Resolution of the Central Committee of the Communist Party of China on Further Deepening Reform Comprehensively to Advance Chinese Modernization

V. Improving Macroeconomic Governance

Sound macro regulation, along with effective governance by the government, is essential for ensuring that we can fully leverage the institutional strengths of our socialist market economy. It is, therefore, vital that we improve our macro regulation systems. We must pursue coordinated reforms in the fiscal, tax, financial, and other major sectors and work to enhance the consistency of macro policy orientation.

(16) Improving the national strategic planning system and policy coordination mechanisms

We will develop mechanisms for formulating and executing national strategies and make a stronger push to fully integrate all major strategies, so that they can provide better macro guidance and overall coordination. The systems for national economic and social development planning will be improved. This will see us enhancing the mechanisms for the alignment and implementation of plans, better harnessing the strategic guiding role of national development plans, bolstering the basic role of territorial space plans, and reinforcing the supporting role of subject-specific plans and regional plans. We will also improve the system by which experts participate in decision-making on public issues.

To promote the implementation of national development plans and major strategies, we will foster greater synergy between our fiscal, monetary, industrial, pricing, and employment policies, improving the allocation of newly acquired resources and adjusting the mix of existing resources. We will explore the introduction of national macro balance sheet management. Both economic and non-economic policies will be evaluated to ensure that they are consistent with the macro policy orientation. The expectations management mechanism will be improved. We will refine the statistical indicators accounting system to better support high-quality development, expanding the coverage of statistics to include more new forms of economy and new sectors. We will promote the development of statistical infrastructure for industrial entities, optimize statistical methods for both headquarters and branches, and gradually work toward compiling statistics based on the places where market entities conduct their business activities. Steps will be taken to improve the mechanisms for international coordination on macro policies.

(17) Deepening reform of the fiscal and tax systems

We will further improve the budget system and strengthen unified management of all fiscal resources and budgets. All revenues generated on the basis of the exercise of administrative power, government credit, and state-owned resources and assets will be placed under government budget management. We will improve the budgeting and performance assessment systems for state capital operations and strengthen fiscal support for major national strategic tasks and basic public wellbeing. We will enhance macro guidance on budgeting and fiscal policies. We will strengthen performance management for public services, with a focus on conducting ex ante evaluations of their functions. Reforms for zero-based budgeting will be advanced. We will unify budget allocation powers, make budget management more unified and standardized, and take steps to boost budget transparency and enhance budget oversight. We will improve the system for comprehensive government financial reporting based on accrual accounting.

The tax structure will be improved to make taxation systems more conducive to high-quality development, social fairness, and the building of a unified market. We will also look into approaches for better adapting these systems to new forms of business. Fully implementing the principle of legality of taxation, we will regulate policies on tax breaks and improve the support mechanisms for key sectors and links. We will refine the system of direct taxes, improve the personal income tax system which is based on both adjusted gross income and specific income types, regulate taxation policies on incomes generated from business operations, capital, and property, and unify tax rates for incomes earned through work. Reform of the tax collection and administration system will be deepened.

We will establish a fiscal relationship between the central and local governments that features well-defined powers and responsibilities and the appropriate allocation of resources, with an optimum balance between regions. To place more fiscal resources at the disposal of local governments, we will expand the sources of tax revenue at the local level and grant greater authority for tax management to local governments as appropriate. To improve the system of transfer payments, we will overhaul special transfer payments and increase the scale of general transfer payments. These will help ensure that the fiscal resources of prefecture- and county-level governments are commensurate with their powers. We will establish incentive and constraint mechanisms through transfer payments to promote high-quality development. We will take steps to move excise tax collection further down the production-to-consumption chain, with the power of collection steadily being passed to local governments. We will improve the value-added tax credit refund policy and free up the channels for making tax deductions. The ratio for taxes shared between the central and local governments will be optimized. We will look into rolling the urban maintenance and construction tax, education surcharges, and local education surcharges into one single local surtax. Local governments will have the authority to set the rate for this tax within a predetermined range. We will appropriately expand the scope of use for funds raised from the sale of local government special-purpose bonds, permitting a greater share of such funds to be used as capital in more sectors and on a larger scale. The systems for managing government debt will be improved. We will establish a system for monitoring and regulating all local government debt as well as long-term mechanisms for preventing and defusing hidden debt risks. We will move faster to reform and transform local government financing platforms. In regulating the management of non-tax revenue, we will delegate, as appropriate, some management authority to local governments and allow them to tailor their practices to local conditions.

The central government will hold more fiscal powers as appropriate and raise the proportion of central government expenditure accordingly. In principle, the expenditures commensurate with such powers should be allocated from the central government, and such powers to be delegated to local governments should be reduced. No requirements for supporting funds from local governments in violation of regulations shall be made. When it is necessary to delegate fiscal powers to local governments, the relevant funds should be arranged through special transfer payments.

(18) Deepening reform of the financial system

We will move faster to improve the central bank system and the monetary policy transmission mechanism. We will actively develop technology finance, green finance, inclusive finance, pension finance, and digital finance and work to ensure quality financial services for major strategies, key fields, and weak links. We will refine the role and governance of financial institutions and the incentive and constraint mechanisms for ensuring that they serve the real economy. We will diversify equity financing, step up the development of multilevel bond markets, and increase the proportion of direct financing. We will optimize the state-owned financial capital management system.

We will improve the functions of the capital market to give balanced weight to investment and financing. We will prevent risks and tighten regulation to promote the sound and stable development of the capital market. We will facilitate the entry of long-term capital into the market. We will improve the overall quality of listed companies, strengthen relevant regulation and delisting systems, and establish long-term mechanisms to enhance the underlying stability of the capital market. We will improve the mechanisms for regulating and constraining the behaviors of major shareholders and actual controllers. We will optimize dividend incentive and constraint mechanisms for listed companies and improve the mechanisms for protecting investors. We will encourage regional equity markets to align their rules and implement unified standards.

A financial law will be formulated. We will improve the financial regulatory system to ensure that all financial activities are placed under regulation in accordance with the law, strengthen regulatory responsibility and accountability systems, and improve regulatory coordination between the central and local levels. We will build secure and efficient financial infrastructure, unify the rules and systems for registration, custody, settlement, and liquidation for the financial market, establish binding constraints for defusing risks at an early stage, and build a robust system to effectively fend off and control systemic risks and ensure financial stability. We will improve the mechanisms for protecting financial consumers and cracking down on illegal financial activities and establish a firewall for industrial and financial capital. We will promote high-standard opening up of the financial sector, steadily and prudently advance the internationalization of the RMB, and develop offshore RMB markets. We will make steady progress in the R&D and application of digital RMB and move faster to build Shanghai into an international financial center.

We will improve the management model based on pre-establishment national treatment plus a negative list and support qualified foreign capital institutions in participating in our financial service trials. We will expand the connectivity between domestic and overseas financial markets in a steady and prudent way and improve the qualified foreign institutional investor system. We will push forward the development of a homegrown, controllable cross-border payment system and strengthen financial security mechanisms as we open our doors wider to the outside world. We will establish a system for the unified monitoring and oversight of all foreign debt. We will actively participate in international financial governance.

(19) Improving mechanisms for implementing the coordinated regional development strategy

We will develop a regional economic layout and a territorial space system characterized by complementarity between different regions and territorial spaces. We will improve the institutional and policy frameworks for opening up a new vista in the large-scale development of the western region, achieving new breakthroughs in the full revitalization of the Northeast, accelerating the rise of the central region, and encouraging the eastern region to modernize more quickly. We will enable regions like the Beijing-Tianjin-Hebei region, the Yangtze River Delta, and the Guangdong-Hong Kong-Macao Greater Bay Area to better play their roles as engines of high-quality development and improve the mechanisms for the development of the Yangtze Economic Belt and the ecological protection and high-quality development in the Yellow River basin. We will move forward with the high-standard and high-quality development of the Xiong'an New Area. We will push for solid progress in developing the Chengdu-Chongqing economic zone. We will improve the system of institutions for functional zoning and strengthen mechanisms to support optimal development of territorial spaces. We will improve integrated regional development mechanisms, build new mechanisms for cooperative development across administrative divisions, and deepen industrial collaboration between the eastern, central, and western regions. The institutions and mechanisms for promoting the development of the marine economy will be enhanced.