic demand is unstable, external demand is sluggish, industrial production is declining, and the price index shows that it is still extremely difficult to get rid of deflation. In the context of the decline in international oil prices, Japan’s energy imports have not increased, but have fallen sharply, indicating that the prospects for economic growth are not optimistic.
4. The general economic downturn in emerging and developing countries First, the risk of vicious circle in the Russian economy has increased. In the first nine months of GDP, GDP fell by 3.8% year-on-year. The continued sluggish commodity prices have caused the country's economy to face great difficulties. It is also facing greater inflationary pressures, and the real income and consumption of residents have declined. Second, the Brazilian economy is in recession. In the second quarter, Brazil's GDP fell by 2.6% year-on-year. The industry, agriculture, services, household consumption, investment, commodity import and export and other areas of overall decline, coupled with high inflation, serious debt burden, political instability, suffered a S&P rating. Down. In addition, the South Korean economy is facing tremendous pressure from the outside, Indonesia's trade activity is weakening, and Mexico's economic growth is slow due to factors such as falling oil prices, weak exchange rates, and capital outflows. Although the Indian economy has risen against the trend, there are also some unfavorable factors. Under the premise of the depreciation of the local currency, exports have declined, and the wholesale price index of commodities has continued to decline.

The Way Out for the World Economy: Revitalizing the Manufacturing Industry. At present, all countries in the world are caught in a predicament. The expansion policy is used to the extreme, and it is still unable to get out of the economic downturn or prevent the economic downturn. Even in China, the role of the steady growth policy has only ensured that the economic growth rate has steadily dropped back to a reasonable range, but it has not stopped it. Therefore, this judgment is universal. The reason is that global growth lacks motivation, and the current task is to find and launch engines. We try to answer this question with a simple exclusion:
First of all, this engine cannot be a monetary policy, nor a fiscal policy. It cannot be external demand, nor can it be domestic demand. It must be further implemented and able to mobilize capital, technology and labor on a large scale. Secondly, this engine cannot be a strong investment in infrastructure, nor can it be a vigorous development of the service industry. Although these two items can mobilize two of the above three elements on a large scale, they are still not all. In the end, there is only one option left, “revitalizing manufacturing”. Revitalizing the manufacturing industry will inevitably drive the production service industry, which will lead to the development of the entire service industry, and ultimately form a positive interaction between the manufacturing industry and the service industry to jointly promote economic development.
Studies have shown that China's manufacturing investment will increase by one percentage point, GDP will increase by 0.836 percentage points, and for every 1 percentage point increase in equipment manufacturing value added, GDP will increase by 0.041-0.102 percentage points.
Since the international financial crisis, countries have launched their own manufacturing development strategies, strengthened their forward-looking layout of manufacturing, and tried to seize the commanding heights of international competition. However, until now, most of these strategies have been “thunder and rainy” and have not been well implemented. The current international economic situation shows that now is the best time to wake up those manufacturing development strategies that are still "sleeping", and China has sufficient space and time to successfully transform into the service industry. Under the premise, further revitalize the manufacturing industry, form a dual-engine drive for economic development, and better achieve economic development goals.

China's economic development quality priority growth rate steadily fell back to a reasonable range In the first three quarters, China's national economy generally operated smoothly. Although some data did not perform well, the problems reflected were not serious. In particular, almost all macroeconomic fields clearly reflect the characteristics of structural optimization, indicating that the transformation of China's economic development mode is progressing in an orderly manner, and the quality of economic development is steadily improving.

First, the economic growth rate has dropped slightly and the supply structure is reasonable. According to comparable prices, China's GDP in the first three quarters increased by 6.9% year-on-year, and the growth rate declined slightly, but it is still within a reasonable range of around 7%. The contribution of the three industrial added value to GDP is 8%, 40.6%, and 51.4%, respectively, and the growth rate is 3.8%, 6.0%, and 8.4%, respectively. The tertiary industry is in a leading position and high in both scale and growth rate. The accelerating growth of the added value of the technology industry reflects the optimization of the economic structure. In the first three quarters, the added value of industrial enterprises above designated size increased by 6.2% year-on-year at comparable prices, and the growth rate dropped by 2.3 percentage points year-on-year. Among them, the growth rate of state-owned enterprises and foreign-funded enterprises slowed down the overall growth rate.

Second, the domestic demand structure is improving, and foreign demand is sluggish. In the first three quarters, the growth rate of total fixed asset investment and total retail sales of consumer goods in the country fell compared with the same period of the previous year. However, the proportion and growth rate of private investment and tertiary industry investment are both high, indicating that the investment structure has improved. The contribution rate of final consumption expenditure to GDP growth has been further improved, indicating that domestic consumption has shown signs of stabilization; the growth rate of rural consumer goods retail sales continues to exceed that of cities and towns, indicating that China's rural consumption potential is gradually being released; online retail sales are accelerating The growth shows that the new format of “Internet+” maintains a rapid growth momentum; the income of residents continues to grow rapidly with the growth rate of super-GDP, and the income gap between urban and rural areas is further narrowed, driving personal and household consumption to be strong. In the first three quarters, I had a lot of pressure on foreign countries, but the proportion of exports to GDP fell from 25% in the same period last year to 20%. This shows that China's dependence on the external market is gradually weakening. At the same time, the decline in international commodity prices and import substitution factors have led to a rapid decline in imports, which has improved the trade situation in China to some extent. However, due to the turmoil in the international market and the outflow of capital, the use of foreign capital has experienced a sharp decline, which has had a certain negative impact on China.

Third, monetary credit grew steadily, and consumer prices were basically stable. In the first three quarters, the scale of new RMB loans, deposits and social financing in China increased to varying degrees, indicating that in China's stable growth and low interest rate policy environment, the demand for financing in the real economy has increased, and bank credit supports the real economy. The intensity has been strengthened, and driven by the “Belt and Road” and mass entrepreneurship and the strategy of innovation, the role of development and policy finance is outstanding. In the first three quarters, consumer prices rose by 1.4% year-on-year, an increase of 0.1 percentage points over the first half of the year. Changes in consumer prices are affected by seasonality and policies, such as tax increases in the wholesale chain of cigarettes, start-up seasons, seasonal alternations, adjustments in pork supply and demand, and cardinal factors. The ex-factory price of industrial producers fell by 5.0% year-on-year, and the purchase price of industrial producers fell by 5.9% year-on-year. At present, the factors affecting the rise and fall of China's price index coexist. Factors that inhibit further price increases include the reduction of refined oil prices by the state, the reduction of electricity prices of industrial and commercial enterprises, the bumper harvest of summer food, the decline in industrial production growth, and the fall in international commodity prices. The price increase factors include the reduction of interest rates and the reduction of the national railway freight rate. Increase, tourism-related price increases, etc., two-phase trade-offs, the pressure of future price increases is greater.

Fourth, the manufacturing industry has downward pressure and non-manufacturing vitality has increased. In September 2015, China's manufacturing purchasing managers' index (PMI) was 49.8%, which was below the critical point and lower than the historical level. This indicates that the downward pressure on the manufacturing industry is still large, and the signs of expansion of large-scale manufacturing enterprises are in the middle. The production and operation of small manufacturing enterprises is still difficult. However, we must see that with the advancement of structural adjustment, transformation and upgrading, the quality of manufacturing development continues to improve. In contrast, non-manufacturing maintained steady growth and market confidence remained stable. Among them, the growth rate of the total service business has accelerated, and it is located in a higher economic range. The construction industry is not optimistic. Although the total business volume has maintained overall growth, the future expectation is better, but the growth rate has slowed down and market demand has declined. In the real estate industry closely related to the construction industry, in the first three quarters, the new construction area of ​​housing decreased year-on-year, and the newly started residential area decreased greatly. The land acquisition area of ​​real estate development enterprises also dropped sharply year-on-year, while the sales area of ​​commercial housing grew rapidly, and the residential sales area The growth is particularly fast, indicating that the real estate industry has accelerated its inventory.
In addition, in the first three quarters, China's energy conservation and consumption reduction continued to make new progress, and the energy consumption per unit of GDP fell by 5.7% year-on-year, indicating that the quality of China's economic development is steadily improving.

Policy recommendations for creating a favorable fiscal and taxation environment for the development of the manufacturing industry reinvigorate the manufacturing industry. Fiscal and tax support is indispensable. Specifically, it can be started from two aspects: First, prepare for the early stage and create a favorable fiscal and tax environment for the development of the manufacturing industry; Understand the status quo of manufacturing development, accurately grasp the financial and tax support needs of the manufacturing industry, and create a systematic fiscal and tax support program for it. Because the second aspect is a large content and high technical requirements, industrial technicians, taxation experts and government departments need to work together. Limited by the length and ability, this article only puts forward corresponding suggestions for the first aspect, which is to create a favorable fiscal and tax environment for the development of manufacturing industry.

Adhere to the "tax reduction and fee reduction" is committed to "subtraction method by subtraction"
“Deduction of taxes and fees” is an important measure to create a good fiscal and tax environment for the development of the manufacturing industry. In particular, it mainly benefits small and micro manufacturing enterprises. They have important contributions to China’s economic development. Tax reduction and fee reduction can provide them with good fiscal and taxation. The environment, to alleviate the development dilemma faced by it, that is, in exchange for the reduction of fiscal revenue in exchange for its multiplier effect on manufacturing development and economic growth.
However, at present, the preferential policies for small and micro enterprises have been re-introduced, lightly publicized and implemented. The existing preferential policies are too complicated and difficult to use, and it is difficult to achieve the expected results. It is necessary to sort out the preferential fiscal and taxation policies that have been introduced for small and micro enterprises, and then print them into a book after induction and merger, make full use of the advantages of the Internet, and carry out policy publicity on relevant websites such as finance and tax authorities, in the government affairs hall and self-service tax terminal. The relevant publicity materials will be posted at the eye-catching locations of relevant places such as the entrusted agencies, so that small and micro enterprises can fully use the various preferential policies to make tax reduction and fee reduction actions an effective way to reduce the burden on manufacturing enterprises. .

Establishing a modern fiscal system to match the power of affairs with the responsibility of expenditure First, the modern fiscal system supports the development of the manufacturing industry, requiring three levels of division of power and expenditure responsibility. First, to delineate the scope of government affairs, we must first deal with the relationship between the market and the government in the process of manufacturing revitalization. Second, according to the scope of relevant benefits and externalities, the exclusive rights and common powers of all levels of government are divided, and the corresponding expenditure responsibilities are matched according to the principle of “equal rights and responsibilities”. Third, according to the complexity of information processing and the requirements of incentive compatibility, determine the power of entrustment and its expenditure responsibility, and focus on dealing with the right to adverse selection and moral hazard.
Second, the modern fiscal system supports the development of the manufacturing industry and requires the formation of a “list of authority and expenditure responsibility”. On the basis of the power list, it is necessary to form a list of the rights and expenditures for the implementation of the “Manufacturing 2025” development strategy, and ensure that the rights and responsibilities are equal.
Finally, the modern fiscal system supports the development of the manufacturing industry and requires a standardized transfer payment system. The powers and expenditure responsibilities of the governments at all levels to support the development of the manufacturing industry should be mainly guaranteed by the financial revenue of the same level. The gap is compensated by the higher-level government for the transfer of general transfer payments or transfer payments. It must be clarified that special transfer payments can only be used for entrusted powers. Used for other purposes. As a precondition, it is necessary to establish a sound local income system and scientifically divide financial power as soon as possible.

Regulating the management of local government bonds to create a suitable fiscal and tax environment for the manufacturing industry also requires a good local fiscal and tax environment. At present, local governments in China can issue general bonds and special bonds. This will not only promote the transparency of local government debt, but also improve the financial capacity of local governments and expand the space for local finance to support the development of manufacturing.
However, local bond issuance is close to half of the quota issued this year, and the first batch of local government debt replacement of 1 trillion yuan has been completed. However, the progress of local bond issuance and replacement is not satisfactory. The reasons are manifold. The most important thing is that the Ministry of Finance requires local governments to replace bonds spontaneously, bond risks are raised, and bond interest rates are also lowered. To compensate for the risks, the commercial bank as an investor has not responded positively. In addition, issued local government bonds with a maximum maturity of 10 years and a weighted average term of 6.45 years have not yet matched the investment payback period of capital projects.
To this end, it is necessary to further rationalize the relationship between finance and finance, strengthen cooperation with financial institutions such as banks, and give higher yields to local government bonds. At the same time, further increase the proportion of local government's medium and long-term bonds and raise the upper limit of bond maturities. Local government financing needs for long-term funding.

Strengthening financial and financial cooperation to seek financial support for the manufacturing industry In the third quarter, the deep cooperation between finance and finance began to sprout at the central and local levels. The biggest advantage of the cooperation between the two is that the active fiscal policy will magnify the policy effect through financial leverage, which will be A new and powerful means of implementing fiscal policy and supporting the fiscal policy of the manufacturing industry can also make full use of financial and financial cooperation.
At present, financial and financial cooperation can be widely used in the PPP field, from which mature experience can be obtained for the development of the manufacturing industry. At the same time, the financial funds saved by social capital intervention can also be used to develop the manufacturing industry. Of course, the premise is to handle the relationship between the government and the market.
What needs to be seen is that the current PPP model has yet to mature. Because PPP projects must simultaneously ensure that social capital obtains long-term stable returns and maximizes public benefits, if the benefits are difficult to guarantee, it will inevitably bring greater economic and social risks, and will also lose attractiveness to social capital. Therefore, it is necessary to further scientifically understand the connotation and extension of PPP, analyze its specific role and possible shortcomings in China, and introduce more cautious and standardized policies on the basis of perfecting the system. It is also necessary to consider the current and future financial sustainability of local governments, the choice of social capital, and the establishment of sound demonstration projects, follow-up guidance, and dynamic adjustment mechanisms.
In addition, more importantly, a tailor-made fiscal and tax support system that is tailor-made for the development of China's manufacturing industry, taking into account various factors such as industrial supporting capacity, intermediate goods, productive services, and high-end technology. It can even coordinate with the fiscal and tax support policies of “Public Entrepreneurship, Innovation” and “Internet Plus”. On the basis of clarifying the internal linkage and influence mechanism, a set of fiscal and tax support programs will be introduced to form a strategic synergy to boost the economic development engine. Get the most out of it.
(Yan Kun is Executive Deputy Director of the Finance and Taxation Research Center of the Chinese Academy of Social Sciences; Yu Shuyi is an Associate Research Fellow at the Institute of Finance and Economics of the Chinese Academy of Social Sciences)

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