Further Adjusting Implementing Efforts and Concrete Measure for Pro-active Fiscal Policy 　　This article, written by Xiang Huaicheng, minister of finance, runs in part as follows: 　　The pro-active fiscal policy, focused on expanding financial investment and put into practice in the second half of last year, is a decisive and useful measure adopted for China's macro-control, it has produced remarkable results in boosting the growth of the national economy. Statistics indicate that the investment in infrastructure facilities increased through the issuance of national bonds in 1998 has brought about a 1.5 percentage-point increase in national economic development, playing a very important role in achievement of the economic growth targets set down early in the year. At the same time, it also yielded positive effect on the maintenance of a rapid growth in financial revenues in the year. Practice proves that the decision of the Party Central Committee and the State Council on implementing a pro-active fiscal policy is perfectly correct. 　　 In the first half of this year, the national economy contained to maintain a rapid growth, and financial revenue also witnessed a high rate of growth. On the whole, the current economic and financial situation is favorable. However, some new changes have recently taken place in the international and domestic economic situation, certain problems and contradictions affecting the economic growth have become increasingly conspicuous. The slow growth in the incomes of urban and rural residents, their stronger anticipation of an increase in future expenditures and their relatively weakening consumption desire have led to the continued depression in consumption demand. There has been a fall in the growth rate of fixed asset investment over the past few months and a weakening role of investment demand in boosting economic growth have directly affected the growth of industrial production; the slowdown in the growth of the world economy, the intensified international market competition and the stronger tendency of regional trade protectionism and the reduction of China's exports to some countries and regions have directly affected the expansion of external demand. At the same time, a slowdown tendency has also begun to emerge in the growth rate of financial revenue. A sizing up of the situation in various fields shows that along with the passage of time and change in the situation, the effect of the pro-active fiscal policy that has been in force since last year is gradually weakening, and it is difficult for expanded financial investment to make up for the reduced domestic demand resulted from the decline in non-state-owned economic investment and in final consumption increment, as well as the reduced external demand caused by net export change. Unless timely effective measures are adopted, the contradictions may become increasingly prominent, the good momentum bringing about the economic recovery since the second half of last year can hardly be maintained. 　　In dealing with the outstanding problem arising from the new change emerged in the international and domestic economic situation, particularly the insufficiency of effective demand, it is essential to study and adopt a policy to further strengthen and improve macro-control, and make a timely adjustment to the effort and concrete measure for implementation of the financial policy. While continuing to increase the issuance of national bonds to expand financial investment, it is also necessary to actively adjust the policy of income distribution, liquidate the various control stipulations unfavorable to investment and consumption, effectively stimulate investment and consumption demands, continually enhance the enterprise's capability to engage in equal competition and thereby bringing about a sustained, rapid and healthy development of the national economy. 　　I. Appropriately expanding financial deficit, increasing the issuance of national bonds and maintaining a rapid growth of investment demand. 　　Properly controlling the use of funds is the key to boosting economic growth by the method of increasing the issuance of national bonds and expanding government investment. 　　II. In adjusting the policy of income distribution, efforts should be placed on stimulating consumption demand. The policy of income distribution should be rationally adjusted from the perspective of reform, development and stability. 　　It is essential to raise the minimum living standards of laid-off workers from state-owned enterprises, the unemployed as well as urban residents, and the secured living level of low income-earners, and to increase the wages of staff and workers of government organizations and institutions and the pension of retirees. This is conducive not only to stimulating consumption and to safeguarding social stability. 　　Along with rise in the income of urban residents, the price of farm and sideline products will go up accordingly, thereby increasing farmers' income. 　　In view of residents' excessive income gap and the contradiction arising from the fact that high income-earners' income desire is not strong, low income-earners' consumption ability is low, while implementing the above-mentioned policy for adjusting income distribution, it is necessary to adopt appropriate taxation policy that can help narrow residents' income gap and promote consumption growth. 　　III. Further implementing a taxation policy that is conducive to expanding investment demands and promoting exports. 　　1. Rationally adjusting the fixed asset investment-oriented regulatory tax. 　　At present, the outstanding contradiction needing to be solved for macro-control is no longer investment demand expansion, but rather is insufficiency in investment demand. On the basis of this background, it is necessary to rationally adjust and even abolish the fixed asset investment-oriented regulatory tax. 　　2. Instituting an investment tax credit policy for enterprise's equipment investment. 　　3. Appropriately raising the rate of export refund, and supporting export growth. 　　4. Continuing to rectify the collection of various charges to reduce enterprises' burden. 　　In addition, in line with the development requirements of the socialist market economy, it is essential to separate the improvement of the financial and economic order from the control policy that restricts investment and consumption. Measures for standardizing the economic order need to persist for a long time to come, while some policies adopted to restrain inflation during the period when the economy was overheated, which restrict investment, limit residents' consumption and are unfavorable to export, should be totally liquidated, this is designed to expand investment and consumption demands and promote export growth. 　　The above-mentioned adjustment of the income distribution policy as well as pro-active fiscal policy for expanding investment will play an important role in promoting the sustained, rapid and healthy development of the national economy. Economicnews 1999-07-15 Page2 Full Story in Chinese